London Pensions Join Forces

Sep 28 2011 | 9:18am ET

A London pension fund is planning a new system that could change the way public pensions invest in hedge funds.

The London Borough of Croydon is behind the scheme, under which local authority pension plans will join forces to win reduced fees from consultants. If the system works, it could be extended to hedge fund services, HFMWeek reports.

In addition to Croydon, the London Borough of Harrow and a half-dozen other unidentified London authorities are participating. The group has hired Aon Hewitt as its consultant.

"In working collaboratively, fees and charges are brought down and Aon Hewitt have a 'tipping point,' whereby a discount is awarded if five or more local authorities come on board under the agreement," Nigel Cook, head of Croydon's pension scheme, told HFM.

"The managers' framework agreement is something that all London local authorities will be interested in and they are currently exploring it among themselves," Aon Hewitt's Ian Bailey said. "If less procurements are necessary, there are definitely savings, and I also think the interest is driven by a desire to be more nimble. It will be important for fund managers to put their best foot forward and get on the list because it could prove difficult to win mandates without being on it."


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