Lothian Pension Fund and Falkirk Council Pension Fund have announced that they will not be progressing with the proposed merger between the two funds.
At a Lothian Pension Fund Committee meeting yesterday (27 September), members approved a motion to cease exploration of the merger at this time, with a view to re-consider the option in two years’ time.
This decision was made after the £9.7bn Lothian Pension Fund has been asked by the City of Edinburgh Council to consider how to enhance the current governance model and explore options for the relationship with £3.2bn Falkirk rather than proceeding with the merger.
It also comes as published minutes from the last committee meeting revealed that members voted to proceed with the merger despite opposition from its chief executive officer (CEO).
In the minutes, City of Edinburgh 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”.
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.
Responding to the news, David Vallery, Lothian Pension Fund’s CEO, said: “Through the work to date, both Falkirk Council Pension Fund and Lothian Pension Fund are in a stronger position, and we will continue to work closely with the City of Edinburgh Council and Falkirk Council to build resilient and sustainable pension funds for both.”
Amanda, Templeman, Falkirk Council’s chief finance officer, added: “Falkirk Council Pension Fund will continue their close relationship with Lothian Pension Fund, which over the years has resulted in excellent outcomes and benefits for our members.
“Both Funds have a proven track record of successful collaboration and the work done to date in preparation for a potential merger has helped to improve the funds and strengthen existing relationships.”
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