BLUE BUDGET 2015: Govt to work with LGPS to pool investments

Chancellor George Osborne has announced in the Budget the government will work with Local Government Pension Scheme administering authorities to pool investments.

It is hoped that this will significantly reduce costs while maintaining overall investment performance. As part of this the government will invite local authorities to come forward with their own proposals to meet common criteria for delivering savings.

A consultation to be published later this year will set out those detailed criteria as well as backstop legislation which will ensure that those administering authorities that do not come forward with sufficiently ambitious proposals are required to pool investments.

“The NAPF and its LGPS member funds will engage constructively with the Government on this initiative; but it’s clear that pooled investments will work most effectively where they arise out of natural collaboration between funds rather than where funds are forced to invest together,” said NAPF chief executive Joanne Segars.

According to PwC public sector pension director Mark Packham, today's announcement on asset pooling should go "a long way" to address the affordability of the Local Government Pension Scheme and strikes a clever balance between encouragement and mandation.

"The reward for getting this right should add up to £600 million a year across the country," he added.

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