Greater Manchester Pension Fund (GMPF) is to manage a £1bn (€1.1bn) pension fund combining three local transport schemes.
The schemes cater for employees of FirstGroup – a private company that operates bus services – in Manchester, West Yorkshire and South Yorkshire.
UK bus services were privatised in the 1980s but their pension arrangements stayed part of the Local Government Pension Scheme (LGPS).
In a statement, Hymans Robertson, adviser to the consolidation effort, said £700m would transfer from the Yorkshire LGPS funds to GMPF.
It is the first time a private sector company has consolidated schemes within the LGPS.
Malcolm Stanley, senior consultant at Hymans Robertson, said there were more than 100 other private sector employers with pension arrangements in multiple LGPS funds, adding cost and complexity.
“By pooling its LGPS funds, FirstGroup will not only reduce the issues brought by this complexity but will also gain greater influence over its overall investment strategy,” Stanley said.
“Ultimately, it will be able to work with the GMPF to design a bespoke investment strategy that better reflects its mature liabilities and benefits scheme members.”
Richard Murray, group head of pensions at FirstGroup, added that the move would help the company manage risks related to its pension schemes and improve cost control.
GMPF is the largest fund within the UK’s local government pension scheme at £21.2bn. It posted a £4.1bn net gain from its investment portfolio in the 12 months to the end of March, according to its most recent annual report.
The Greater Manchester and West Yorkshire pension funds are forming the Northern Pool as part of the pooling project across the LGPS. South Yorkshire is part of the Border to Coast Pension Partnership.