Local Pension Partnership Investments (LPPI) has increased its annual net cost savings to £40.2m in the last financial year, bringing its total net cost savings since the pool launched to £153.2m.
£24.2bn LPPI is the investment management subsidiary of Local Pensions Partnership (LPP), one of the eight Local Government Pensions Scheme (LGPS) pools. It revealed that its annual net cost savings increased from £39.1m to £40.2m in the year to 31 March 2023.
This savings increase has taken LPPI’s total net cost savings since the pool launched to £153.2m and means that it’s on track to deliver £200m in cost savings by 2025.
LPPI outlined that the key drivers that improved its savings figures were growth of assets under management, lower fees negotiated with external managers and an expanding portfolio of direct investments and co-investments.
Chris Rule, LPPI’s chief executive, said: “We have been able to realise sector leading cost savings and performance largely due to having pooling scale from the outset. By managing all of our clients’ assets under a delegated model we’ve benefited from scale, flexibility and agile decision making since inception.”
The announcement comes as the Department for Levelling Up, Housings and Communities’ (DLUHC’s) LGPS consultation reveled that since the implementation of pooling the pension scheme has achieved net savings of £380m to March 2022.
In the same time period, LPPI’s cumulative net cost savings had amounted to £113m. This is equivalent to 30% of the total LGPS figure despite the pool’s share of total LGPS pooled assets under management being 6%.
Commenting on DLUHC’s LGPS consultation, Rule said that he welcomes the proposal of funds having the flexibility to invest through their own pool or in another pool’s investment vehicle.
“We believe that more direct investments into other pools would also remove the need for feeder funds and the associated costs,” he continued.
In addition, LPPI stated that it has delivered “sector leading investment performance”, achieving an average annual return of 7.9% over five years to 31 March 2023.
Rule added: “Our partner funds have benefitted from LPPI’s involvement in two significant cross-pool collaborations – GLIL Infrastructure and The London Fund.”
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