The ACCESS Pool is extremely disappointed to learn that government has chosen not to support our intention to build our own FCA regulated investment management company at a time when other similar proposals have been given the green light.
Our proposal was based on significant detailed analysis, and evidence-based appraisal of alternative approaches to meet the requirements of November’s consultation LGPS: Fit for the Future, including a consideration of the Treasury’s request to evaluate setup and transition costs. This was undertaken thoroughly and impartially to enable a balanced assessment of options, and we understand this to be consistent with the approach taken by other pools.
In both our detailed submission and at our subsequent 30-minute meeting with Ministers, we underlined:
– Our independent implementation plan, which gave confidence in the achievability to move to a built model by March 2026. This is similar to other models that have been accepted by Government;
– how our pool would develop from the minimum standards to best-in-market, such as the use of internal management; and
– the significant cost and risk associated with merger with either Local Pension Partnership or Border to Coast.
ACCESS estimated transition costs between 28-36 basis points of the value of active listed assets pooled, equivalent to over £100m, consistent with multiple external sources of evidence and in line with the estimates of other pools who also did not propose merger. After a lengthy review of the options, ACCESS established that the costs of merging far exceeded our proposed built model – unnecessary expenditure of tens of millions of pounds and a financial burden on our scheme members which could alternatively be used to invest in UK productive finance initiatives.
ACCESS notes with concern that the government’s rejection of our proposal attempts to downplay significant cost considerations – without supplying its own analysis or counter-factual evidence – nor proposing a framework for how costs will be compensated in the event of undesirable pool or fund level mergers.
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