Aoifinn Devitt: Series 5 of the 2025 50 Faces podcast is kindly supported by Diamond Hill. Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline, and client alignment. An independent active asset manager with significant employee ownership, Diamond Hill’s investment strategies include differentiated US and non-US equity, alternative long-short equity, and fixed income.
George Graham: We need more skill and expertise within pension funds if we’re going to do that. Well, getting the skill and expertise you need to manage those sorts of investments and design those sorts of investment strategies is not easy in the traditional public sector. We cannot build sustainable professional investment teams on local government salaries. It’s just a fact of life. So we need to find different ways of doing that, and pooling is one of the ways you can deliver that more sustainably. Because the pool entities are at arm’s length.
Aoifinn Devitt: I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment. By focusing on its people and their stories. I’m joined today by George Graham, who’s Director and Head of Fund at South Yorkshire Pensions Authority. He has spent a long career in public service culminating in the last 8 years at SYPA, and prior to that, he spent his career in various finance roles at Oxfordshire, Northamptonshire, Chorley, Lancashire, and LPP. He is Governor and Vice-Chair of Barnsley College, as well as Independent Chair of the Local Pension Board at Lincolnshire County Council. I am catching George in the sunset of his career at the LGPS in this current role, supposed that he will be retiring at the end of this year. And he and I have had the pleasure of working together for the past 10 years since his time at Lancashire and then LPP. And we currently work together at SYPA where I sit as independent advisor. So after that long introduction, George, very welcome. Thank you for joining me today.
George Graham: Thank you. It’s good to be with you.
Aoifinn Devitt: Well, you are definitely at this point, you’ll be bashful when I say this, a legend in local government circles, and that has been rightly recognized with a recent Lifetime Achievement Award which we can link to on our show notes. But before we get into your career in local government, can you take us through how that started? Where did you grow up? What were your early interests? And how did this make itself available to you as a career?
George Graham: Well, I had a vaguely peripatetic childhood. I was born in Scotland and spent most of my childhood in North Wales and then emigrated to England to go to university. So I moved around a bit. I was always interested in history, and I think an interest in history takes you to an interest in politics and economics, and those sorts of things intend to move you into public service or local government. But the immediate cause of me ending up as a trainee accountant at Oxfordshire was the fact that when I got to my final year at university, I had absolutely no idea what I wanted to do. I knew I didn’t want to go and work as an accountant for one of the big firms, which was what most of my contemporaries were doing. My dad sent me this advert for trainee accountants at Oxfordshire. I applied and got it because, partly because it sounded interesting, partly because I was interested in local government, and the rest is history. I have been very lucky. I’ve worked for bosses who’ve been prepared to let me get on with stuff, explore stuff, sometimes make mistakes, and we learn from mistakes. We probably learn more from mistakes than we do from our successes, it has to be said. And I’ve gradually taken on different things, and I’ve been able to move from one thing to another in my career. So I, I started off after I qualified as an accountant in social services. I then went on to be a chief accountant and manage financial systems, and then to be a treasurer, and then take more of an interest in things like treasury management and financial planning. And that led to the pension fund and working on major economic development schemes and That led to an interest in local investment, and so on and so on. So it’s been a gradual accretion of knowledge, I suppose, but it all sort of stems from that, I suppose, an inquisitiveness about how things, the reasons why things happen. This happens, therefore that happens, therefore you end up with whatever it happens to be. So I I suppose, suppose that’s what it all springs from.
Aoifinn Devitt: Well, we’ll definitely get into that when we speak about pooling, as I think now it’s actually really interesting to kind of pull the lens back and look at how you think about changing systems, regimes, regimes, norms, and maybe with your interest in history and politics as well, I should say, you’ve introduced me to a lot of great political podcasts and why you, you see the changing shape as perhaps being a necessity and inevitability essentially as we seek to gain advantages of scale. Maybe just to keep that historic lens a little bit going back over the course of your career, can you speak about the evolution of local government pensions? When you started and to the present day where you see that pooling is ever greater, pooling is now the norm. Can you speak about that and how this has been necessitated?
George Graham: Yeah, I mean, I wrote about this recently and sort of reflecting back on what things were like when I started. We didn’t talk about pensions then, we talked about superannuation. You know, even the language has changed in the course of my career. But the management of the investments of the fund effectively consisted of the treasurer taking a trip down to London every 3 months or so to visit the fund managers and probably have a very nice lunch. And funds probably had a couple of balanced managers in those days. Things have moved on. Financial markets have evolved. A much wider range of products is available, and those products are much more complex. So even ignoring the benefits that you might achieve through greater scale and so on, the idea that we could manage a multi-billion pound pension fund’s investments through the treasurer spending a day every 2 or 3 months taking a trip to see the managers. It is just for the birds. We can’t do that anymore. We need to apply more intimate knowledge of how these things work to their oversight. So we need more skill and expertise within pension funds if we’re going to do that. Well, getting the skill and expertise you need to manage those sorts of investments and design those sorts of investment strategies is not easy in the traditional public sector. We cannot build sustainable professional investment teams on local government salaries. It’s just a fact of life. So we need to find different ways of doing that, and pooling is one of the ways you can deliver that more sustainably because the pool entities are at arm’s length. But that doesn’t mean that we will be without investment skill within pension funds. We need to oversee what the pools do for us. The pools are acting as our interface with the investment management industry who selling all these complicated products, and the pools are able to challenge those investment managers. In some cases, they’re capable of managing money themselves, and that is clearly a way of doing that at significantly less cost. So I think what’s evolved is— I don’t want this to sound as dismissive of what happened in the past— it would be perceived as a greater professionalization of what we do. Now, that’s not to denigrate, um, the people who were running funds in the past. Everything happens in a particular time and place, and it was late ’80s, we were in a very different time and place. I remember after the Maxwell scandal, all of a sudden every fund was rushing to appoint their first ever global custodian so that the issues caused by Maxwell dipping into the Mirror Pension Fund couldn’t happen in our local government pension fund. Now, the chances of it happening were vanishingly remote because of all the other controls that existed, but we were in a much, much more innocent time, maybe is the way to describe it, and things have moved on. The world has become much more complicated. We have to deal with that complexity. Part of the way we deal with that complexity is by trying to skill ourselves up. There’s a degree to which we can skill our own teams up, but we have to— to a degree, we need to outsource that because we can’t build our own teams. In Lancashire, I was very lucky. I had a team of genuine investment professionals who could do direct investment and could trade. And when I came to South Yorkshire just prior to pooling, we had a team who were running global equity mandates. From Barnsley and doing so fantastically well, but they were doing so without any backup resource and any resilience. And the same is true in Lancashire. Now, if you put those two teams together, and maybe with the team from a couple of other funds, you’d have created something that had the resilience and created something greater than some of its parts. And essentially, that’s what pooling has done for us. So I think we’ve seen a professionalisation, and we’ve also seen pensions become a specialism. Within local authority finance departments in a way it wasn’t back in my early days. That’s a good thing. Running the pension fund is not the same as running the finances of the council. You have very different considerations. If nothing else, you’re looking at things over a much longer timescale. Our liabilities run out 50, 60 years, if not more. That’s very different to the council treasurer who’s looking at the next 12 months if he’s lucky.
