Government figures have upped the pressure on Local Government Pension Scheme finance directors to dump active fund managers following the crisis Neil Woodford’s Equity Income fund.
A senior source LGPS source told the Financial times that they are under political pressure to switch to passive management following problems that resulted in the fund’s suspension in June.
A key factor was the decision by Kent County Council Pension Fund, a member of the LGPS, to pull a £263m investment out.
Part of the concern is over the transaction fees generated by fund managers like Woodford.
Jeff Houston, secretary to the LGPS advisory board, said: “There are elements within government that want the LGPS to be passive and are trying to find a way for that to happen. There is a belief we are forgoing savings by not going passive. Things like Woodford come along and you get that knee-jerk regulatory reaction . . . the easiest thing is to just stop them having that ability to invest in actives.”
