THE countrys largest local authority pension fund, the Greater Manchester Pension Fund, is progressing talks with a range of other funds across England about creating a multi-asset pool with a value of more than 35 billion pounds.
The Greater Manchester Pension Fund, Merseyside Pension Fund and West Yorkshire Pension Fund on Friday submitted their initial response to the Government's pooling proposals, setting out their plans to work together. The 35 billion fund that will be created by the three funds is well in excess of the 25 billion target that the Government requires pooling arrangements to meet.
Negotiations between the three funds have been under way for months with conversations taking place even before the Government's announcement last autumn that the country's 89 funds should look to pool assets. This resulted in a memorandum of understanding being signed by the three funds to create a new asset pool.
The new asset pool will meet many key objectives including reducing management costs and investing more in local infrastructure, aiming to create a 1 billion infrastructure pot to fuel the Northern Powerhouse by summer 2016.
Pooling of assets will build on the strengths of each of the funds taking part. Greater Manchester, as well as having excellent long-term investment performance, already has an excellent track record of successfully investing in local infrastructure, allocating up to 5 per cent of the fund for this purpose, with the ambition to increase this to 10 per cent.
The Greater Manchester Pension Fund has long been at the forefront of developing investments that generate commercial returns and deliver wider social benefits. It has built 240 new homes in a joint venture with Manchester City Council. The innovative funding model allowed development on some sites that were previously considered commercially unviable. It is also collaborating with the London Pension Fund Authority on a 500 million pound infrastructure investment vehicle.
It is these schemes, along with the newly developed impact portfolio designed specifically to deliver social value, that led to the Greater Manchester Pension Fund being awarded the Local Government Pension Scheme Fund of the Decade award and, jointly with the London Pension Fund Authority, the Infrastructure Investment Award at the
2015 Local Authority Pension Fund Forum Investment Awards.
As the largest and most prominent fund in the country many other funds will be waiting to see the direction the Greater Manchester Pension Fund and its partners are taking with a view to joining the pool when the final details have been announced. The Lancashire County Pension Fund and London Pension Fund Authority have
already expressed an interest in joining the Pension Powerhouse, a move which would increase the asset pool to an estimated 45 billion.
The funds look forward to receiving the Government’s response to their pooling proposal and working with other pools to create an outcome of significant benefit to all Local Government Pension Scheme stakeholders.
Kieran Quinn, Chair of the Greater Manchester Pension Fund, said:
"For some time I have been in no doubt that increased collaboration between pension funds will bring significant benefits to both local government pension schemes and the economy. The success of our existing collaborations shows clearly the role pension schemes have in driving economic growth through investment. These plans coming together into a 35 billion pound fund will be at the forefront of turning the
Northern Powerhouse from an idea into a reality.
By working together we can build on our existing strengths through shared learning, and help all schemes access the benefits of big investments. The proposals we are developing will meet the criteria set out by the Government, but more importantly they are ahead of the game and are focused on growing a sustainable
I look forward to working more closely with our existing partners to develop this pensions powerhouse, and welcoming new partners as others join us in these nationally significant plans."