Three local government funds have made a joint custodian appointment using the newly established National LGPS Framework agreement, saving around £1.5m (€1.8m) through collaboration.
The framework, which was set up by local government funds in order help reduce procurement costs, and negotiate better deal for funds, went live for custodian services at the start of 2014.
Suffolk Pension Fund and London’s Hackney Pension Fund joined Norfolk, which led the creation of framework agreements for the LGPS in 2012.
Jointly, the funds appointed HSBC Securities to act as global custodian for the combined £5.2bn in assets.
The funds said the combined contract, negotiated through the framework, would save £1.25m over the contract period, and £250,000 in procurement costs.
Each scheme, however, retains a separate contract with HSBC defined to the particular requirements.
Jill Davy, head of financial services at London Borough of Hackney council, said: “Working together has delivered a great value for money outcome for each of our funds, but wider benefits for each of us also as we shared our ideas and experience to help identify the right solution for each of us.”
The framework, which was originally set up in 2012, allows local government funds to reduce the procurement process, still comply with European legislation, but leverage better pricing through collaboration, and the use of a price ceiling.
It covers actuarial, benefit and investment consultancy services, global custody, and from the end of this year, legal services.
This is real collaboration in action, already delivering significant savings and benefits for the LGPS. The achieved and potential savings are very significant,” said Nicola Mark, head of Norfolk Pension Fund and chair of the framework.
Six custodians were appointed to the framework for services in November 2013, and alongside HSBC are BNP Paribas, BNY Mellon, JP Morgan, Northern Trust and State Street.
The original framework was jointly created by seven local authority funds , but remains open to all LGPS funds.