In the five years since Local Pension Partnership Investments (LPPI) was founded, the business has achieved £74 million net savings, with £28.2 million of those savings made in the year to 31 March 2021.
These figures place LPPI on course to achieve savings of more than £186 million by 2025, £327 million by 2030 and £468 million by 2035.
The savings have come from economies of scale provided by LPPI’s pooling model, providing access to cost-effective assets in private markets, increased buying power for negotiating fund manager discounts, and internal management.
Client funds have also benefited from long-term investment performance exceeding benchmarks. Several multiples of the net cost savings have come from excess returns.
LPPI manages £22.1 billion as of 30 September 2021 across eight investment funds covering asset classes including equities, fixed income and infrastructure.
Pooling is designed to generate cost savings, but also improve governance, and increase access to asset classes such as infrastructure and other private assets which can be hard to access for smaller funds. Economies of scale also provide opportunities to deliver responsible investments outcomes.
“The value of pooling stretches far beyond cost reductions, but these figures are strong evidence for the success of pooling, and its long-term future as a vehicle for paying public sector pensions,” said Chris Rule, CEO of LPPI and LPP Group.