The government is determined to press ahead with the current timetable for Local Government Pension Scheme pooling despite Brexit and a minority government, funds have been told by ministers.
In a letter sent to chairs of the pension funds and of the LGPS pension pools, local government minister Marcus Jones reiterated that the government would not hesitate in using backstop legislation to force pooling if necessary.
The letter has been interpreted in some quarters as a warning to any remaining funds which hoped that the current political uncertainty meant that they might be able to row back on pooling.
Jeff Houston, head of pensions at the Local Government Association, told Room151: “The letter is just a gentle reminder to funds to check whether they are complying with the November guidance on pooling.
“I think it is more to do with individual funds that the pools. The pools have been more or less given the go ahead and are getting up and running and the government seems as content as it can be with the progress, given the tight timescales.”
The letter makes it clear that the government expects that funds invest as many of their assets through a pool as possible, that the pools have an FCA-regulated operator in place, and that fund manager selection is delegated to the operator.
Jones also expressed satisfaction with the progress on pooling and the increased investment in infrastructure made by some pools so far.
Helen Cusins, project manager at the Brunel Pension Partnership pool, said: “There is also a positive change in language in terms of talking about net investment performance rather than simply fee savings.”
David Walker, head of LGPS investments at pension adviser Hymans Robertson, welcomed the publication of the letter, saying: “Some funds might have thought this had gone away or the focus had moved.”
However, he added: “One of the slightly disappointing aspects is that it is a generic letter. We would welcome some constructive feedback on where individual pools are not meeting the criteria.”
In his letter, Jones said that funds will be asked to provide another update on pooling progress after September.
The government expects pools to be up and running by 1 April 2018, with a phased transition of assets from individual funds planned to follow.
