LGPS countdown continues with seven pools in the running

Uncommitted local government pension funds are mulling seven different emerging investment pools, with Lincolnshire the latest to announce its preference.

Last year, chancellor George Osborne indicated that he would like to see six pools, each of around £25bn, in order to reduce management fees across the sector.

And with just over a month until councils have to submit initial indications for the shape of the new pools, many funds have yet to make up their minds over which way to jump.

This week, Lincolnshire Pension Fund voted to partner with the Border to Coast Pensions pool, founded by East Riding, Cumbria, Surrey and Warwickshire.

A report to councillors said: “The draft investment principles that have been drawn up are aligned to Lincolnshire’s principles.

“This is seen as the most suitable pool for Lincolnshire to join.

“Given the work that has already been undertaken, and that which is planned over the coming weeks, this pool will be able to submit a considered and ‘suitably ambitious’ proposal in time for the Government’s deadline.”

Lincolnshire’s participation in the fund would push the total value of committed investments to around £12bn, some way short of the chancellor’s target.

However, a number of funds contacted by Room151 said they were still in conversations with a number of the proposed pools.

Paul Campbell, head of investments and treasury management at Teesside Pension Fund, said: “We are talking to Borders to Coast and another fund and are keeping an open mind at the moment.”

Julie Edwards, pensions & investments manager at Buckinghamshire Pension Fund said: “We are still working on this and haven’t ruled anything in or out.”

Meanwhile, Paul Tysoe, ‎investment and fund accounting manager at LGSS Pension Services, said he was confident that the ACCESS pool, covering central, eastern and southern shires, would reach the £25bn benchmark.

He said: “We are in conversations with a number of councils, but some are more committed than others at the moment.”

It remains unclear whether the existing £10bn tie-up between Lancashire Pension Fund and the London Pension Funds Authority, will form the basis of an eighth pool or team up with one of the others.

George Graham, director of the Lancashire fund, said:   “We are having discussions with a number of the funds, some of which have announced they are in a pool.

“We have already done all the legal work for our joint pool with LPFA, so have an infrastructure that is in place for other funds to make use of.”

The following is a provisional list of the emerging LGPS pools and their potential values. Details are subject to change.

Northern Powerhouse: £40billion
West Yorkshire, Greater Manchester, Merseyside (plus unnamed smaller funds)

Midlands – £35bn
Cheshire, Derbyshire County Council, Nottinghamshire County Council, Shropshire, Staffordshire, West Midlands ITA, West Midlands Pension Fund and Worcestershire.

ACCESS – £25bn+
Central Eastern and Southern Shires including Northamptonshire, Cambridgeshire, Essex, Norfolk, Isle of Wight.

London CIV £25bn

South West – £20bn
Avon, Cornwall, Devon, Dorset, The Environment Agency, Gloucester, Somerset and Wiltshire, plus Oxfordshire

Border to coast £13bn-£32bn
Cumbria, East Riding, Surrey, Warwickshire, Lincolnshire plus others in discussion

Welsh funds £13bn
Carmarthenshire, Cardiff, Flintshire, Gwynedd, Powys, Rhonda Cynon Taff, Swansea, Torfaen.

LPFA/Lancashire £10bn