Brunel Pension Partnership not only met the government’s initial aims of pooling, but exceeded them and was a trailblazer in responsible investment, the local government pension scheme pool said in a news release as it moved to communicate with the industry that it is exploring options for the future alongside its member funds.
The communication follows the U.K. government’s rejection of the pool’s proposed business case under its Fit for the Future review, launched earlier this year. Brunel, like the other LGPS pools, responded to a call for evidence, a consultation and a business plan request from the government, receiving a response that its proposals did not meet the government's vision for the future of the roughly £360 billion ($470.9 billion) sector.
Instead, the roughly £35 billion pension pool’s 10 member funds — which are all based in southwest England — have been invited to pursue mergers either individually or as a pool. It is up to the member funds to decide how they will proceed.
Essex, England-based £52 billion pension pool ACCESS in the southeast of the country was also told that its member funds should look for other mergers, with its plans to launch a Financial Conduct Authority-authorized investment company going unsupported by the government.
In setting out a strong resume outlining its successes and how it has met and, in some cases, exceeded expectations originally set out by the government when pooling was first floated about a decade ago, Brunel said the pool and its peers “are very aware of our considerable progress and strengths as a pool, across client transitions, governance, cost efficiencies and value for money, asset class range, and responsible investment. We believe these place us in a strong position to find a solution that continues to benefit our partner funds and their members.”
Almost 90% of the member pension funds’ assets have been transitioned to management under the auspices of the pool, the release said, while Brunel has also already met a number of the government’s pooling targets and priorities ahead of schedule. It provides subfunds across multiple asset classes, including five private markets strategies, and more than 30% of all client assets that are pooled and nonpooled are committed to alternatives, of which more than £4.3 billion are invested in U.K. assets. That private markets allocation is already more than three times the expected 10% target that sources expect the government to encourage from U.K. pension funds by 2030.
Regarding responsible investment, Brunel said it was a pioneer of Paris Agreement-aligned passive indexes.
“In short, we did not simply meet the initial aims of pooling; we exceeded those aims and blazed a trail in responsible investment across the global asset owner space,” Brunel said.
The release went on to state that “for these reasons, we strongly reject any suggestion that weaknesses as a pool explain the government’s recent invitation to Brunel’s partner funds to seek an alternative pooling arrangement.”
The pool will continue to work with member funds and engage with the government and His Majesty’s Treasury as it plans for its next steps.
“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,” CEO Laura Chappell said in the release. “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.”
The release also included testimonials from a number of Brunel’s external asset managers and the chair of its client group.
