Brunel Pension Partnership, one of eight UK Local Government Pension Scheme (LGPS) pools, is making cost savings of £34m (€38.3m) per year, two years ahead of its initial 2025 target of £27.8m per annum.
The partnership’s most recent annual report and financial statements show that Brunel is therefore saving almost four times the costs it incurs thanks to the management fees it negotiates.
“This success reflects two defining characteristics of Brunel: the professionalism and efficiency of our approach to pooling; and the negotiating power we gain from our leadership in responsible investment,” the pool stated.
While the specific targets on cost savings were set by Brunel, the broader ambitions of pooling were defined by the UK government when it launched the pooling process: to make cost savings while enhancing performance; and to enhance investment in UK infrastructure.
At the same time last year, chair Denise Le Gal said the pool was “breaking even on the Department for Levelling Up, Housing & Communities (DLUHC) return”.
Each year DLUHC requires each LGPS pool company to submit an update on its progress on pooling. This includes an update on the annual running and set-up costs compared with the fee savings being achieved.
Joe Webster, chief operating officer at Brunel, said: “Cost savings were a core motivation behind the government’s launch of pension pooling. They are therefore fundamental to our purpose as a pool. We are very encouraged to be exceeding our targets in terms of both the size of savings made and the speed with which we are meeting them.”
Infrastructure investment
Infrastructure is a core part of Brunel’s focus. The partnership is in its third cycle of private market portfolios through which it has targeted a range of infrastructure projects and at financial year-end (30 September 2022), infrastructure portfolios had £819m invested and had delivered £6m in cost savings.
“The government provided two priorities for the new LGPS pools but we added one of our own: to provide industry leadership on responsible investment. On this front, the reporting year saw Brunel launch the Cornwall Local Impact portfolio, the first LGPS multi-asset portfolio to target local impact,” the pool said.
Despite the portfolio’s small size, Brunel was able to negotiate mandates with two global asset managers – one for affordable housing, the other for renewables – and to harness the portfolio to target those priorities in a county where both poverty and climate change are significant challenges.
Laura Chappell, chief executive officer of Brunel, said: “The twin challenges of transition finance and accelerating global change are enormous. By delivering on the goals set by our partnership, we will not just benefit our clients and their members. In the long term, we will demonstrate to the wider industry our belief that responsible investment is indispensable to achieving healthy long-term returns.”
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