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Pension funds to launch passive investment procurement framework

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A group of Local Government Pension Scheme funds is to launch a procurement framework for passive investment services.

National LGPS Frameworks, run by a group of council pension funds, already runs frameworks via which LGPS funds can procure legal, actuarial and custodian services more cheaply than on the open market.

This framework would be the first for investment management services that the group has created.

The move comes as pension funds look to save money on investment management fees by forming investment pools, on the government’s instruction.

The group published an invitation to tender for passive investment services in the OJEU on Thursday.

National LGPS Frameworks chair Nicola Mark, who is also head of the Norfolk Pension Fund, said that the government’s 2015 investment reform criteria and guidance, which instructed funds to form pools, highlighted the savings funds could make by collaborating on passive investment management.

“We are delighted to be working with Cambridgeshire, Essex, Hampshire, Kent, Northamptonshire and Suffolk CCs to put in place a national framework of passive investment managers that all LGPS funds can access to help them access the benefits of the scale the framework aims to achieve,” said Ms Mark.

Ms Mark added: “Across the four current frameworks, we estimate savings to be in the region of £27m to date.”

Ms Mark confirmed to LGC that the procurement framework is not intended to be an alternative to formal pooling and could work alongside it. However she added that funds are able to secure significant savings from collective procurement.

 

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