Establishing the six Local Government Pension Schemes will cost each fund an estimated £20m to set up and £11m in annual running costs, the government has reiterated.

The Parliamentary Under-Secretary for Housing, Communities and Local Government, Rishi Sunak, said that the costs were necessary in order to achieve total net savings of between £1bn and £2bn.

In the 2015 July Budget, then Chancellor George Osborne announced the government intention to create six ‘British Wealth Funds’ with assets £25bn in order to “drive down investment costs”.

Sunak said: “The final proposals for the development of the pools in July 2016 estimated set up costs excluding transition of assets of around £20m, and initial running costs of around £11m per annum, in order to achieve estimated total net savings of £1-2bn by 2033.

“The costs of establishing each pool in the local government pension scheme, and future costs, will be met by the participating funds and will be published in the annual reports of the pools.”

In addition, Sunak confirmed that the government has accepted that the Welsh pool is in a “special position”, due to the possibility of “eventual devolution”.

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