At the Conservative Party conference last October, chancellor George Osborne first called for the assets of the 89 Local Government Pension Scheme funds in England and Wales to be merged into six wealth funds, each containing at least £25bn of scheme assets.
Following the November Spending Review, the government told administering authorities that they would have to suggest initial pooling proposals by today.
Among the schemes is a £35bn pool of eight LGPS schemes across the Midlands, the ACCESS (A Collaboration of Central, Eastern and Southern Shires) group of eight confirmed funds, and the common investment vehicle being developed by London boroughs.
Proposals also include a South West pool, one covering Welsh LGPS funds, and a scheme called “Border to Coast”.
It has been revealed today that the so-called Northern Powerhouse pool, covering Greater Manchester Pension Fund, Merseyside and West Yorkshire funds, will to join an asset pooling arrangement already confirmed by the London Pension Fund Authority and the Lancashire County Pension Fund.
It had been thought these schemes would be submitted separately, but confirming its plans today, LPFA said letters of intent having been exchanged with these authorities.
“Given the timescale, discussions are at an early stage, but the next steps between now and July [the deadline for final plans] are for all participants to develop a proposal around how the pooling arrangement will work and meet the government’s criteria. All parties anticipate the discussions reaching a successful conclusion,” it said in a statement.
Discussions with other funds have also been ongoing, LPFA’s statement revealed, either for a full asset liability management partnership or direct investment in infrastructure. For example, the Royal County of Berkshire Pension Fund has indicated this pool would be their preferred route, and LPFA now hope to include Berkshire in these discussions. However, it does not anticipate that any of these discussions can be concluded within today’s deadline.
Under government plans, the new pools should be in place from April 2018.
