Annal Nayyar-Council pension funds could be merged, says DCLG official

Government ministers want council pension funds to work closer together and ‘do not rule out’ implementing mergers of existing funds, the man leading pension reforms at the Department for Communities and Local Government has said.

Bob Holloway, the head of the Local Government Pension Scheme 2 division in the department, said discussions with the Local Government Association and others would begin next month on how to make greater efficiencies.

There are currently 89 locally administered pension funds in England and Wales, and Holloway is working on the changes being introduced to the scheme from April 2014 following government reforms.

Speaking at a Public Sector Pensions event on Wednesday, Holloway noted that a number of schemes currently collaborate and share services.

However, he added: ‘I have to be honest though, and suggest that ministers want to see more and they do not rule out the idea of merging funds to achieve further efficiency and improve investment returns.’

A roundtable event being held on May 16 would ‘get the ball rolling’ by bringing together existing examples of shared services, he said. A possible call for evidence to find out ‘the optimal size of am LGPS pensions fund’ could then follow.

‘All the evidence I have seen is that there is a tremendous amount that can be done and is being done in terms of collaborating and sharing common services, but there seems to be a very big obstacle in going that one step further and actually merging of funds.

‘Ministers do not rule that out – they want a proper discussion about that particular issue.’

Responding to the comments at the same event, Brian Strutton, the GMB union’s national secretary for public services, agreed there was a need for greater evidence on the benefits of pooled investments or mergers.

He added: ‘We have no reliable evidence either way in terms of whether fund mergers, LGPS investment vehicles or anything else results in better performance.

‘Our first task has got to be to get good reliable comparative data so we can start taking informed decisions about these things. I’m completely indifferent to the number of funds. All I want to know is: will it improve the investment yields, and will it do something about managing our deficits? Those are the only two criteria that I particularly care about.’

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