Fiona Miller PFAY 2016: Hall of Fame

With over 20 years’ experience of running pension funds, Fiona Miller moved up to become head of pensions and financial services at Cumbria County Council in the north of England in 2014, having begun her career at the local government scheme as head of technical finance in 2010.

The reason for her nomination for this year’s coveted Pension Fund Achievement of the Year award – and indeed her win – is her commitment to the recent pooling concept among the UK’s local authority pensions.

Altogether, 91 UK public sector pension funds have agreed to pool their investment assets into eight wholly-owned and operated local government regulated investment companies. Detailed proposals have been submitted to the UK government outlining key features of the innovation such as scale, governance models, budget savings and transition plans.

The local investment company Miller is heavily involved in is the Border to Coast Pensions Partnership (BCPP), which comprises 13 funds and is the largest proposed pool in terms of assets under management, with £36bn (€39.8bn) at the end of March 2015, and servicing 906,000 members’ pensions in total. Cumbria – led by Miller – was one of three pension funds that initiated the BCPP proposal. In addition, she is active nationally in the UK on the Cross Pool Collaboration group and chairs the cross-pool infrastructure working group.

The BCPP proposal is for a multi asset pool formed on the basis of like-minded beliefs. These include the following key principles:

One fund, one vote, regardless of fund size;
Any asset allocation strategy should remain a decision for each fund. This is necessary to enable each to demonstrate that it is exercising its democratic and fiduciary duty;
The BCPP pool’s role is to independently and professionally deliver asset allocation choices. However, all partner funds accept that if savings are to be achieved, changes will be required through the rationalisation and standardization of processes and the selection and appointment of external managers;
There will be a clear segregation of duties between those undertaken by the partner funds and those performed by employees of the BCPP pool. This will ensure both that the fiduciary duty and democratic responsibility of the partner funds can be maintained, whilst achieving the cost benefits and expanded professionalisation of the investment functions through the economies of scale that the pooling brings about;
The BCPP pool should have a strong corporate governance philosophy that focuses on the delivery of long-term value through active corporate engagement. The rationale behind this principle is that it aligns directly with ensuring the partner funds exercise their fiduciary duty in the best interests of their own members and employers.

The first stages are complete and included securing the investment commitment in order to achieve the required scale of £25bn and gaining the approval of all partner pension funds to enable a detailed proposal submitted to the UK government in July 2015.

The next stage, to be completed by April 2018, concerns the creation of a fully functioning regulated asset management company. This will involve:

Sourcing a location;
Finalising the share ownership and governance structures;
Defining the asset sub-group offerings;
Gaining regulatory approval;
Recruiting staff.

In the final stage, which is set to run from April 2018 to 2025, the BCPP will gradually undertake the transition of all the assets into the pool. It expects to have more than 60% transitioned by 2020.

For Cumbria and the other funds taking part, the benefits of the BCPP come in the savings they can make as a result of this initiative, including:

Improved efficiency;
Professionalisation of investment teams;
Increased levels of resilience;
Access to asset classes that need scale for efficient investing.

Pension Fund Achievement of the Year 2016

Fiona Miller, Cumbria County Council

Unifying Force