Aoifinn Devitt: And I think let’s give credit where it’s due. I think it’s a really interesting aspect, points you pointed out there, because what I think is really remarkable is that you at Lancashire saw the writing on the wall before there was writing on the wall, essentially by taking this first move with LPFA. This is when we started working together back, measure about 10 years, 2015 or so, when the discussions were maybe started even earlier perhaps. What was it that led you to see the inevitability of building scale long before it was policy or certainly mandated?
George Graham: Well, I’m not going to take credit for the original idea. The original idea came from Mike Jensen and the investment team, and they saw the ability to collaborate with others on individual deals, but they also, they recognized the unsustainability of the operating model and would there be a way of doing that differently, which would create a sustainable operating model. I think where credit it’s due, they came up with the original idea. My role was essentially working that through a political process and the process of negotiation and agreement. There were trade-offs that had to be made. I think what we ended up with worked for the partners that were involved and has achieved probably in some senses more than we might originally have expected. And that’s a good thing. It reflects one model of doing pooling. What we created between Lancashire and the LPFA reflects one way of doing pooling. There are other ways, and the fact that we ended up with 8 pools in response to George Osborne’s original invitation for a zolder pool indicates there are clearly more than— there’s clearly more than one way to do it. And there are a spectrum of views within the LGPS, all of which are extremely strongly held. And I think LPP was— when the London SIP came first, which was a response by the London funds to a perceived threat, then came LPP. And LPP was about more than just the investment side. It was about pension administration as well as investment. And that was an equally important part to it. Certainly for in us Lancashire, it was an important part of the thing because We went into that aiming to achieve benefits for Lancashire, particularly in the area of jobs and pensions administration. I think it’s fairly obvious that if you’re going to create sustainable investment teams, you’re more able to do that if they’re managing more money. You can do that through creating a function that manages through some sort of ACS— well, sorry, unitized funds. Well, so far so good. That bit of thinking is the easy bit. The difficult bit is actually getting from the thoughts to the execution, and that was somewhat painful.
Aoifinn Devitt: I lived to tell the tale, and so did you. So I think that’s certainly, I mean, probably painful doesn’t even begin to express, because that is obviously a prolonged, protracted process that is not always made easier by regulatory change in the backdrop and having to kind of repivot. But I think you’re right, certainly the direction of travel has been fairly consistent, even if sometimes the execution has varied. And I want to kind of hold that thought on the idea of the sustainable— you use the word sustainable in terms of investment team, and we’ll get back to that when it comes to the investing style moving forward. Just very quickly, you mentioned the local government just as an employer. Clearly, there’s an element of public service. What is it that drives you in this role in terms of the beneficiaries, your sense of mission, and how do you think it can be expressed to attract people into these roles, which often provide good economic regional solutions for employment?
George Graham: I tend to focus on, well, what is it that we deliver? Our average scheme member is a woman in her 40s who works part-time, who earns something between £15,000 and £20,000 a year, and will take home a pension of between £4,000 and £5,000 a year when she retires. Now, that pension, together with the state pension, is enough to put that woman assuming they’re a single person, into the sort of lowest level of the retirement living standards, which is a tool we use to gauge how much income you need in retirement. Now, keeping the lowest paid element of the UK public sector workforce out of retirement poverty strikes me as quite an important mission. I wouldn’t necessarily describe myself as someone who’s sort of mission-driven, but achieving that end goal is clearly a motivating factor. I suspect if I was to ask the people in my team who process pension benefits what their key drivers and motivations are, it’s more about the fact that I’ve got what I regard as a secure, well-paid job. And as you say, well-paid in the context of our locality is, is quite important. And I have a decent pension. And one of the reasons my dad sent me that advert all those years ago was, you want to get yourself a job with a decent pension sum. And that’s the same advice I’ve given to both my children. Don’t really care what you do, you’ll find your own route, but find something with a decent pension. One of them has done. He works in a job where he’s in our scheme. My other child, unfortunately, works in a charity, so has less generous pension provision, as it were. So I think we’re all motivated by our own things. But I mean, a part of the public sector that is actually growing simply because we have a continually growing number of members of the scheme, whether they’re pensioners or whatever, Regardless of the amount of money we put into the economy and local economy in terms of pensions we pay, and that is clearly very significant, we also put a lot of money in back into the local economy in terms of salaries we pay to our staff and, you know, the things we buy from local businesses and so on. So we do deliver that economic benefit. It’s probably not something we talk about terribly much, nor is the fact that by keeping our pensioners out of poverty, we’re reducing the call on other elements of the public purse. The typical pensioner I mentioned will not be claiming means-tested benefits. That’s a significant benefit to the public purse. So we do have that impact. We should probably talk about that more, but we should talk about the impact of everything we do far more than we do.
Aoifinn Devitt: We’re going to take a short break to hear from the sponsor of this series, Diamond Hill. I sat down with Krishna Mohanraj, International Portfolio Manager of Diamond Hill, and asked him about the current opportunity set for international investing.
