Local Pensions Partnership’s investment manager has saved its local government pension scheme (LGPS) clients £74m (€86m) since the asset pooling company was launched in 2016, it said today.
It said £28.2m in costs had been saved in the year to March 2021, and that it was on track to deliver £468m in cost savings by 2035. It said its forecasts were based on no less than £28.2m annual savings to 2035.
As of the end of September, Local Pensions Partnership Investments (LPPI) manages £22.1bn of pension assets.
It said the money it has saved clients had come through economies of scale its pooling model had created, “allowing access to more cost-effective assets in private markets, increasing buying power to negotiate fund manager discounts, and internal management”.
LPPI has launched eight investment funds covering most asset classes, including equities, fixed income and infrastructure. Most client assets have been transitioned into the in-house funds and where this is not possible, assets are still managed by the LPPI team as part of the whole portfolio.
LPPI currently manages over half of the LPPI Global Equities Fund in house. The company also invests client assets directly in infrastructure through the LPPI Infrastructure Fund and via GLIL Infrastructure.
Chris Rule, chief executive officer of LPPI and LPP Group, said: “The value of pooling stretches far beyond cost reductions, but these figures are strong evidence for the success of pooling, and its long-term future as a vehicle for paying public sector pensions.”
LPPI is only the latest asset pooling entity to announce its cost savings and hail the power of pooling more broadly, for example in a responsible investment context. The government mandated pooling of LGPS assets in 2015 and is expected to consult on a new framework for LGPS pools by the end of the year.
In the summer Border to Coast Pensions Partnership said it was on track to deliver more than £250m of cumulative net savings in the first 15 years. It is not entirely clear by which calendar year this would be, but Border to Coast said it was established in 2018, so the first 15 years could mean the period to 2033.
Earlier this year Brunel Pension Partnership said it expected annual savings of over £34m by 2025.
LPP is a collaboration between the Lancashire County Council and London Pension Funds Authority, with Royal County of Berkshire’s pension fund assets also managed by LPPI.