UK pension pool Brunel under pressure from clients over governance

UK pension pool Brunel Pension Partnership is facing questions over its governance from representatives of shareholder funds, prompted in part by alarm at the recent exodus of senior staff from the £30bn local government pension pool. 

A report by Devon’s County Treasurer Mary Davis reveals that a letter was sent to Brunel’s Chair, Denise Le Gal, “outlining concerns” raised by “client funds’ shareholder representatives, Oversight Board members and client group officers” at a meeting in June.

The UK Government kicked off the process of ‘pooling’ local government pension schemes in 2015, in a bid to cut costs by creating a handful of regional asset managers to run the schemes’ money. Brunel was set up in 2017 and is arguably the most ESG-orientated of the eight pension pools. It has 10 client funds, including Devon County Council, Cornwall, Buckinghamshire, Dorset, Wiltshire, Devon, Avon, Gloucestershire, Somerset, Oxfordshire and the Environment Agency Pension Fund (EAPF).

Treasurer Davis’ report, which addresses the ongoing governance review announced by Brunel last year, endorses calls for the Chair’s “appraisal process” to be “formalised and strengthened”. Le Gal, who was appointed as Chair of Brunel in 2017, is a former Vice-Chair of the UK’s Local Authority Pension Fund Forum (LAPFF). She also currently is the Chair of the JPM Chase UK Retirement Plan.

“it is not uncommon for a high turnover of staff in ‘start-ups’ like Brunel where those responsible for setting up an organisation move on when the company is established” –  Dorset County Pension Fund committee

The report also highlights concerns about how Brunel consults with its shareholders, particularly on “significant issues” that “need to be addressed with tact and discretion because of their complexity, potential impact on the partnership or contentious nature”. 

It states that “often” such consultation has “been done via informal phone calls to canvass views”, and adds that on a “number of occasions there has been concern that the views of some shareholders have then been misrepresented”. 

Concern has also been voiced over the number of high-profile departures from Brunel. Chief Investment Officer, Mark Mansley stepped down from his role in May – less than a year after Brunel’s CEO Dawn Turner left the pension pool. 

“Strong concerns” about the loss of the CIO and CEO within a year of each other were voiced in June by Conservative Councillor David Harris at the meeting of Cornwall Council’s Pension Committee, which he is a member of. 

He told RI that “any big fund – and Brunel is a big fund – who lost their CEO and CIO [in less than a year], the shareholders would be concerned [about] and would have questions".

Harris added that from his perspective “as an ordinary member of the Pensions Committee, Brunel is not transparent”. He explained that it is the Cornwall County Council that is actually the shareholder in Brunel, rather than the pension fund, but added that he felt the pension committee should have more access to what is going on. The “accountability isn’t joined up”, he said. 

Given the seniority of the departures, he told RI that it is the responsibility of the Chair to provide leadership. “If one loses a Chief Executive and Chief Investment Officer, one naturally looks to the Chair for leadership and some strong comment on what's going on.” 

Minutes from the Dorset County Council Pension Fund Committee, however, state that “it is not uncommon for a high turnover of staff in ‘start-ups’ like Brunel where those responsible for setting up an organisation move on when the company is established”.

Also present at that virtual meeting in September were Brunel’s new CEO, Laura Chapell and Chief Stakeholder Officer, James Russell-Stracey, who revealed that a replacement CIO had been found, although they did not disclose who.  

Another senior departure confirmed to RI by Brunel is its Client Relationship Director, Matthew Trebilcock, who has joined Brunel’s client Gloucestershire County Council as Head of Pensions.

Minutes from the meetings of the Devon’s Investment and Pension Fund Committee in June and September also make reference to concerns raised by client fund representatives. 

But Devon Conservative County Councillor, Ray Bloxham, who chairs the pension committee, clarified to RI the concerns cited in the minutes “are not held by myself nor by fellow members of the Devon Committee”. He added that he is “very happy with the service provided by Brunel”.

A spokesperson for Brunel declined to give the details of the letter to its Chair, citing confidentiality between its board and shareholders, but described its governance review, which RI reported early last year,  as “a timely exercise” given the pool’s “rapid growth and development”.

“The pace of change, as we shifted from being a start-up to becoming an asset owner, meant that it was crucial we updated our governance frameworks and procedures to support Brunel”, he said.

Since the letter was sent to Brunel’s Chair, “further discussions have taken place between client funds and Brunel”, according to the report by Devon’s Treasurer, resulting in a “timetable” being put in place for “addressing each of the issues that need to be resolved by the governance review, with the intention that a revised Shareholder Agreement be put in place by the end of the year.”

Among the proposed governance changes are calls for the recruitment of a fifth Non-Executive Director to represent shareholders. This request appears to have been actioned by Brunel, which is in the process of recruiting a new Shareholder Non-Executive Director.