£10bn UK pension pool up and running

The partnership between Lancashire County Pension Fund and the London Pensions Fund Authority has been officially launched.

A £10 billion (€14.1 billion; $15.6 billion) partnership between the Lancashire County Pension Fund Committee (LCPF) and the London Pensions Fund Authority Board (LPFA) has been officially launched.

First announced in December last year, when the details were still to be thrashed out, the so-called Asset Liability Management Partnership will initially be known as the Lancashire and London Pensions Partnership (LLPP).

The partnership is an example of UK pensions – of which there are a large number, but individually of a modest size – coming together to reduce fees, access different types of opportunity, do more direct investment, and reduce administration costs.

In an interview with Infrastructure Investor in December, LPFA chief executive Susan Martin said pooling resources would allow both pensions to make greater forays into illiquid assets, notably infrastructure.

“At the moment the government is talking to large sovereign funds from Qatar, Abu Dhabi or China for large projects like HS2 or the Thames Tideway Tunnel,” Martin said. “Gaining greater scale should allow us to sit at the table with them for some of these projects.”

The £4.9 billion LPFA said it aims to have 30 percent of its capital invested in illiquid assets by 2016, a target allocation that might increase to 40 percent as the partnership gathers pace.

In January this year, the LPFA followed details of its talks with the LCPF with news that it was establishing a £500 million partnership to invest in infrastructure with the Greater Manchester Pension Fund (GMPF) over a three- to four-year period.

The £5.2 billion LCPF was a surprise bidder earlier this year for the UK government’s 40 percent stake in Eurostar, the cross-Channel train service. The stake was ultimately sold to UK asset manager Hermes Infrastructure and Canadian pension La Caisse in a £585 million deal.

The trend towards UK pension pooling was also exemplified by the formation of the Pensions Infrastructure Platform (PIP), a National Association of Pension Funds initiative.

Earlier this week PIP, which was formed in 2013 with an aim of raising £2 billion, said it had now reached more than £1 billion in commitments.