Cratus’s Executive Chairman – Sir Merrick Cockell – is featured with an interview in October’s edition of Infrastructure Investor magazine.
In his role as chairman of the new London Pensions Fund Authority, Sir Merrick sets out his ambition for pooling the resources of multiple UK pension funds to invest in areas such as infrastructure.
The article describes him as “making waves” by challenging the UK’s individually-small 89 pension funds administering the Local Government Pension Scheme (LGPS) around the country to join forces to create something more efficient and powerful.
Sir Merrick said: “I could see the potential inherent in having 89 funds in a scheme with £180 billion of investment value. It was as big as [Singapore sovereign wealth fund] GIC, but you wouldn’t have known it. The LGPS had no personality and no recognition that a large amount was being invested but in a way that was not competitive with, for example, the Canadian pensions.”
At Kensington and Chelsea, where he was leader of the Council for 13 years from 2000 to 2013 (and was knighted for services to local government in 2010), Sir Merrick saw pensions go from being effectively absent from the day-to-day agenda to high up on the priority list as council revenues were increasingly being used to prop up funds with growing deficits. “There was increasing taxpayer awareness and it became a politically charged issue. People were asking why this additional support for pensions was needed,” he said.
As the article highlights, this prompted Sir Merrick to consider how local government might work better together to maximise efficiency and performance. He discovered that there was little awareness of what was being invested in and not invested in. As part of this research, he discovered that the trend for infrastructure investment – which was being readily identified by other pension funds around the world as a great match for liabilities – was passing over the heads of UK pensions.
“I remember going to a National Association of Pension Funds (NAPF) meeting and asking how much we were investing in infrastructure,” he recalls. “And the answer was materially less than 2 percent. I wondered why and my interest grew in the idea of achieving scale and allowing our pensions to flex their muscles when it came to investment.”
Sir Merrick has since been influential in the forming of two partnerships that he would like to see as the basis for more widespread cooperation across the LGPS. The first of these was a £10 billion pooling of resources between the LPFA and Lancashire County Pension Fund in December last year, which has since been named the Lancashire and London Pensions Partnership (LLPP). The second, announced just a month later, was an agreement between the LPFA and Greater Manchester Pension Fund (GMPF) to deploy up to £500 million (£250 million each) in infrastructure investment.