Local government pension funds for South Yorkshire and Tyne & Wear have joined a collaboration group led by Cumbria, East Riding and Surrey to pool investments.
The chairs of the South Yorkshire Pension Fund and South Yorkshire Passenger Transport Pension Fund announced this week they were in discussions with the Border to Coast group as their preferred partner to develop a multi-asset pool.
Separately, a spokesperson for South Tyneside Council confirmed that the pension committee for Tyne & Wear has decided the fund should also join the pool.
It comes just weeks before the 90 local authorities must hand over their initial proposals for pooling to the government by 19 February, showing they have made progress towards formalising arrangements with other authorities. The South Yorkshire funds said they will work with the Border to Coast pool to preparing their response to the government.
Final submissions for pooling must then be sent to government in July, with arrangements to go live from April 2018.
Funds that have so far collaborated under the Border to coast pool include Cumbria, East Riding and Surrey pension funds, with Warwickshire, Lincolnshire and North Yorkshire recently deciding to come on board. Its size is estimated to be in the range of £13bn-32bn and could be even bigger if other funds come on board.
Following discussions with the group over several weeks, the South Yorkshire funds said in a statement that they believe the group shares the same long-term vision and values.
South Yorkshire Pension Fund chair, councillor Sue Ellis said in a statement: "I'm encouraged by the progress that has been made during the discussions and am confident that the outcome will be in the longer term interests of all stakeholders in the South Yorkshire Pension Fund."
South Yorkshire Passenger Transport Pension Fund chair, councillor David Leech added: "Identifying Border to Coast as our preferred partner is not a decision that the funds have arrived at lightly."
The funds added the new structure should satisfy the aims of both the participating funds and the government, and allow them to "continue to reap the low cost and high returns" that their current internally managed approach has delivered. Some of the funds have "considerable experience of collaborating together already" which should prove beneficial as they face the challenge of meeting the government's objectives, they added.
At the end of March 2015 the South Yorkshire Pension Fund had assets valued at £6.28bn and the South Yorkshire Passenger Transport Pension Fund had assets of £212m.
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