The 10 UK local government pension funds that will form the Brunel Pension Partnership will initially pool assets in 22 portfolios, according to highlights from the grouping’s recent submission to the government.
The local government pension scheme (LGPS) asset pools that are being formed had a 15 July deadline to submit pooling proposals to the government.
A team from the project to form the Brunel partnership met with a panel of government officials and independent experts a month before the deadline and was given the thumbs-up to proceed along the lines they had been pursuing.
Meetings with a government overview panel were due to be held for each asset pool being proposed by the local government pension schemes, according to a document from the Brunel partnership.
The partnership’s proposal shows that the 10 funds* involved will initially pool assets across 22 portfolios.
This would appear to be a considerable consolidation of portfolios across the participating funds.
Each fund will retain decisions over its asset allocation, while the choice of underlying fund managers and structure of the portfolios will be made by the Brunel Company, a regulated company to be established by the Brunel partnership.
The participating funds envisage that the pooling of assets will achieve net savings of £13m (€16m) per year by 2021, with the potential to increase to £70m per year in the longer term.
The £13m of projected net savings exceeds base asset management fees at at least one of the funds in the Brunel partnership, with the Environment Agency Pension Fund (EAPF), for example, reporting £10.2m of base fees for fund managers for the financial year ending 31 March.
The next step for Project Brunel is to develop a full business case and establish the Brunel Company, with authorisation by the Financial Conduct Authority targeted for March 2018 at the latest.
“We expect a further confirmation from the government in October that they are ‘content we continue’ with our proposal,” said the Brunel partnership in an update.
“Meanwhile, we continue to push ahead in developing the project.”