The eight local government pension schemes in Wales might begin a search in November for a single passive equity and fixed-income manager to run a total of £3 billion ($4.7 billion) for a common investment pool.
One of those pension funds, the £1.4 billion City and County of Swansea Pension Fund, will vote whether to join the other seven pension funds, in a pension fund committee meeting Thursday, according to a committee agenda provided by a pension fund spokesman.
Currently, those £3 billion in passive assets are managed by three managers across 18 mandates, according to the agenda. A search could be launched in November and a hire could be made in April 2016 assuming “the Clwyd (Pension) Fund launches the search for a consultant (in) early October” the agenda said.
The Society of Welsh Treasurers first commissioned Mercer to write a report on the cost and administrative benefits of pooling certain investment portfolios among the eight funds, and in May, Mercer recommended pooling the £3 billion in passive assets.
The agenda said “analysis showed there is a disparity of fees between managers and mandates leading to the assumption that immediate savings could be made if one provider was appointed.”
On July 31, the pension funds' investment officers, including Swansea's, agreed to the search to provide fee savings as well as “the appointment of a third party to facilitate the procurement and provide expert advice, the costs to be split equally, which will be sourced via the Clwyd Fund's consultant framework.”
Philip Latham, manager of the £1.2 billion Clwyd Pension Fund, could not be reached for further information by press time.