Speaker C: And from our perspective, we’ve always said valuations are important, currency is important, and in both senses, international has been super attractive for a long time. So that’s kind of the backdrop today. I would say there’s only one story in town. Know, You the world seems to be coming around to accepting that there is a regime change. We are moving— we don’t know how much, but definitely away from a truly global world to a more local world. And then the question is, how does that path look like? Ups and downs. So that’s kind of more current thinking. For us, what is the true north, right? That’s the key. The true north, the philosophy for us is buy good businesses that you can understand.
Aoifinn Devitt: And now back to the show. Well, I mean, clearly SYPA has a phenomenal communications effort, and I think the other important part of what you do, not just preserving the fiscal security or financial security of the people at the lower end of the earnings spectrum, is also how you engage them about their pensions. I think that that is often something that is a mystery, is not well understood, is opaque. And I know that there are huge efforts underway to make that process more intuitive, automated, to ensure that there are fewer delays, in general, that that’s more accessible. So I suppose that’s another advance. I know we didn’t normally touch on this, but just in terms of that side of things, are you optimistic about the possibility for AI to automate, to make this process smoother?
George Graham: I tend to be a little skeptical of AI, possibly not having had much direct exposure to it, which I suspect is a symptom of age. I think yes, it will be possible, and undoubtedly automation driven by AI will enable us to improve elements of pensions processing in due course. And I think that’s great because that means we will be using our staff to do the things that only humans can. And in the context of our scheme, which is horrendously complicated and going to get more complicated. Freeing staff from the stuff that can be automated to do the stuff that requires human input will be undoubtedly a good thing. But things like pension dashboards and that sort of thing, which are partly driven by AI, they’re an increasingly necessary part of how we engage scheme members with their pensions. There’s a statistic I saw the other day, I think it was something like in the UK, the average person will have 11 different pension pots. The end of their career. It is no wonder people lose some of them. If we can do things which connect people to those pensions and enable them to make sensible decisions about how to manage those in aggregate, we will have achieved a great deal. That may mean more people consolidating various DC pension pots, transferring DC pensions into our scheme if they’ve got them. Now, that is allowed. There are limitations on that, One of the things the government might do if it wanted to encourage pension saving and so on is to bring up some of the restrictions on transfers in from DC schemes. Don’t honestly see that happening because it might have cost implications, but it would certainly be a way of helping people secure an income for the rest of their life post-retirement. DC schemes can deliver an income for life post-retirement, but only if you have sufficient savings in them. It’s very difficult to achieve sufficient savings in them to do that, certainly for people that are on average incomes.
Aoifinn Devitt: Well, before we move on to, I think, personal reflections and hearing what’s next for you, I’d love to circle back briefly to the investment side because South Yorkshire has been at the forefront of both local investing, setting bold net zero targets, and really moving the needle on sustainable investing efforts within the LGPS. So I suppose if we just take that as a given, can you— do you want to talk a little bit about what excites you now as you end the near of your tenure in this role? When you look at the investment landscape, what excites you about the opportunity for the LGPS pensions to invest?
George Graham: I think the whole local investing arena represents a fantastic opportunity for LGPS, and one that has been massively underexploited. You don’t know that investment opportunities exist until you go looking for them. We haven’t generally gone looking in our backyard. There are some honorable exceptions to that, Greater Manchester Fund being the most obvious one, but most funds haven’t gone looking for those opportunities. They are there, and you can achieve an enormous amount as well as delivering the returns that are necessary to pay pensions. I think there’s a vast opportunity there. I think we tend to focus on climate negatively. We focus on how we must reduce emissions, we must reduce emissions. Yes. I understand that, and yes, the survival of the planet— ideally we do need to reduce emissions. But the transition to a low or no carbon economy represents an enormous investment opportunity. There are new technologies that we need to have to allow us to eliminate emissions. So there’s a fantastic opportunity there. The challenge for an LGPS fund is that all of those opportunities are— tend to be in private markets, and we need liquidity. So the degree to which we can tie up our funds in ever-increasing amounts in private markets is challenging. And I think we’ve probably— certainly in South Yorkshire, we’ve probably reached the limit of what we can tie up in private markets. We might move stuff around within the total, but in terms of the broad sort of public markets-private markets divide, we’re probably at the limit, at the limits now. But we always talk in pension funds about we are long-term investors with long-term institutions. Well, The corollary of that, I suppose, is that every investment we make has to be sustainable, because an investment won’t be there for the long term if it’s not sustainable. That’s in a sense the definition of sustainability. When we talk about sustainability in the context of investments, we’re talking about investing in companies that are there for the long term. They have a sustainable business model. So if the UK has a policy that effectively bans smoking and means that it becomes increasingly illegal to sell tobacco products to people, as is the government’s intention, previous government’s intention, then that doesn’t strike me as tobacco companies having a sustainable business model. So why would we be looking to invest in? So those are debates that will, I think, flow through. But the fundamental point is all of our investments have to be sustained. Excuse me, we tend to talk about sustainability as though it’s some sort of thing that’s off to the side and is a bit trendy and sandal-wearing hippies and all that sort of thing, and it’s not. It’s it’s hard, hard capitalist economics. A business is not going to survive, it is not sustainable.
Aoifinn Devitt: 100%, and I think that obviously it’s very intertwined. What is next for you now as you bring this chapter at South Yorkshire to a close, and what would you like your legacy to be in this role? Because I don’t think your legacy with the LGPS is finished yet.
George Graham: I think the second bit first. I think the best that anybody in the sort of leadership role I’ve been doing for the last few years, best that anybody in that sort of role can hope for is to leave the organisation in a better position than they found it. And I would hope I’ve achieved that. Certainly the nice things that people have been saying to me would seem to indicate that that’s the case. We’ve just communicated the results of our triennial valuation to employers. All of our employers will be seeing a reduction in contribution rates. That’s a good way of going out. Over that time, we’ve improved customer service and so on. Lots of things are in a better place than they were. The organisation is certainly more robust and resilient than it was. That’s my legacy in that sense. I suppose that proves that the model of a single-purpose pension authority can work. What’s next? Well, more holidays. My wife is very determined that we will take more holidays, so that’s definitely on the agenda. People have been kind enough to ask me to do some pieces of advisory work, which I’m more than happy to do. And as you said, I chair Lincolnshire’s local pension board, and I’ll continue with that, and that’ll keep me engaged with the LGPS in the same way some of that advisory work will do. And I’m continuing as vice chair at our local college, which is currently going through a merger with a small specialist institution, and that merger process has some interesting pension elements to it, which will no doubt test my thought processes over the coming months.
