The Local Pensions Fund Authority (LPFA) has slammed Wandsworth’s Council data as ‘fundamentally flawed’ after the council stated that its own pension fund would be £100m worse off if it had invested with the LPFA over the last three years.

The LPFA stated that such claims were a “misrepresentation” and argued that Wandsworth’s Council's three-year performance is strong because the fund has mainly invested in equities. It emphasised that it is nothing more than “a moment-in-time snapshot” however.

Last week Wandsworth Council criticised the London Pensions Fund Authority’s (LPFA) plans to merge LGPS schemes in a single £40bn fund as “disastrous” as it would lead to a more risk averse approach to investments. However, the LPFA said that there is compelling evidence to suggest that larger funds are more cost effective. It cited research published by the Centre for Policy Studies (CPS) which showed that a scheme with more than 50,000 members costs just £15 to £30 per member with regards to administration costs compared to £200 for a scheme with fewer than 1,000 members.

Furthermore, the LPFA stated that larger funds have better performances because they have access to better expertise and liability management and hedging tools.

LPFA chief executive Mike Taylor commented: “We are not suggesting an LPFA takeover, nor are we trying to impose the LPFA’s strategy on to other funds. What we are proposing is a more cost-effective solution for all 34 funds. This is something all funds should be in favour of, and something that recession-weary taxpayers are crying out for.”

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