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London and West Midlands schemes in talks

UK – The London Pensions Fund Authority says it has had discussions with the West Midlands Pensions Fund on possible “partnership arrangements” that would serve their mutual interests.

“Discussions have been held with West Midlands Pensions Fund to investigate partnership arrangements which would serve our mutual interests in developing the efficiency and quality of the administration,” the 2.8 billion-pounds (four billion-euro) LPFA said.

“A number of ideas have emerged (e.g. on annual benefits statements), exchange visits have been organised, and practical initiatives are being taken forward in 2004-05.”

The scheme added in its 2003-04 annual report that it is working with the Transport for London scheme to “identify joint working possibilities”.

LPFA also said that it won five-year pensions administration contracts at the London boroughs of Hammersmith & Fulham and Brent. It has other deals with Westminster, Hackney and Bexley.

The scheme disclosed that the growth in scheme membership has slowed recently “with some significant employers switching to the Civil Service scheme”. Total fund membership has risen to 73,572.

The scheme’s strategic policy is to allocate around 15% of its active sub-fund away form equities and into alternative assets. Investments include property unit trusts, private equity funds and private finance initiative.

But it said: “The move to alternative investments has to have any significant impact on investment returns.”

Scheme chairman Neil Newton said: “There is no doubt that the pressure on investment performance will increase as the current triennial investment exercise will undoubtedly lead to increases in employer contribution rates.”

He added that the investment performance of its two active managers had been “patchy”. The scheme has hired Philip Jones to the investment team and Newton said he has “already made a significant impact on the board’s ability to engage in more depth with our external managers”.

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