The London Pensions Fund Authority (LPFA) has called for wider partnerships, not collaboration on initiatives such as common investment vehicles (CIV), in its response to consultation over reforming the Local Government Pension Scheme (LGPS).
LPFA deputy chairman, Sir Merrick Cockell, said: “The consultation rightly identifies the need for change but wrongly prescribes a narrow solution. We believe that the single asset class CIV proposal would create a new tier of entities and attendant bureaucracy without proper incentives to focus on the underlying liabilities.”
Cockell said that the LPFA believes that asset and liability management partnerships could reduce costs and give better access to liability-matching assets such as infrastructure and housing. “Our model can happen within existing legislation and we are already working with like-minded funds to develop a partnership.” The LPFA said an integrated approach to asset and liability management would retain local accountability. It added that single asset class CIVs will not pool, develop and enhance existing LGPS management teams. It stated: “The long-term interests of the LGPS will be best met by allowing authorities to set up multi-asset, collective arrangements with strong internal management capabilities which best meet their investment needs based on their particular aggregate liability profile.”