Wandsworth Council has slammed London Pensions Fund Authority’s (LPFA) plans to merge LGPS schemes into a single £40bn fund as “disastrous” and Londoners would now be £2bn worse off if such a plan had already been implemented according to Wandsworth Council

The Council criticised the LPFA’s argument that “big is best”, arguing that the LPFA’s own fund has greatly underperformed in comparison with London’s town halls over the past decade.

Over the past three years, LPFA’s underperformance has amounted to over £1bn and, £2bn over the past decade. Wandsworth Council stated that if its own pension fund had been invested with the LPFA over the last three years, the fund would be nearly £100m worse off. It added that only five out of London’s 33 boroughs would have benefited from a merger.

Wandsworth’s pensions committee chairman Maurice Heaster said: “If bigger is better then these results shouldn’t be possible. Something is obviously wrong with the way that LPFA is operating. In London over the past decade, the LPFA has performed very poorly in comparison with the smaller funds managed by individual boroughs. The merger plans that have now been put forward by LPFA would be disastrous.

“At the moment each borough has its own pension fund, with locally elected councillors making key policy decisions. This direct link between pension fund management and elected members means that there is proper democratic control. The creation of a single pension fund representing so many diverse town halls with different economic and political priorities would undoubtedly also lead to a more risk averse approach to investments. The danger is that this would deliver lower returns, worse profits and higher employer contributions.”

Heaster added that if there was to be any shake up of pension funds in London, it is that the “LPFA should be abolished” and its “remaining assets distributed to London borough funds.”

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