Brunel Pension Partnership exceeds pooling aims as it explores options

Brunel Pension Partnership has claimed it has “exceeded” the initial aims of pooling, and it exploring other options after the UK government’s invitation for the pool’s partner funds to seek an alternative pooling arrangement.

Last November the government put forward a package of ambitious “megafund” proposals to reform the structure, investment and governance of the local government pension scheme (LGPS) in England and Wales, saying it wanted all individual pension funds’ assets to be transferred to pools and for these to have internal management capabilities, regulated by the Financial Conduct Authority (FCA).

The eight UK investment pools and the rest of the pensions industry had until mid-January to respond to the government’s consultation. By the beginning of March the pools, working with their partner pension funds, had to deliver a report setting out how they intend to meet the government’s proposed requirements.

The ministers have since then met with their pools to discuss their proposals. Six out of the eight LGPS pools have been given the go-ahead for their proposals. ACCESS and Brunel were told their proposals did not make the cut and that they would need to merge with another pool instead of pursuing their individual transition plans.

Brunel said it is now working with partner funds to consider options for the next stage in its evaluation.

It said that as a company and as a pool it has engaged with the government throughout the consolidation consultation process. Brunel said it advocated for a process for considering pool mergers that was transparent, fair, evidence-led and fully costed.

Brunel claims it is in a “strong position” to find a solution that continues to benefit its partner funds and members.

It highlighted that since the pooling was initiated, it is almost 90% transitioned with more than £35bn in assets under management and has already met several of the government’s pooling targets and priorities ahead of schedule.

These include:

• cost savings of £46m per year by 2023/4 – ahead of original aim of £43m by 2025;
• provision of portfolios across multiple asset classes, including five private markets asset classes;
• 32% of all pooled AUM invested in the UK at the end of Q1 2024;
• more than 30% of all client assets in private markets, including commitments, of which more than £4.3bn is in UK assets;
• “private fund” allocation greater than three times the reported Mansion House Compact 2.0 10% target, five years before the government’s target date;
• UK private fund allocation two times the government’s reported 5% mandated minimum, despite the lack of a target UK allocation in initial pooling guidelines.

As a result, Brunel claims it “did not simply meet the initial aims of pooling: we exceeded those aims” and rejected any suggestion that weakness as a pool explains the government’s recent invitation for Brunel’s partner funds to seek an alternative pooling arrangement.

Claiming to be one of the most transitioned pools, Brunel said it will continue to embrace the evolution and change for the next stage of pooling.

It added that it will be led through the process by its partner funds, and will continue to seek engagement with the Ministry of Housing, Communities and Local Government and the Treasury as it plans next steps.

Laura Chappell, chief executive officer of Brunel, said: “Our partnership is highly respected among LGPS pools and throughout the pensions sector, while our leadership on responsible investment gives us clout across the broader financial industry.

“The pool we have built has delivered on the original aims of pooling ahead of schedule for our partner funds and their members.

“As we look to the next stage of pooling, it is crucial that we continue to build on this progress.”

Mark Gayler, client group chair at Brunel, added: “We know that our success has come from the strength of working together in partnership. We are exploring options to harness that strength for the future, so that our impact and influence can continue.”

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