Welsh local government pension schemes (LGPS) are set to launch a tender for a third-party provider for a tax-transparent fund to house the emerging £12.8bn (€17.4bn) asset pool.
The eight* pension funds plan to select an outside company to provide the Authorised Contractual Scheme (ACS), but have not ruled out in future “designing and building” their own regulated operator.
The formal decision to appoint a third party operator was originally taken by the Welsh funds in September 2015, and was “revisited and re-confirmed” by the Wales Pool earlier this year, according to the pooling proposal the group submitted to the UK government in July, as per the deadline set by the Department for Communities and Local Government (DCLG).
The local authorities administering the schemes are currently considering the scope and specification of the services that will be required of the third party operator, and will decide on this as part of the selection process.
It has for the time being informed the market of its intentions, publishing a prior information notice on government procurement portals to help identify potential candidates, and gather further details on the services it should require from operators.
In its July submission to the government, the pool stated that the operator will be responsible for managing and operating the asset pool, including selecting and contracting with investment managers for the funds in which the assets of the eight participating schemes will be invested.
However, the pool said it anticipates working closely with the operator of the ACS – a collective, tax transparent investment vehicle – and the sub-investment funds.
The eight pension funds participating in the pool have £12.8bn of assets between them, as at March 2015. They aim to hold 95% of their assets within the pool by April 2021, and to have pooled all their assets by April 2030.
The funds have already appointed a single asset manager for their passively managed equity and bond holdings, having in April announced the selection of BlackRock following a joint procurement exercise.
The London CIV, comprising all of the capital’s LGPS, appointed Northern Trust as its ACS provider in January 2015.
*The eight schemes (and their administering authorities): Cardiff and Vale of Glamorgan Pension Fund (Cardiff), City and County of Swansea Pension Fund, Clwyd Pension Fund (Flintshire), Dyfed Pension Fund (Carmarthenshire), Greater Gwent Pension Fund (Torfaen), Gwynedd Pension Fund, Powys Pension Fund and Rhondda Cynon Taf Pension Fund.