LGPS Central, the pooling company for eight local authority pension funds in the Midlands, has formally taken over the oversight of passive mandates worth a combined £11bn.
The mandates were previously overseen by the pool’s partner funds, but have been centralised amid a government push to accelerate pooling of assets.
The investments are managed by Legal & General Investment Management (LGIM), with LGPS Central now responsible for the oversight and stewardship of the mandates through a “pass through” arrangement.
This means that LGPS Central also has responsibility for governance and sustainability issues relating to underlying investments. It will vote on company issues on behalf of its partner LGPS funds in line with a unified agreement.
Richard Law-Deeks, chief executive officer at LGPS Central, said: “The agreement represents a significant advancement in our assets under stewardship, supporting partner funds in building on the historic joint procurement. This collaboration sets a benchmark for stewardship and cost-effective management.
“It amplifies our impact and ensures a unified approach to governance across all partner funds.”
The LGIM arrangement was established before LGPS Central was set up in 2016 by six of the pool’s partner funds. The remaining two also appointed the asset manager to run passive mandates after the pool was established.
The additional mandates mean LGPS Central now runs more than £43bn on behalf of eight funds: Cheshire, Derbyshire, Leicestershire, Nottinghamshire, Shropshire, Staffordshire, West Midlands and Worcestershire. Of this, £23bn is in passive mandates either run internally or outsourced to external managers.
The development comes as the LGPS is facing serious pressure from central government to accelerate pooling and enhance the services that the pools offer.
