Seven UK public pensions have appointed Legal & General Investment Management (LGIM) to run £6.5 billion ($9.8 billion) in passive and smart beta mandates collectively.
“Joining forces has enabled us to unlock significant savings and gives clear and tangible evidence of what can be achieved.”The pensions for the counties of Cheshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, Warwickshire, and Worcestershire have agreed to pool resources in line with wider plans set out by the UK government to run public pensions more efficiently.
A statement issued by consultant Bfinance, which advised on the agreement, claimed the collaboration would create fee savings of more than 50%. LGIM will manage passive equity, passive fixed income, and smart beta pooled funds for UK and global assets.
“Joining forces… has enabled us to unlock significant savings and gives clear and tangible evidence of what can be achieved if local government pension scheme funds are willing to work together and collaborate as equals,” said a spokesperson for the seven pensions.
LGIM already runs roughly £3.9 billion in passive mandates for some of the pensions involved in the deal, the fund manager said in a statement. In total, the seven funds have more than £20 billion in assets.
This is the latest pooled project to be announced, following plans by Welsh pensions to combine their passive investments. LGIM currently manages such mandates for several public funds in Wales.
The London CIV—the collaborative venture backed by all 33 public pensions in the UK capital city—also this month announced its first funds.
Those deals come after the government set out its plans last week to dial back investment rules for local government funds, allowing them more flexibility to allocate and collaborate.
It also proposed “backstop” rules for pensions that did not participate in collaborative projects, which could include the Department for Communities and Local Government stepping in to take over responsibility for investment decisions.
Related: UK Government Said to Target £30B Public Asset Pools & £10B UK Pension Partnership Gets Green Light