Nick Dixon

Welcome to the LGPS Series Finale with Nick Dixon. Hello, ladies and gentlemen, welcome to the last of the LGPS interview series.

I’m Thomas Parker. I’m joined by the editorial supremo of pensions expert. It is Nick Reeve.

0:36

Speaker 2

Hello, I wondered who you’re building up to then didn’t recognise that.

Thank you very much, that’s the best intro I’ve had.

0:45

Speaker 1

Very.

0:45

Speaker 2

Excited for the last one.

0:47

Speaker 1

Glad to hear it.

So, Nick, who have we got today?

0:52

Speaker 2

Well, I’m very glad you asked me to introduce him because it is another Nick, another pensions Nick.

It’s Nick Dixon from the Avon pension Fund.

I’m very excited.

I should declare an interest at this point.

I’m not a member of the Avon pension fund.

I just live in the districts formerly known as Avon.

1:09

So I’m a bit of a fan of the general area, but it’s also quite interesting some of the talking points that you’re gonna hear in this interview.

1:19

Speaker 1

Yes.

And as ever, as with all of our interviews, this took place at Lapsif February last month and was hosted by the Fifty Faces Podcast’s host, Aofinn Devitt.

1:33

Avon Pension Fund’s Member Survey on Aerospace Investments

And Ethan started off by asking Nick about the recent aerospace investment consultation that the fund did, why the consultation was conducted and the outcomes of that consultation.

1:47

Speaker 3

So during 2024 and and 25, we had a lot of petitions from our members who were deeply concerned about the war in Gaza, in particular Israel’s response and the indirect role of aerospace and defence companies in supplying Israel.

2:06

So in response to that, we thought this is a critical stakeholder issue and therefore we conducted a survey of all our members.

It was actually a subset with whom we had online contact details and we undertook a survey to assess their views about whether we should invest in aerospace and defence.

2:28

And we opened up the issue to bring out a set of trade-offs, including the importance of NATO defence, the concern about arms impacts on the environment, the fact that they kill innocent civilians, etcetera.

2:43

And the snapshot of the survey is that 42% wanted to divest, about 47% said they’d like to remain invested and about 11% said they didn’t know.

So out of that, there was not a clear mandate to divest and therefore we’ve decided to remain invested.

3:02

And the committee confirmed that in December 2025.

3:06

Speaker 4

And I said one immediate question would be the participation rate by your members.

In a survey of that nature, I think often it’s surprising to see how low participation can be.

Did you have any read on that?

Any kind of insights in terms of the general level of interest in this question?

3:25

Speaker 3

Yes.

So we issued about 30,000 invitations.

We had two and a half thousand responses.

I mean that’s what is that 8%, eight, 9% very, very high for an online survey, typically you’d be looking at 2 or 3%.

3:43

And so we were delighted by the engagement level and by how thoughtful our members were, but also statistically to get 2 1/2 thousand members for a membership of 100,000 means it’s statistically very robust.

4:00

And as we saw the surveys come in, they began to converge around those results that I gave you.

4:09

Speaker 4

And do you think this could be the beginning of other similar consultations, other kind of evidence because it is ultimately evidence gathering in terms of responding to other stakeholders who may agitate for for a certain other change in terms of the ease or the administrative burden of this type of a consultation.

4:26

Is it something you could conduct again?

And do you think other funds may may look to?

4:30

Speaker 3

Yes, that’s an interesting question because we’ve decided that the committee wanted us to make this sort of thing more regular.

So we’ve loosely committed to doing this sort of thing every one or two years to to poll people on different topics, perhaps linked to climate change, their appetite for local investment, etcetera.

4:52

Not to make the funds decisions, but to inform our thinking and to inform the committee about what members think.

Other funds are also doing similar things.

So Islington now I know is conducting a survey on aerospace and defence driven by similar triggers.

5:12

And I think one of the funds in the Midlands is as well.

So I I’m doing it online means that you can have a repeatable industrial process that gathers a lot of responses in a highly efficient way.

5:26

Speaker 4

And then stepping back as opposed to the the status quo and beyond the consultation that what’s going on in your world even as we speak.

5:33

Navigating the Avon Fund’s Transition to LPPI and Local Investment Goals

So you are one of the funds that was originally part of Cornell.

You are now moving to LPPI.

You’re in the middle of that transition process.

Can you just give us an update here?

We are sitting in the beginning of February 26th as to where that process is and some of the governance and other, I suppose, obstacles that that are between here and full integration.

5:55

Speaker 3

Yeah.

So I think there’s two strands of work that I’ll highlight.

