Budget raises expectations of pooling process

The March budget announced that the government intends to consult on proposed requirements for LGPS funds to transfer all listed assets into their pools by March 2025.

It also mentioned future changes that might include reducing the number of pools in excess of £50 billion to optimise benefits of scale.

“While pooling has delivered substantial benefits so far, progress needs to accelerate to deliver and the government stands ready to take further action if needed,” it stated.

“The government will also consult on requiring LGPS funds to consider investment opportunities in illiquid assets such as venture and growth capital, thereby seeking to unlock some of the £364 billion of LGPS assets into long-term productive assets.”

Iain Campbell, senior investment consultant, Hymans Robertson said the potential pooling deadline was a “step-up in expectations from government” and added he would welcome further detail on this in the forthcoming consultation, such as what is classed as “listed”, as well as how passive assets will be considered.

“The potential move to a smaller number of larger pools is also an important development in government’s plans for pooling,” said Campbell, and he welcomed further information on how this would be achieved and the expectations for cost savings given the potential further costs of this exercise.

Campbell also raised concerns about the potential requirement for funds to invest in illiquid assets, such as venture and growth capital, in order to provide support to the UK economy.