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First stage of ground-breaking pension partnership launches

05 December 2014

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Lancashire County Pension Fund and the London Pensions Fund Authority have announced the first stage in the development of a ground-breaking Asset and Liability Management Partnership.

Each pension fund retains its separate identity and local accountability, while remaining part of the ALM partnership.

Chairman of the London Pensions Fund Authority Edi Truell, said: "We firmly believe that large scale Asset and Liability Management Partnerships are the best way to deal with the challenges faced by UK pension funds."
"We are delighted to be working on the development of this partnership and believe, with a greater pool of assets, both pension funds will gain access to a wider range of investments," he added.

The central proposal of the partnership is to create a commonly managed, jointly invested pool of assets overseen by an FCA-registered entity created by the two pension funds.

This will provide the benefits of investment scale and ensure that industry-leading standards of governance will be achieved and maintained through the FCA registered vehicle.

The partnership will build on existing expertise and increase co-operation and collaboration between the pension funds.

It will put into practice the views expressed by both pension funds in their responses to central government on the reform of the Local Government Pension Scheme.

It could also ultimately cover all areas of activity involved in the running of the pension funds, including pension administration.

Cllr Jennifer Mein, leader of Lancashire County Council, said: "Taking a more proactive approach to managing the assets and liabilities of the Lancashire County Pension Fund has really paid off in recent years and this new partnership will enable us to build on the expertise we have developed."

Both funds have a track record of innovation in a number of areas.

London Pensions Fund Authority has been a pioneer in first assessing and managing its liabilities before concerning itself with assets, producing lower risk improvements in its funding ratio.

It has also pioneered direct public equity investing and the use of synthetic exposures to optimise market exposure.

Lancashire County Pension Fund has won two Local Government Chronical Investment Award for quality of service for administration in the last five years, along with the British Renewable Energy Association's Pioneer Award for its innovative funding of a solar farm in Wiltshire.

"Facing the challenges of supporting an ageing population, the government should be using the good practice of funds like our own and the London Pension Fund Authority to drive up the performance of the Local Government Pension Scheme, rather than dumbing down to the average," said Cllr Jennifer Mein, from Lancashire County Council.

First published 05.12.2014