London councils set to merge pension funds
Two London councils are set to merge their pension funds, as they set out to collaborate on staffing and deliver £20m (€34.9m) in savings.
The merger of the local authority schemes (LGPS) for Richmond upon Thames and Wandsworth council is the first to go ahead after the UK government proposed, and then abandoned, wide-spread scheme mergers as a way of bringing about scale within the sector.
Under the preferred solution, the respective councils would retain responsibility for the past liability within each scheme, but future contributions would be made to the newly established joint scheme, to be administered by Wandsworth Council.
The proposed merger is now subject to a consultation by the Department for Communities and Local Government (DCLG), as it requires a minor change to existing law, absolving Richmond upon Thames of its responsibility to maintain an LGPS.
The councils have agreed a new pensions committee structure, which will see Wandsworth Council provide six members and Richmond a further three, while asset management will largely be outsourced to the now operational London CIV, of which Wandsworth is a member.
The consultation is to close on 15 September.
The move to merge the schemes is notable, as full-scale scheme mergers were initially proposed by DCLG as one of the methods to bring about scale within the LGPS.
DCLG later considered banning all active management of LGPS assets, and has since pushed the launch of asset pools – with eight collaborations emerging across the affected English and Welsh funds.
However, the funds are not the first to attempt a merger in recent years, with Buckinghamshire, Windsor and Maidenhead and Oxfordshire councils proposing a joint pension fund as part of plans to merge all three councils, but the plans were abandoned last January.