The £9.7bn Lothian Pension Fund will continue to pursue a merger with the £3.2bn Falkirk Council Pension Fund despite a motion to cease any further development of the proposal.
In May 2022, both pension funds announced that they were exploring the possibility of merging, a proposal called Project Forth. The key driver behind the merger being that “larger pension funds are generally more financially successful” as they can make greater investments on behalf of their members.
The push for greater consolidation comes amid an ongoing UK government consultation on LGPS investment, which includes calls for greater consolidation of LGPS assets.
But Edinburgh City Council’s chief executive had advised the committee in June that, based on an informal and high-level consideration of various risks and issues, there was currently “no appetite to explore further fundamentally changing the existing model of Lothian Pension Fund”. This information was also relayed to the chief executive at Falkirk Council.
Consequently, at the latest Lothian Pension Fund Committee meeting, a motion was put forward by Mandy Watt, Lothian’s chief executive officer, which called for the cessation of any further development of the merger of the funds.
The Pension Committee meeting minutes also outlined that a second motion was put up for a vote by John Anzani, a member of Lothian’s Pension Committee for more than ten years.
He called for a rejection of Watt’s proposal and agree to progress with Project Forth. Members voted in favour of the second motion four to two.
The reasoning behind the committee’s decision was that it had not been “afforded the opportunity to have sight of the updated business case”, which they had requested at previous meetings, “nor had they had the opportunity to fully assess and debate the benefits, risks and governance around the project”.
An options paper on proposed governance structures will now be submitted to Lothian’s Pensions Committee to outline possible options for the merger.
Following the publication of this article, there have been new developments, which have led to talks of a possible merger between the two funds to cease. An update on the story can be found here.
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