On the go: The Local Pensions Partnership has announced it made £28.2m in cost savings for clients in the year to March 2021, bringing the overall total savings to £74m since inception in 2016.
The pool, which oversees £22.1bn on behalf of the London Pensions Fund Authority, the Lancashire County Council Pension Fund, and the Royal County of Berkshire Pension Fund, revealed that these savings put it on track to deliver cost savings of more than £186m by 2025, £327m by 2030 and £468m by 2035.
The money saved has come through the economies of scale that LPP’s pooling model has created, including allowing access to more cost-effective assets in private markets, increasing buying power to negotiate fund manager discounts, and internal management.
LPP manages more than half of its global equities in-house, and its plan is to incrementally grow its in-house investment team. The pool also invests client assets directly in infrastructure through its Infrastructure Fund and via GLIL Infrastructure.
Clients have also benefited from long-term benchmark-beating investment performance. Excess returns have the potential to provide benefits that amount to several multiples of the cost savings.
Chris Rule, chief executive of LPP, said: “The value of pooling stretches far beyond cost reductions, but these figures are strong evidence for the success of pooling and its long-term future as a vehicle for paying public sector pensions.”
He continued: “A key part of our model is internally managing the assets and offering a tailored range of investment options to support strategic asset allocation as we help clients manage their liabilities, which stretch out into the very long term.”
Separately, LPP has announced its commitment to net zero greenhouse gas emissions by 2050 and will set an interim target for 2030.
The commitment by the pool recognises the risks and opportunities that climate change poses to its clients, and the role it needs to play in helping all stakeholders navigate the challenges they face to effectively manage transition risks and maintain the returns required to meet their liabilities.
As a member of the Institutional Investors Group on Climate Change, LPP will be informed by the IIGCC’s Net Zero Investment Framework and intends to become a signatory to the Net Zero Asset Managers initiative later this year.
Rule commented: “As a manager of large, globally diversified portfolios on behalf of our pension fund partners, we will leverage our scale and influence to ensure we are able to assist our clients to meet their investment objectives, while contributing in a meaningful way to the transition to a low-carbon economy and a sustainable climate for the future.
“Net zero by 2050 is an ambitious goal — not least as we all seek better data. We believe it is most likely to be achieved if we collaborate, including with our clients, peers and suppliers.
“The IIGCC framework is well suited to this collective endeavour, as we manage risks, identify opportunities, and support positive and permanent change,” he added
A full list of the LPP’s fund managers can be found in MandateWire’s Investor Directory.
This article originally appeared on MandateWire.com
