LGPS pooling proposals continue to drive planning

Consultant Mercer has commented on Chancellor George Osborne’s proposals for the assets of 89 local government pension funds in England and Wales to be pooled into six British wealth funds.

Mercer partner, Steve Turner, said: “The Chancellor’s statement provides the clearest sign yet of the scale of ambition that the LGPS has been tasked to come up with on pooling. If done in the right way, this can have significant investment and governance benefits to the LGPS and also to wider society.”

Individual authorities need to determine how to best organise themselves into collaborative working relationships of sufficient scale, Turner said. He added that these groupings should look at the long-term cost savings of pooling, as well as considering the cost and governance implications. “A number of viable frameworks are being considered, including either setting up a structure from scratch or leveraging an existing framework to support pooling. These approaches differ in terms of short and long run objectives, resourcing needs, cost efficiency and speed of implementation,” Turner said.

Osborne’s announcement, at the Conservative party conference in Manchester, follows a previous call for LGPS funds to invest passively in listed markets in order to save costs. That move was widely opposed. Since then, the emphasis in LGPS reform has been on greater pooling, with a number of local authority funds clustered together geographically now working on sharing resources.