Aoifinn Devitt: Well, now let’s move to some personal reflections, because as I said, one doesn’t come up with Lifetime Achievement Awards without putting quite a bit into an industry and, and I think taking lessons and memories out of it. So I’d love if you could just talk through some, starting with maybe your influences in this arena. Think I you mentioned having a very forward-looking investment team at Lancashire, and I would definitely share that view. But, you know, across the course of your whole career, any particular influences or mentors you can mention?
George Graham: Yeah, I mean, there are two chief executives I worked for at the same council. This was a small district council which had a very troubled history. I was part of a new management team that was appointed to help turn it around, and both of them in different ways helped, I think, shape my leadership style and helped me understand that if I was to be effective, I needed to play against type. I’m naturally something of an introvert, and in order to get the best out of teams, any sort of team, you can’t just lock yourself away in a room and put a towel over your head, which might in some cases be my default position to sit and think about stuff and come up with the answer. You need to actually sit and engage with people and be visible and acknowledge them. So rather than As one of these people said to me, every morning, George, I see you come into the town hall and you just head down the walk straight to your office and straight past the people on reception. What he said was, I want you to make sure when you come in you say good morning to those people. There’s a good manners element to that, which I hate to be thought to be rude anyway, but it’s also the human thing. We are all human beings. If you acknowledge people as human beings,, you will get more out of them and get more out of your team. So I think both of those chief executives in different ways helped shape my leadership style. I mean, I learned a phenomenal amount, phenomenal amount about investments from the investment team at Lancashire, and they forced me to think about, well, what are my rules about what I will invest in and what I won’t invest in? You know, so your sort of personal risk appetite, and helped by yourself and as an advisor and Eric Lambert, the sort of longerstanding of the investment advisors there. So I sort of came to the conclusion, well, if I can’t understand how I’m making money, then it’s not an investment for me. You know, that’s the— and there are lots of investments where it’s fairly obvious how you’re making money, but there’s some really complex transactions where it’s very difficult to see, to understand how the profit flows. And I think I suppose the other version of that is keep it simple, and that’s something that our strategy here at South Yorkshire has been for many, many years, simply because so much of the money used to be run internally before pooling, we didn’t have the resource to do really complicated stuff. We had a nice simple investment process that bought and sold shares and bonds. That worked and delivered really good long-term returns. And some years the team here were able to demonstrate performance better than some of the big outfits in the city. All the years weren’t so good, but we’re long-term investors. You ride the rough with the smooth.
Aoifinn Devitt: Well, great advice there, and I hear a little echo of Mr. Lambert in that wisdom there, which I certainly internalize myself. A true legend there, Eric Lambert. Yet to get him on the podcast, but hopefully someday. And then just in terms of setbacks, so obviously this trajectory you paint is very consistent, but I’m sure there are setbacks along the way that maybe were lessons learned took place. Anything you can mention there?
George Graham: Yeah, and you learn from those things. I mean, I can remember making a real mess of budget monitoring when I was a social services accountant, which caused us a real problem when we came to the end of the year. We’d overestimated income as part of the forecast for some reason, and I was feeling absolutely dreadful about it because it really was down to me. My learning from that was the conversation I had with the Deputy County Treasurer, who said to me, you feel bad enough about this anyway, I’m not going to give you a rollicking for it, but what have you learned? And that was another of those pivotal learning experiences that I hope I have applied in similar circumstances to situations where people who work for me have made mistakes. We all make mistakes, we learn about them. I think I’ve over time learned as well to become more personally resilient. I can think of times in the past when I have allowed myself to become unduly stressed, and that has probably manifested in me not being as nice a human being as I would like to be to those around me. So I think I’ve learned to recognize that in advance as it’s developing and sort of take steps. I think I’ve also found that to know my limitations And there have been occasions when I have been a square peg in a round hole, and being able to recognize that and then do something about it to avoid the stress that causes, if nothing else, is, I think, something I’ve learned from.
Aoifinn Devitt: And I do have one last question, even though you’ve laced this conversation with a lot of wisdom already. It is any word of wisdom, a creed or motto that you can leave us with. Maybe it’s something you might have given to your younger self. Something you know now, something that you, you think defines the way to enjoy a life well-lived, which I think, yeah, to date is certainly what I’m hearing.
George Graham: I think I have been lucky enough to be given lots of opportunities by people I’ve worked for, and I hope I’ve properly taken advantage of those opportunities. I suppose if I was to give my younger self some advice, it would be to make sure you do take advantage of those opportunities that you’re given, whether it’s new to work on a particular project, or whatever it happens to be. And I think that’s the sort of advice I try to give to some of the people who work for me now. And hopefully I try and give them those opportunities as well, in the way that I was given them.
Aoifinn Devitt: Well, very well said. And I think this is a long goodbye, perhaps from this role I should say only, and not a short goodbye. I want to be one of the first to note here what a giant you are, not only literally, Our audio listeners may not be aware of that, but also figuratively in the LGPS space, how much you have contributed so selflessly, so mission-driven and so purposefully and intentionally around the world of pooling. It resonated with me here, what you said about acting against your normal instincts when it comes to personality-wise, that is not only extremely difficult to do, but very courageous. And I think courage is something that comes across a lot when I think about your contributions to the industry. The courage to break the mold, the courage to be first, and more importantly, the courage to stick with the position. And that is something that we know from history is not always easy, but always critical. And you will be missed profoundly by us in the LGPS community that see you on a day-to-day basis. But I take reassurance from the fact that you are going to be engaged in other roles. So thank you so much, George, for your contribution to the history of the LGPS and its future. Most importantly.
George Graham: Thank you very much. Thank you.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal stories, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
Aoifinn Devitt: Series 5 of the 2025 50 Faces podcast is kindly supported by Diamond Hill. Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline, and client alignment. An independent active asset manager with significant employee ownership, Diamond Hill’s investment strategies include differentiated US and non-US equity, alternative long-short equity, and fixed income.
