New pension pool emerges

Another local government pension fund pooling partnership is emerging, with potential members spread across the length of England and Wales.

Three funds in Cumbria, Surrey, and East Riding are already in advanced discussions about teaming up to jointly manage joint assets worth £9bn.

And Room151 understands that the councils this week held talks with a number of other funds interested in joining, which would take the multi-asset pool over the £20bn minimum indicated as a minimum requirement by the Treasury.

At the beginning of October the chancellor George Osborne told the Conservative Party conference of his intention to create six wealth funds out of the 89 LGPS funds there are across local government.

Phil Triggs, strategic finance manager of pensions and treasury at Surrey County Council, told Room151: “We are hoping to join up with a number of funds which have a similar philosophy to us and good, strong governance, and which have a record of outperforming benchmark returns.

“The geographical spread of the partners make this a compelling proposition”

He said that the partnership would look to take advantage of the internal investment management capability possessed by the East Riding fund, and that active management would be a key part of the proposal.

Triggs would not be drawn on the scale of expected cost savings, but said that they would come from the rationalisation of existing deals with external fund managers, and the renegotiation of fees.

The councils are being advised by financial manager Mercer, and will respond to the expected government consultation on pooling, which is expected later this month.

The sovereignty of the pension funds involved will remain, Triggs said, but the intention is to develop a collaborative approach to pooling the investments of the funds.

Councillor Mel Worth, chairman of Cumbria Pension Fund said:  “The speed in which we have managed to move towards developing a solution to pool assets speaks volumes about the similarities of the funds, but more crucially about the desire of those involved to collaborate and make this a success.

“I look forward to working more closely with our partners over the coming months and to welcoming any others who have similar aims and philosophies and may wish to join us and help to finalise our proposal to Government”.

Last month, eight local government pension funds in South West England announced they were pursuing plans to create a collective investment.

London councils are also on the verge of creating a CIV which is already above the Treasury threshold.