Northern Trust takes the reins of London’s LGPS 26 January 2015London Reporter: Stephanie Palmer
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Northern Trust is working with the London Councils to establish a tax-transparent, pooled fund to consolidate the local government pension funds.
London’s boroughs and the City of London collaborated through London Councils to work with Northern Trust and create the agreement, which is the first of its kind in the UK pensions industry.
The collective investment vehicle is an authorised contractual scheme (ACS) that allows a co-ownership agreement, reducing costs and enhancing returns, while maximising efficiency and driving economies of scale.
Chair of London Councils and Mayor of Hackney, Jules Pipe, said: “We are excited to be at the forefront of evolution in the local government pension scheme (LGPS) landscape. The collective investment vehicle demonstrates London local government’s commitment to efficiency and value for money.”
“Appointing Northern Trust to support us in this venture is a key milestone and their proven expertise in asset pooling and significant experience across the sector will be very valuable.”
The scheme will increase opportunities for investment in alternative asset classes, which may not have been available for individual funds in the past.
The ACS is a tax-transparent fund regulated by the Financial Conduct Authority (FCA) and domiciled in the UK.
Northern Trust will also provide global custody, fund administration and depository services, as well as transfer agency support and financial reporting services for the fund.
Penelope Biggs, head of the institutional investor group for Europe, Middle East and Africa at Northern Trust, said: “We are extremely proud to support London Councils as they embark on this exciting journey, raising the bar for innovation in LGPS.”
“As market leaders in the LGPS, providing services to over a third of the UK market, we recognise the commercial pressure our clients are facing and are leading the way to help them become more efficient and cost effective. We have extensive experience providing asset pooling solutions and offered London Councils insights and guidance on how to unlock the financial and administrative potential of the ACS.”
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