UK – Three English local authorities are in discussions to merge their pension funds, potentially creating a local government pension scheme (LGPS) managing more than £4bn (€4.7bn) in assets.
The Royal Borough of Windsor & Maidenhead, administering authority for the £1.4bn Berkshire Pension Fund, and neighbouring county councils Oxfordshire and Buckinghamshire in July agreed to support the possibility of a “full merger” of their schemes.
The leader of Oxfordshire County Council, councillor Ian Hudspeth, said in a statement that talks were “at the early stages”.
“However,” he added, “if the currently ongoing work with our neighbours leads to a conclusion that we have found a value-for-money way of making savings that allows us to provide some additional protection to frontline services in the future, then we’ll no doubt be keen to move forward.”
The Berkshire Pension Fund noted in a statement that members’ benefits would not be impacted by any potential changes and stressed that its administering authority was not looking at the merger as the only way forward.
“A merger of the three pension funds is one of a number of options being considered, and no decision has been made at this stage,” it said.
In a Cabinet report from Oxfordshire’s July meeting, the council says any further progress will need to be based on a “fully detailed business case” and that groundwork is unlikely to be completed before next spring.
It adds: “The Pension Fund Committee is keen to ensure any business case shows clearly how the proposals will be to the benefit of the scheme members (in line with their key statutory duty), as well as saving costs to the councils and other employers within the scheme.”
It noted that the creation of a Thames Valley local authority scheme could result in savings “in the region of £2.5m a year across the [three] funds”, although the figure was reliant on both reduced costs and a higher overall return.
However, Oxfordshire said any merger would require “significant further work”, as well as the establishment of a new statutory authority to oversee the fund.
An initial report on the merger was presented before the Department for Communities and Local Government launched its review of the LGPS sector in England and Wales that could lead to fund mergers, while the Cabinet report noted that the three councils could have the “benefit of helping to shape future policy” and may be able to attract government funding to cover the associated costs.
At the end of March, Oxfordshire’s LGPS held assets of £1.5bn.
As of March 2012, Buckinghamshire reported its fund was similarly £1.5bn.