A group of seven U.K. local government pension schemes will invest £6.5 billion ($9.8 billion) in pooled passive strategies run by Legal & General Investment Management, said Sam Gervaise-Jones, head of client consulting for the U.K. and Ireland at bfinance, the group’s consultant.
The seven English pension funds are Cheshire Pension Fund, Chester; Leicestershire County Council Pension Fund, Leicester; Nottinghamshire County Council, Nottingham; Shropshire County Pension Fund, Shrewsbury; Staffordshire County Council Pension Fund, Stafford; Warwickshire County Council Pension Fund, Warwick; and Worcestershire County Council Pension Fund, Worcester.
While specific strategy information was not available, the hire encompasses developed markets equities, emerging markets equities, gilts, credit and some non-market-cap-weighted equities, Mr. Gervaise-Jones said in an e-mail.
Each pension fund is contributing the entirety of its externally managed passive strategies to the pooled arrangements, Mr. Gervaise-Jones said. Existing passive managers have been informed, and transitions to LGIM are expected to take place shortly. The names of the managers could not be learned by press time.
The group of LGPS funds began talking early in the summer, Mr. Gervaise-Jones said, and in August, issued a search for a consultant. The hired consultant, bfinance, released an RFP to prospective money managers in mid-September, he said.
A “conservative estimate” indicated the group could reap cost savings of 50% through the new arrangement. Mr. Gervaise-Jones said figures were not available, but the calculation was made by the group.
“Joining forces with other pension funds has enabled us to unlock significant savings and gives clear and tangible evidence of what can be achieved if LGPS funds are willing to work together and collaborate as equals,” said a spokesman for the pension fund group, in a bfinance news release.