Local government pension funds are discussing mergers under Rachel Reeves’ mega-fund proposal
- The funds pay the pensions of six million employees
Two of Britain’s largest local government pension funds are exploring mergers with other council pension schemes in a race to meet a government deadline over their future.
In her Mansion House speech, Rachel Reeves revealed plans to set up pension mega-funds to invest billions of pounds in British businesses and infrastructure to boost growth.
This includes measures to unify the Comprehensive Local Government Pension Scheme (LGPS), £355 billion of which is spread across 86 councils.
These funds – which invest in shares, bonds, property and other assets – pay the pensions of six million workers.
The LGPS has eight ‘pools’, but the Chancellor wants them to consolidate so they have the economies of scale to invest like public sector funds in Canada and Australia.
Crucially, she has insisted that all pools be regulated by the Financial Conduct Authority.
Joining forces: Local government pension plans invest in stocks, bonds, properties and other assets to pay the pensions of six million workers
Two of the largest pools – Access, comprising 11 councils in south-east England, and Northern LGPS, which covers Greater Manchester, West Yorkshire and Merseyside – do not have an FCA licence.
Both want to set up their own authorized structures, but have also approached the other regulated pools about a merger.
The government consultation will conclude next week.
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