One is getting the new organization set up with legal agreements that all the shareholders sign.

So the two critical ones are a shareholder agreement and an and an investment management agreement, which is the services they’ll provide us.

6:15

All of both of those are progressing well on the key principles.

We’re all agreed there are some minor things we need to figure out that we’ll get them signed and agreed well before the end of March.

And then the second thing is organizing the asset transition and the vast bulk of the assets can just be transferred in species.

6:34

We’re not selling and buying things.

We’re just transferring with, with the beneficial owner remaining the same.

And then there’s some other assets that are more tricky to physically transfer.

And with those, we’re giving LPPI oversight and management responsibility, even if legally the assets remain with the local authority.

6:58

And that, I think, sufficiently aligns with the spirit of future fit.

7:02

Speaker 4

And in terms of the the actual transition from one to the other, are you that that that was all a smooth process in terms of your stakeholders and the are there any concerns you might have?

7:13

Speaker 3

There are some concerns about transaction costs at the margin.

I stress at the margin in asset classes where you probably do have to sell and then buy.

We have, I mean that covers 1 or 2% of our total assets.

So it’s so it’s small.

7:30

There’ll be a period when we are a member of LPPI and shareholder and we’re still a shareholder of Brunel before it winds down over the following nine months.

That’s kind of a technical thing.

But from an investment point of view, by April the 1st, we will just be with LPPI.

7:49

Speaker 4

In terms of the clear delineation of advice and where the decision making occurs, now to be mostly moving to the pool.

And we started this conversation by speaking about your engaged investment team and how you’ve engaged with stakeholders around specific sectors.

How do you see that evolving, given that, according to the government regulations, those kind of decisions will no longer be in your remit?

8:13

Speaker 3

Well, I think our role as a fund is to be really clear with the pool about what are our objectives, risk appetite constraints and we need to lay those out very clearly with some numbers like what’s our growth aspiration for assets versus the actuarial assumptions.

8:32

And then the pool is going to come back and and advise A strategic asset allocation that can meet those objectives.

To your wider question around things like, well, what about local, what about aerospace and defence and responsible investment.

8:47

I think those are things where we will express very clear preferences and I think the pool LPPI will do its utmost to try and meet them.

They may not bespoke their solution to every individual fund, but they may provide a blend of options that is perfectly good enough for us.

9:07

Speaker 4

And in terms of the, we’ve spoken about their plan to have an office in Bristol, for example, a little closer to you to get closer to the, I suppose the, the, the sense of, of local, what local means.

How well advanced have you developed your local investment policy to date and how do you see that as evolving?

9:24

Speaker 3

I think we’ve set it out very clearly.

So we’ve got a plan to deploy 3% of our fund into local by the end of 2026.

We’ve now raised that to a 5% aspiration by the end of 2027 and that would be 300 million out of 6 billion.

9:47

And thus far we want it focused on three discrete sectors, that is housing, renewable infrastructure and small business funding.

And and by local, we mean across the Northwest region.

10:00

Speaker 4

And it relates a little bit to the where we started this conversation around the aerospace consultation because I also advise South Yorkshire.

And there we have had some individual recipients, beneficiaries of the fund concerned about pooling because of the loss of agency and the loss of their ability to make to influence perhaps what South Yorkshire it does with respect to say different sectors.

10:25

Have you had that level of engagement with some of your underlying beneficiaries in terms of what pooling means and greater pooling means for for their ability to have a voice?

10:36

Speaker 3

We’ve explained that to the committee and the committee is aware that increasingly or you know, the, the, the, the accountability is moving to the pool and they understand that.

And frankly, if it delivers good investment outcomes and what we want it to do and contributions can go down again, then they’ll be comfortable with that.

11:00

We’ve obviously not discussed that technicality with members and I think most of our committee are supportive of the direction of travel, but they’re concerned about the detail of the implementation.

So that that’s what we need to get right.

11:16

How Funds Manage Political Pressure and Foster Pool Collaboration

And do you think that some of that pressure will then move upstream to the pools?

We know that some local authorities have been under stakeholder pressure.

If that moves upstream, do you think that will, will, will, will interfere with or at least how will it influence the, the pool’s ability to invest?

11:34

And clearly divestment was written explicitly in the in the regulations.

11:38

Speaker 3

Yeah.

Well, I think part of our role is to shield the pool from that kind of pressure.

So I think we need to take the political Flack locally and poll our members accordingly.

And typically if you lay out sensible trade off choices, but the one issue, demand for divestment tends to go away.

12:03

If it’s a broad theme to do with climate or human rights, then I, I, I think that the view of the local funds is gonna be more robust and assertive.