George Graham: We need more skill and expertise within pension funds if we’re going to do that. Well, getting the skill and expertise you need to manage those sorts of investments and design those sorts of investment strategies is not easy in the traditional public sector. We cannot build sustainable professional investment teams on local government salaries. It’s just a fact of life. So we need to find different ways of doing that, and pooling is one of the ways you can deliver that more sustainably. Because the pool entities are at arm’s length.
Aoifinn Devitt: I’m Aoifinn Devitt, and welcome to the 50 Faces Podcast, a podcast committed to revealing the richness and diversity of the world of investment. By focusing on its people and their stories. I’m joined today by George Graham, who’s Director and Head of Fund at South Yorkshire Pensions Authority. He has spent a long career in public service culminating in the last 8 years at SYPA, and prior to that, he spent his career in various finance roles at Oxfordshire, Northamptonshire, Chorley, Lancashire, and LPP. He is Governor and Vice-Chair of Barnsley College, as well as Independent Chair of the Local Pension Board at Lincolnshire County Council. I am catching George in the sunset of his career at the LGPS in this current role, supposed that he will be retiring at the end of this year. And he and I have had the pleasure of working together for the past 10 years since his time at Lancashire and then LPP. And we currently work together at SYPA where I sit as independent advisor. So after that long introduction, George, very welcome. Thank you for joining me today.
George Graham: Thank you. It’s good to be with you.
Aoifinn Devitt: Well, you are definitely at this point, you’ll be bashful when I say this, a legend in local government circles, and that has been rightly recognized with a recent Lifetime Achievement Award which we can link to on our show notes. But before we get into your career in local government, can you take us through how that started? Where did you grow up? What were your early interests? And how did this make itself available to you as a career?
George Graham: Well, I had a vaguely peripatetic childhood. I was born in Scotland and spent most of my childhood in North Wales and then emigrated to England to go to university. So I moved around a bit. I was always interested in history, and I think an interest in history takes you to an interest in politics and economics, and those sorts of things intend to move you into public service or local government. But the immediate cause of me ending up as a trainee accountant at Oxfordshire was the fact that when I got to my final year at university, I had absolutely no idea what I wanted to do. I knew I didn’t want to go and work as an accountant for one of the big firms, which was what most of my contemporaries were doing. My dad sent me this advert for trainee accountants at Oxfordshire. I applied and got it because, partly because it sounded interesting, partly because I was interested in local government, and the rest is history. I have been very lucky. I’ve worked for bosses who’ve been prepared to let me get on with stuff, explore stuff, sometimes make mistakes, and we learn from mistakes. We probably learn more from mistakes than we do from our successes, it has to be said. And I’ve gradually taken on different things, and I’ve been able to move from one thing to another in my career. So I, I started off after I qualified as an accountant in social services. I then went on to be a chief accountant and manage financial systems, and then to be a treasurer, and then take more of an interest in things like treasury management and financial planning. And that led to the pension fund and working on major economic development schemes and That led to an interest in local investment, and so on and so on. So it’s been a gradual accretion of knowledge, I suppose, but it all sort of stems from that, I suppose, an inquisitiveness about how things, the reasons why things happen. This happens, therefore that happens, therefore you end up with whatever it happens to be. So I I suppose, suppose that’s what it all springs from.
Aoifinn Devitt: Well, we’ll definitely get into that when we speak about pooling, as I think now it’s actually really interesting to kind of pull the lens back and look at how you think about changing systems, regimes, regimes, norms, and maybe with your interest in history and politics as well, I should say, you’ve introduced me to a lot of great political podcasts and why you, you see the changing shape as perhaps being a necessity and inevitability essentially as we seek to gain advantages of scale. Maybe just to keep that historic lens a little bit going back over the course of your career, can you speak about the evolution of local government pensions? When you started and to the present day where you see that pooling is ever greater, pooling is now the norm. Can you speak about that and how this has been necessitated?
George Graham: Yeah, I mean, I wrote about this recently and sort of reflecting back on what things were like when I started. We didn’t talk about pensions then, we talked about superannuation. You know, even the language has changed in the course of my career. But the management of the investments of the fund effectively consisted of the treasurer taking a trip down to London every 3 months or so to visit the fund managers and probably have a very nice lunch. And funds probably had a couple of balanced managers in those days. Things have moved on. Financial markets have evolved. A much wider range of products is available, and those products are much more complex. So even ignoring the benefits that you might achieve through greater scale and so on, the idea that we could manage a multi-billion pound pension fund’s investments through the treasurer spending a day every 2 or 3 months taking a trip to see the managers. It is just for the birds. We can’t do that anymore. We need to apply more intimate knowledge of how these things work to their oversight. So we need more skill and expertise within pension funds if we’re going to do that. Well, getting the skill and expertise you need to manage those sorts of investments and design those sorts of investment strategies is not easy in the traditional public sector. We cannot build sustainable professional investment teams on local government salaries. It’s just a fact of life. So we need to find different ways of doing that, and pooling is one of the ways you can deliver that more sustainably because the pool entities are at arm’s length. But that doesn’t mean that we will be without investment skill within pension funds. We need to oversee what the pools do for us. The pools are acting as our interface with the investment management industry who selling all these complicated products, and the pools are able to challenge those investment managers. In some cases, they’re capable of managing money themselves, and that is clearly a way of doing that at significantly less cost. So I think what’s evolved is— I don’t want this to sound as dismissive of what happened in the past— it would be perceived as a greater professionalization of what we do. Now, that’s not to denigrate, um, the people who were running funds in the past. Everything happens in a particular time and place, and it was late ’80s, we were in a very different time and place. I remember after the Maxwell scandal, all of a sudden every fund was rushing to appoint their first ever global custodian so that the issues caused by Maxwell dipping into the Mirror Pension Fund couldn’t happen in our local government pension fund. Now, the chances of it happening were vanishingly remote because of all the other controls that existed, but we were in a much, much more innocent time, maybe is the way to describe it, and things have moved on. The world has become much more complicated. We have to deal with that complexity. Part of the way we deal with that complexity is by trying to skill ourselves up. There’s a degree to which we can skill our own teams up, but we have to— to a degree, we need to outsource that because we can’t build our own teams. In Lancashire, I was very lucky. I had a team of genuine investment professionals who could do direct investment and could trade. And when I came to South Yorkshire just prior to pooling, we had a team who were running global equity mandates. From Barnsley and doing so fantastically well, but they were doing so without any backup resource and any resilience. And the same is true in Lancashire. Now, if you put those two teams together, and maybe with the team from a couple of other funds, you’d have created something that had the resilience and created something greater than some of its parts. And essentially, that’s what pooling has done for us. So I think we’ve seen a professionalisation, and we’ve also seen pensions become a specialism. Within local authority finance departments in a way it wasn’t back in my early days. That’s a good thing. Running the pension fund is not the same as running the finances of the council. You have very different considerations. If nothing else, you’re looking at things over a much longer timescale. Our liabilities run out 50, 60 years, if not more. That’s very different to the council treasurer who’s looking at the next 12 months if he’s lucky.
