Home ListingNovember 23, 2015

London Pensions Confirm First Pooled Fund Launch

The 33 local authorities could combine as much as £6 billion by the end of March 2016.

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London’s local authority pensions have received regulatory approval for their pooled funding vehicle and will launch their first sub-fund within the next four weeks.

“Throughout next year and beyond we will be opening more sub-funds covering the full spectrum of asset classes in response to the boroughs’ needs.”Three pensions have pooled money to back a global equities fund, to be run by Allianz Global Investors and set to be launched before Christmas.

In a statement released today, the London Collective Investment Vehicle (CIV) confirmed it had been fully authorised as an investment entity by the UK’s regulator, the Financial Conduct Authority.

A further eight sub-funds will be opened by the end of March 2016, said Hugh Grover, the London CIV’s chief executive. This would bring the CIV’s total assets to roughly £6 billion ($9.1 billion) as it aims to cater for all major asset classes.

The CIV is backed by all 32 London public pensions, as well as the Corporation of London, and will be available to other local authority funds once it is fully established.

“It has been a real privilege to be leading this ground-breaking project on behalf of the London boroughs,” Grover said. “Overall the boroughs have some £25 billion of assets and throughout next year and beyond we will be opening more sub-funds covering the full spectrum of asset classes in response to the boroughs’ needs.”

“London local government has been leading the way in developing proposals for greater collaboration across the local government pension schemes,” added Mayor Jules Pipe, chair of London Councils. “I am extremely proud of what has been achieved by everyone involved in setting up London CIV, which is already delivering significant financial benefits for the boroughs, the pension scheme members and local taxpayers.”

The CIV was established under the UK’s new authorised contractual scheme rules, allowing tax-efficient investment funds to be domiciled in the UK.

UK Chancellor George Osborne is pushing the country’s public pensions towards pooling their assets and has targeted collaborative vehicles of £25 billion to £30 billion. Primarily, he wants these pooled assets to be available for infrastructure investment, but the Treasury currently has little power to force investment in specific asset classes.

However, several pensions have expressed interest in accessing infrastructure and other alternative asset classes, which is made easier through scaling up assets.