The Falkirk Council Pension Fund and the Lothian Pension Fund, both part of the Scottish local government pension scheme (LGPS), have decided not to proceed with their proposed merger.
In 2022, the pension committees of both pension schemes agreed to explore the possibility of a merger, which would create a £11.3bn pension fund.
After considering comprehensive due diligence setting out the benefits to each fund, both individually and collectively, and confirming the feasibility of the merger, the committees approved a merger subject to approval by both councils.
However, on 1 June 2023, following a high-level consideration of some issues, the Lothian scheme was asked by the City of Edinburgh Council to consider how to enhance the current governance model and explore options for the relationship with the Falkirk scheme rather than proceeding with the merger at this time.
At a committee meeting on 27 September, the City of Edinburgh’s Council Pension Committee approved the motion to cease exploration of the merger. The committee said that it will review its options in two years’ time.
The pension funds agreed that while this is not the originally planned outcome, the exploration of a merger has been “a valuable project for both funds”.
They added that both the Lothian Pension Fund and Falkirk Council Pension Fund have delivered various improvements, including further alignment of their investment and pension administration processes.
They listed key successes as the roll out of member self-service, and new systems and processes across Falkirk Council Pension Fund, such as automated workflow.
These, they said, bring benefits to members and colleagues alike and leave both funds in a strong position and well placed to continue collaborating.
David Vallery, chief executive officer of the Lothian Pension Fund, said that through the work to date, both pension funds are in a stronger position.
He added that the Lothian scheme will continue to work closely with the City of Edinburgh Council and Falkirk Council to build resilient and sustainable pension funds for both.
“We will continue working to deliver the best service we can for our members and employers and make it a great place for our colleagues. We will carry on with our successful collaboration with Falkirk and other strategic partner funds,” he said.
Amanda Templeman, chief finance officer at Falkirk Council, agreed that the relationship with Lothian Pension Fund has resulted in “excellent” outcomes and benefits for its members.
“Both funds have a proven track record of successful collaboration and the work done to date in preparation for a potential merger has helped to improve the funds and strengthen existing relationships,” she said.
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