Aoifinn Devitt: And I think let’s give credit where it’s due. I think it’s a really interesting aspect, points you pointed out there, because what I think is really remarkable is that you at Lancashire saw the writing on the wall before there was writing on the wall, essentially by taking this first move with LPFA. This is when we started working together back, measure about 10 years, 2015 or so, when the discussions were maybe started even earlier perhaps. What was it that led you to see the inevitability of building scale long before it was policy or certainly mandated?
George Graham: Well, I’m not going to take credit for the original idea. The original idea came from Mike Jensen and the investment team, and they saw the ability to collaborate with others on individual deals, but they also, they recognized the unsustainability of the operating model and would there be a way of doing that differently, which would create a sustainable operating model. I think where credit it’s due, they came up with the original idea. My role was essentially working that through a political process and the process of negotiation and agreement. There were trade-offs that had to be made. I think what we ended up with worked for the partners that were involved and has achieved probably in some senses more than we might originally have expected. And that’s a good thing. It reflects one model of doing pooling. What we created between Lancashire and the LPFA reflects one way of doing pooling. There are other ways, and the fact that we ended up with 8 pools in response to George Osborne’s original invitation for a zolder pool indicates there are clearly more than— there’s clearly more than one way to do it. And there are a spectrum of views within the LGPS, all of which are extremely strongly held. And I think LPP was— when the London SIP came first, which was a response by the London funds to a perceived threat, then came LPP. And LPP was about more than just the investment side. It was about pension administration as well as investment. And that was an equally important part to it. Certainly for in us Lancashire, it was an important part of the thing because We went into that aiming to achieve benefits for Lancashire, particularly in the area of jobs and pensions administration. I think it’s fairly obvious that if you’re going to create sustainable investment teams, you’re more able to do that if they’re managing more money. You can do that through creating a function that manages through some sort of ACS— well, sorry, unitized funds. Well, so far so good. That bit of thinking is the easy bit. The difficult bit is actually getting from the thoughts to the execution, and that was somewhat painful.
Aoifinn Devitt: I lived to tell the tale, and so did you. So I think that’s certainly, I mean, probably painful doesn’t even begin to express, because that is obviously a prolonged, protracted process that is not always made easier by regulatory change in the backdrop and having to kind of repivot. But I think you’re right, certainly the direction of travel has been fairly consistent, even if sometimes the execution has varied. And I want to kind of hold that thought on the idea of the sustainable— you use the word sustainable in terms of investment team, and we’ll get back to that when it comes to the investing style moving forward. Just very quickly, you mentioned the local government just as an employer. Clearly, there’s an element of public service. What is it that drives you in this role in terms of the beneficiaries, your sense of mission, and how do you think it can be expressed to attract people into these roles, which often provide good economic regional solutions for employment?
George Graham: I tend to focus on, well, what is it that we deliver? Our average scheme member is a woman in her 40s who works part-time, who earns something between £15,000 and £20,000 a year, and will take home a pension of between £4,000 and £5,000 a year when she retires. Now, that pension, together with the state pension, is enough to put that woman assuming they’re a single person, into the sort of lowest level of the retirement living standards, which is a tool we use to gauge how much income you need in retirement. Now, keeping the lowest paid element of the UK public sector workforce out of retirement poverty strikes me as quite an important mission. I wouldn’t necessarily describe myself as someone who’s sort of mission-driven, but achieving that end goal is clearly a motivating factor. I suspect if I was to ask the people in my team who process pension benefits what their key drivers and motivations are, it’s more about the fact that I’ve got what I regard as a secure, well-paid job. And as you say, well-paid in the context of our locality is, is quite important. And I have a decent pension. And one of the reasons my dad sent me that advert all those years ago was, you want to get yourself a job with a decent pension sum. And that’s the same advice I’ve given to both my children. Don’t really care what you do, you’ll find your own route, but find something with a decent pension. One of them has done. He works in a job where he’s in our scheme. My other child, unfortunately, works in a charity, so has less generous pension provision, as it were. So I think we’re all motivated by our own things. But I mean, a part of the public sector that is actually growing simply because we have a continually growing number of members of the scheme, whether they’re pensioners or whatever, Regardless of the amount of money we put into the economy and local economy in terms of pensions we pay, and that is clearly very significant, we also put a lot of money in back into the local economy in terms of salaries we pay to our staff and, you know, the things we buy from local businesses and so on. So we do deliver that economic benefit. It’s probably not something we talk about terribly much, nor is the fact that by keeping our pensioners out of poverty, we’re reducing the call on other elements of the public purse. The typical pensioner I mentioned will not be claiming means-tested benefits. That’s a significant benefit to the public purse. So we do have that impact. We should probably talk about that more, but we should talk about the impact of everything we do far more than we do.
Aoifinn Devitt: We’re going to take a short break to hear from the sponsor of this series, Diamond Hill. I sat down with Krishna Mohanraj, International Portfolio Manager of Diamond Hill, and asked him about the current opportunity set for international investing.
Speaker C: And from our perspective, we’ve always said valuations are important, currency is important, and in both senses, international has been super attractive for a long time. So that’s kind of the backdrop today. I would say there’s only one story in town. Know, You the world seems to be coming around to accepting that there is a regime change. We are moving— we don’t know how much, but definitely away from a truly global world to a more local world. And then the question is, how does that path look like? Ups and downs. So that’s kind of more current thinking. For us, what is the true north, right? That’s the key. The true north, the philosophy for us is buy good businesses that you can understand.