And provided that view is shared by other funds in the pool, then the pool has a collective mandate to divest accordingly and have a responsible investment policy that reflects the members the the the the different funds views.

12:28

Speaker 4

That last point actually is guessed my last question, which is around another undercurrent of the regulations which is around encouraging collaboration within a pool, whether it’s around sharing a fiduciary oversight advisor teaming up to reduce costs when it comes to Tri annual perhaps assessment of the pool.

12:45

And and it seems that equally that having some commonality in terms of approaches to sectors would also be helpful to the pool and shielding it from some of this perhaps need to be very granular.

How have you undertaken the collaboration already with with some of your soon to be 8 sister funds in the the new entity?

13:05

Speaker 3

Well, what we’ve agreed is we haven’t agreed any concrete things yet because we’re focused on those two things.

I mentioned earlier, the legal agreement and set up coupled with asset transition.

But we’ve also started discussions about how do we hold the pool to account.

13:21

And we don’t all want to employ 9 different experts to do that.

So we’re very open minded about sharing that resource.

And if you like doing it once with the pool collectively rather than all of us doing it separately.

But in addition, we do want to have individual scrutiny meetings with the pool so that we can assess them versus our own fund objectives.

13:45

So it will be a mixture.

13:47

Speaker 4

Well, thank you so much, Nick.

This has been a refreshing discussion with a pragmatic voice that is not only tremendous institutional memory within the LGPS, but is a is a force to be reckoned with in the course of the current set of changes.

Thank you for sharing your insights with us.

14:03

Speaker 3

Pleasure.

Thank you.

14:04

Hosts Discuss Key Insights and Upcoming Podcast Episodes

Thank you, Nick, and thank you, Ethan.

Well, Nick, Part 2, what was sort of the the key takeaways you took from from that that interview?

14:17

Speaker 2

Yeah, I’m, I’m happy to do the secondary, Nick, for this, for this episode.

Yeah.

Well, I mean, they LED straight off with the aerospace and defence thing that I I remember kind of reading about that and writing about it a little while ago.

It happened.

Yeah.

Really, really interesting in terms of member engagement and there’s a lot of stuff we’ve been reading and writing about member engagement in the public sector, private sector.

14:41

How do you get members interested in specific issues, but also the kind of wider discussion I found quite interesting about those single interest groups that maybe kind of led to this particular consultation, but also, you know, how to manage those interests.

14:58

I’ve heard Nick talk about this before in other contexts, but also how he kind of brought that into them.

The, the, the pooling element of that as well.

And the whole idea of kind of shielding the pool from political pressure, I thought was an interesting, interesting debate there.

15:13

Speaker 1

Absolutely.

Well, thank you very much Nick for joining me.

Just wanted to sort of flag a few things as if you are a subscribe to the podcast.

And if you’re not a subscribe to the podcast, why you’re not a subscribe to the podcast, get on, subscribe, get on it.

15:31

But if you are a subscribe to the podcast, you will know that there has been a rather large influx of of episodes over the past few weeks, including our interview with Helen Wheatley, which went out last Friday.

If you haven’t listened to that, please do it.

15:46

It is really, really fascinating to hear what she has to say.

And to be honest with you, it’s really interesting to scuttle here at Scotland around to around Westminster Palace throughout the the early afternoon on that Thursday.

So we’re going to park the podcast.

16:02

I know the podcast was due out next Monday, however, we’re going to park that for now and we’re going to.

So you won’t be having a podcast in your feed next Monday, but you will be having one the following Monday.

So we’ll get back to our our kind of regular, regular schedule.

16:21

But yeah, keep subscribed because there will always be a few specials popping out here or there.

There’s a few a few ideas and into prospects in the work.

So please, please do keep keep an eye out for that.

So much so that Nick isn’t even aware of of these these ions in the fire.

16:41

And I’m going suspense is killing me and we’ll tell them about it as soon as we get off this podcast.

But yeah, there’s a there’s a few ones that that could be quite interesting.

So watch this space and excellent.

No other better reason to subscribe.

Subscribe to the the always pensions angle podcast.

16:58

I would also like to say just finally, a big thank you to Aofinn Devitt, who conducted all these interviews over what was a crazy busy couple of days for her.

So thank you so much to her.

And please do go and subscribe to the 50 Faces podcast.

It’s been going through for a couple of years now.

17:17

And yeah, there’s some really, really interesting stuff, really, really interesting people that she’s she’s had the chance to sit down with over the years.

So please do go through that back catalog.

But yeah, thank you so much, Nick.

17:32

Speaker 2

Thanks Tom, and see you all next month.