Address different reporting requirements.  Be prepared to manage multiple funds. 

Meet the requirements of the UK Pension Scheme Bill

The accelerating pace of reforms across the UK pensions industry is set to drive significant changes. This process raises several key considerations that are particularly relevant for Local Government Pension Schemes (LGPS).  

From a monitoring and reporting perspective, an LGPS’s choice of performance measurement and analysis tool will facilitate its long-term ability to effectively manage the complexities of onboarding new partner funds, expand into new asset classes, and meet the distinct strategies, benchmarks and reporting needs of each individual partner fund. A suitable analytics tool will play a pivotal role in optimizing the investment decision-making process.

Measure and analyze all investment decisions efficiently 

PEARL - Ortec Finance’s established performance measurement and attribution solution has a strong track record of helping institutional investors navigate hierarchical decision-making and reporting in an accessible manner.

 

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Learn how PEARL supported the Australian superannuation industry in responding to the Australian Government’s 2021 'Your Future, Your Super' (YFYS) reforms, which mandated an annual performance test and reporting requirements across all funds. 

This is similar to the ‘value for money framework (VfM) proposed as part of the UK government reforms, which may lead the LGPS to adopt a standardized approach across its partner funds. This would enable members to compare the performance of their schemes using a broad set of data metrics to assess value.

Utilize PEARL to: 

  • Create fund hierarchies for each partner fund to model their unique investment processes 
  • Model a range of benchmarks, such as strategic asset allocations, reference portfolios or tactical asset allocations that are fit for purpose
  • Set up different access levels for different users - allowing users at pool level to manage the availability of individual reports across all users. 

This structure supports partner funds by providing them with meaningful reporting that accurately reflects their investment decision process, while enabling an LGPS pool to gain detailed insights into the value it has added for each fund, helping to clearly demonstrate its contribution. 

Cater to all stakeholder needs in a transparent manner  

PEARL’s unique decision-based attribution gives a holistic and transparent view of the investment process and quantifying the added value of each decision and decision-maker. It can: 

  • Apply to any investment fund hierarchy, with decision structures developed specifically for each partner fund
  • Split out the impact of investment decisions made by the pool from those made by partner funds, improving accountability as well as demonstrating the value added by pool-level investment decisions
  • Evaluate the value-add of each decision type, from high-level strategy, overlay programs and granular implementation within specific portfolios
  • Handle complexity that might come with derivatives, overlay strategies or investments in private assets
  • Combine with currency overlay attribution, where currency management plays a vital role in a fund’s overall investment process. 

PEARL also offers other attribution models that can be applied to any portfolio, or aggregate level within any fund structure, driving further transparency across all decisions and asset classes. These outputs are essential in helping an LGPS pool to meet the growing regulatory demands stemming from the UK Government’s proposed reforms. 

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Multi-asset

Understand performance drivers and optimize portfolios with granular insights

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Equity

Examine the impact of allocation and selection decisions with a traditional Brinson model, or use a factor-based approach, depending on the investment philosophy

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Fixed income

Analyze how yield, duration and credit quality impact your portfolio after splitting out the impact of currency, trading and pricing effects

Handle multiple data flows 

PEARL’s extensive data interfacing and workflow tools, allows LGPS pools to easily load, manage and transform data. It offers users the flexibility to import files in various formats from multiple sources, such as custodians, asset managers, or benchmark data providers. Users can:   

  • Receive detailed warnings of any data issues during file processing, pinpointing the exact row and column where the issue occurs 
  • Configure a wide range of checks to help identify other data issues such as missing or incorrect cashflows, or incomplete security attributes 
  • View and alter data loaded into PEARL via a user-friendly web interface - no coding skills required 

Adapt to evolving operating needs and frameworks 

PEARL is available through different operating models to help support LGPS pools and their partner funds in their growth journey, with the flexibility to switch between models as in-house resources and capabilities evolve. 

  • SaaS Model: Suitable for LGPS pools with an established in-house team and necessary expertise. 
    • Your system, set up by Ortec Finance, will be implemented with correctly flowing data, fully configured fund structures, benchmarks and attribution models – along with comprehensive training on system use and maintenance.   
  • Investment Performance Service (IPS): Best suited for LGPS pools with smaller teams prioritizing its resources on analyzing performance measurement outputs. 
    • Your system, is set up by and fully outsourced to Ortec Finance, who will continue to maintain and manage the system, data and configurations. 
  • Hybrid: A flexible alternative option tailored to the specific needs of an LGPS pool.
    • The typical daily workflows are shared between the in-house and Ortec Finance team, allowing the internal team to focus on specific workflows based on their preferences and capacity. 
  • How can LGPS learn from PEARL’s role in the Australian superannuation landscape?
There are many parallels between Australian superannuation funds and LGPS pools. Super funds manage a central pool of investments while offering different investment options to their end clients. Similar to LGPS partner funds, each investment option must be modeled independently due to its unique asset mix and strategy, while the centralized pool requires in-depth analysis supported by complex attribution models. 

Australia has also experienced a significant increase in government regulation in recent years from rising mandatory contributions to the introduction of a performance test aimed at improving value for money for pensioners by ensuring all funds deliver competitive returns and fees. 

Ortec Finance is proud to have worked with many of Australia’s leading superannuation funds, supporting them through a changing landscape that includes mergers with other funds, onboarding new assets and investment structures, and introducing a new attribution model in PEARL to help them analyze performance against the regulator’s YFYS performance test. 
PEARL Australia

A range of comprehensive solutions for LGPS’s investment decision-making and reporting needs 

Ortec Finance offers several solutions for LGPS pools facing the challenges of reform. By leveraging advanced models and technology we empower pools to navigate the complexities introduced by the upcoming UK Pension Scheme Bill. While PEARL helps to measure and understand the added value of investment decisions from multiple perspectives, GLASS supports strategic risk management, asset allocation and asset liability management, and ClimateMAPS identifies systemic climate risks and opportunities using top-down climate scenarios. 

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