Aoifinn Devitt: And now back to the show. Well, I mean, clearly SYPA has a phenomenal communications effort, and I think the other important part of what you do, not just preserving the fiscal security or financial security of the people at the lower end of the earnings spectrum, is also how you engage them about their pensions. I think that that is often something that is a mystery, is not well understood, is opaque. And I know that there are huge efforts underway to make that process more intuitive, automated, to ensure that there are fewer delays, in general, that that’s more accessible. So I suppose that’s another advance. I know we didn’t normally touch on this, but just in terms of that side of things, are you optimistic about the possibility for AI to automate, to make this process smoother?
George Graham: I tend to be a little skeptical of AI, possibly not having had much direct exposure to it, which I suspect is a symptom of age. I think yes, it will be possible, and undoubtedly automation driven by AI will enable us to improve elements of pensions processing in due course. And I think that’s great because that means we will be using our staff to do the things that only humans can. And in the context of our scheme, which is horrendously complicated and going to get more complicated. Freeing staff from the stuff that can be automated to do the stuff that requires human input will be undoubtedly a good thing. But things like pension dashboards and that sort of thing, which are partly driven by AI, they’re an increasingly necessary part of how we engage scheme members with their pensions. There’s a statistic I saw the other day, I think it was something like in the UK, the average person will have 11 different pension pots. The end of their career. It is no wonder people lose some of them. If we can do things which connect people to those pensions and enable them to make sensible decisions about how to manage those in aggregate, we will have achieved a great deal. That may mean more people consolidating various DC pension pots, transferring DC pensions into our scheme if they’ve got them. Now, that is allowed. There are limitations on that, One of the things the government might do if it wanted to encourage pension saving and so on is to bring up some of the restrictions on transfers in from DC schemes. Don’t honestly see that happening because it might have cost implications, but it would certainly be a way of helping people secure an income for the rest of their life post-retirement. DC schemes can deliver an income for life post-retirement, but only if you have sufficient savings in them. It’s very difficult to achieve sufficient savings in them to do that, certainly for people that are on average incomes.
Aoifinn Devitt: Well, before we move on to, I think, personal reflections and hearing what’s next for you, I’d love to circle back briefly to the investment side because South Yorkshire has been at the forefront of both local investing, setting bold net zero targets, and really moving the needle on sustainable investing efforts within the LGPS. So I suppose if we just take that as a given, can you— do you want to talk a little bit about what excites you now as you end the near of your tenure in this role? When you look at the investment landscape, what excites you about the opportunity for the LGPS pensions to invest?
George Graham: I think the whole local investing arena represents a fantastic opportunity for LGPS, and one that has been massively underexploited. You don’t know that investment opportunities exist until you go looking for them. We haven’t generally gone looking in our backyard. There are some honorable exceptions to that, Greater Manchester Fund being the most obvious one, but most funds haven’t gone looking for those opportunities. They are there, and you can achieve an enormous amount as well as delivering the returns that are necessary to pay pensions. I think there’s a vast opportunity there. I think we tend to focus on climate negatively. We focus on how we must reduce emissions, we must reduce emissions. Yes. I understand that, and yes, the survival of the planet— ideally we do need to reduce emissions. But the transition to a low or no carbon economy represents an enormous investment opportunity. There are new technologies that we need to have to allow us to eliminate emissions. So there’s a fantastic opportunity there. The challenge for an LGPS fund is that all of those opportunities are— tend to be in private markets, and we need liquidity. So the degree to which we can tie up our funds in ever-increasing amounts in private markets is challenging. And I think we’ve probably— certainly in South Yorkshire, we’ve probably reached the limit of what we can tie up in private markets. We might move stuff around within the total, but in terms of the broad sort of public markets-private markets divide, we’re probably at the limit, at the limits now. But we always talk in pension funds about we are long-term investors with long-term institutions. Well, The corollary of that, I suppose, is that every investment we make has to be sustainable, because an investment won’t be there for the long term if it’s not sustainable. That’s in a sense the definition of sustainability. When we talk about sustainability in the context of investments, we’re talking about investing in companies that are there for the long term. They have a sustainable business model. So if the UK has a policy that effectively bans smoking and means that it becomes increasingly illegal to sell tobacco products to people, as is the government’s intention, previous government’s intention, then that doesn’t strike me as tobacco companies having a sustainable business model. So why would we be looking to invest in? So those are debates that will, I think, flow through. But the fundamental point is all of our investments have to be sustained. Excuse me, we tend to talk about sustainability as though it’s some sort of thing that’s off to the side and is a bit trendy and sandal-wearing hippies and all that sort of thing, and it’s not. It’s it’s hard, hard capitalist economics. A business is not going to survive, it is not sustainable.
Aoifinn Devitt: 100%, and I think that obviously it’s very intertwined. What is next for you now as you bring this chapter at South Yorkshire to a close, and what would you like your legacy to be in this role? Because I don’t think your legacy with the LGPS is finished yet.
George Graham: I think the second bit first. I think the best that anybody in the sort of leadership role I’ve been doing for the last few years, best that anybody in that sort of role can hope for is to leave the organisation in a better position than they found it. And I would hope I’ve achieved that. Certainly the nice things that people have been saying to me would seem to indicate that that’s the case. We’ve just communicated the results of our triennial valuation to employers. All of our employers will be seeing a reduction in contribution rates. That’s a good way of going out. Over that time, we’ve improved customer service and so on. Lots of things are in a better place than they were. The organisation is certainly more robust and resilient than it was. That’s my legacy in that sense. I suppose that proves that the model of a single-purpose pension authority can work. What’s next? Well, more holidays. My wife is very determined that we will take more holidays, so that’s definitely on the agenda. People have been kind enough to ask me to do some pieces of advisory work, which I’m more than happy to do. And as you said, I chair Lincolnshire’s local pension board, and I’ll continue with that, and that’ll keep me engaged with the LGPS in the same way some of that advisory work will do. And I’m continuing as vice chair at our local college, which is currently going through a merger with a small specialist institution, and that merger process has some interesting pension elements to it, which will no doubt test my thought processes over the coming months.
