LGPS Central saves Midlands local government schemes £42.8m

Local Government Pension Scheme (LGPS) Central, which manages the pooled assets of eight Midlands-based LGPS funds, has saved £42.8m in net investment cost savings to date for the partner funds, according to its 2021/22 annual report.

It now has a total of £28.5bn of pooled assets under its stewardship, which translates into 51.6 per cent of the eight funds' £55bn worth of total assets under management (AUM). In March last year, the figure was 44.8 per cent.

Pooled products as a percentage of total partner fund AUM represented 34.7 per cent, while AUM under discretionary and advisory agreements stood at a further 16.9 per cent.

Annual net investment cost savings for LGPS Central's partner funds are now positive and accelerating with an anticipated cumulative breakeven point sometime between 2023 and 2024.

With more funds in the pipeline, LGPS Central remains on track to deliver net cost savings in excess of £250m for the eight funds by 2034.

The company has seen additional contributions into pooled vehicles from its partner funds, including a commitment of £2.9bn during the year to newly launched private market funds.

Since March 2022, LGPS Central has launched a £1bn global sustainable equity fund, with commitments from four of its partner funds. More products are in the pipeline including private debt, property and targeted return funds.

Responsible investment remained a dominant theme throughout the year for LGPS Central, with a confirmed commitment to net zero, market-leading climate reporting, an active role at COP26 and retention of the eight funds' proprietary Responsible Investment Integrated Status (RIIS) across all products.

"Engagement remains an important part of the LGPS Central strategy, especially on matters of climate change, deforestation, plastic pollution, and human rights," it said in its report.

LGPS Central chief executive, Mike Weston said, "We have continued to build on the strong foundations of the company, ensuring we deliver on our promises to our partner funds and their scheme members. We continue to progress our mandate of encouraging further transitions to the pool and the savings that brings.

“I have a firm belief that our potential benefit to our partner funds should go beyond purely economy of scale savings, by drawing together individuals with the depth and breadth of skills that we have, will see us drive positive investment performance over the long term."

LGPS Central's partner funds are the Cheshire Pension Fund, Derbyshire Pension Fund, Leicestershire Pension Fund, Nottinghamshire Pension Fund, Shropshire Pension Fund, Staffordshire Pension Fund, West Midlands Pension Fund, and Worcestershire Pension Fund.

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