Aoifinn Devitt: Well, now let’s move to some personal reflections, because as I said, one doesn’t come up with Lifetime Achievement Awards without putting quite a bit into an industry and, and I think taking lessons and memories out of it. So I’d love if you could just talk through some, starting with maybe your influences in this arena. Think I you mentioned having a very forward-looking investment team at Lancashire, and I would definitely share that view. But, you know, across the course of your whole career, any particular influences or mentors you can mention?
George Graham: Yeah, I mean, there are two chief executives I worked for at the same council. This was a small district council which had a very troubled history. I was part of a new management team that was appointed to help turn it around, and both of them in different ways helped, I think, shape my leadership style and helped me understand that if I was to be effective, I needed to play against type. I’m naturally something of an introvert, and in order to get the best out of teams, any sort of team, you can’t just lock yourself away in a room and put a towel over your head, which might in some cases be my default position to sit and think about stuff and come up with the answer. You need to actually sit and engage with people and be visible and acknowledge them. So rather than As one of these people said to me, every morning, George, I see you come into the town hall and you just head down the walk straight to your office and straight past the people on reception. What he said was, I want you to make sure when you come in you say good morning to those people. There’s a good manners element to that, which I hate to be thought to be rude anyway, but it’s also the human thing. We are all human beings. If you acknowledge people as human beings,, you will get more out of them and get more out of your team. So I think both of those chief executives in different ways helped shape my leadership style. I mean, I learned a phenomenal amount, phenomenal amount about investments from the investment team at Lancashire, and they forced me to think about, well, what are my rules about what I will invest in and what I won’t invest in? You know, so your sort of personal risk appetite, and helped by yourself and as an advisor and Eric Lambert, the sort of longerstanding of the investment advisors there. So I sort of came to the conclusion, well, if I can’t understand how I’m making money, then it’s not an investment for me. You know, that’s the— and there are lots of investments where it’s fairly obvious how you’re making money, but there’s some really complex transactions where it’s very difficult to see, to understand how the profit flows. And I think I suppose the other version of that is keep it simple, and that’s something that our strategy here at South Yorkshire has been for many, many years, simply because so much of the money used to be run internally before pooling, we didn’t have the resource to do really complicated stuff. We had a nice simple investment process that bought and sold shares and bonds. That worked and delivered really good long-term returns. And some years the team here were able to demonstrate performance better than some of the big outfits in the city. All the years weren’t so good, but we’re long-term investors. You ride the rough with the smooth.
Aoifinn Devitt: Well, great advice there, and I hear a little echo of Mr. Lambert in that wisdom there, which I certainly internalize myself. A true legend there, Eric Lambert. Yet to get him on the podcast, but hopefully someday. And then just in terms of setbacks, so obviously this trajectory you paint is very consistent, but I’m sure there are setbacks along the way that maybe were lessons learned took place. Anything you can mention there?
George Graham: Yeah, and you learn from those things. I mean, I can remember making a real mess of budget monitoring when I was a social services accountant, which caused us a real problem when we came to the end of the year. We’d overestimated income as part of the forecast for some reason, and I was feeling absolutely dreadful about it because it really was down to me. My learning from that was the conversation I had with the Deputy County Treasurer, who said to me, you feel bad enough about this anyway, I’m not going to give you a rollicking for it, but what have you learned? And that was another of those pivotal learning experiences that I hope I have applied in similar circumstances to situations where people who work for me have made mistakes. We all make mistakes, we learn about them. I think I’ve over time learned as well to become more personally resilient. I can think of times in the past when I have allowed myself to become unduly stressed, and that has probably manifested in me not being as nice a human being as I would like to be to those around me. So I think I’ve learned to recognize that in advance as it’s developing and sort of take steps. I think I’ve also found that to know my limitations And there have been occasions when I have been a square peg in a round hole, and being able to recognize that and then do something about it to avoid the stress that causes, if nothing else, is, I think, something I’ve learned from.
Aoifinn Devitt: And I do have one last question, even though you’ve laced this conversation with a lot of wisdom already. It is any word of wisdom, a creed or motto that you can leave us with. Maybe it’s something you might have given to your younger self. Something you know now, something that you, you think defines the way to enjoy a life well-lived, which I think, yeah, to date is certainly what I’m hearing.
George Graham: I think I have been lucky enough to be given lots of opportunities by people I’ve worked for, and I hope I’ve properly taken advantage of those opportunities. I suppose if I was to give my younger self some advice, it would be to make sure you do take advantage of those opportunities that you’re given, whether it’s new to work on a particular project, or whatever it happens to be. And I think that’s the sort of advice I try to give to some of the people who work for me now. And hopefully I try and give them those opportunities as well, in the way that I was given them.
Aoifinn Devitt: Well, very well said. And I think this is a long goodbye, perhaps from this role I should say only, and not a short goodbye. I want to be one of the first to note here what a giant you are, not only literally, Our audio listeners may not be aware of that, but also figuratively in the LGPS space, how much you have contributed so selflessly, so mission-driven and so purposefully and intentionally around the world of pooling. It resonated with me here, what you said about acting against your normal instincts when it comes to personality-wise, that is not only extremely difficult to do, but very courageous. And I think courage is something that comes across a lot when I think about your contributions to the industry. The courage to break the mold, the courage to be first, and more importantly, the courage to stick with the position. And that is something that we know from history is not always easy, but always critical. And you will be missed profoundly by us in the LGPS community that see you on a day-to-day basis. But I take reassurance from the fact that you are going to be engaged in other roles. So thank you so much, George, for your contribution to the history of the LGPS and its future. Most importantly.
George Graham: Thank you very much. Thank you.
Aoifinn Devitt: I’m Aoifinn Devitt. Thank you for listening to the 50 Faces podcast. If you liked what you heard and would like to tune in to hear more inspiring investors and their personal stories, please subscribe on Apple Podcasts or wherever you get your podcasts. This podcast is for informational purposes only and should not be construed as investment advice, and all views are personal and should not be attributed to the organizations and affiliations of the host or any guest.
