The government has finally given the go-ahead for the merger of Wandsworth and Richmond-upon-Thames pension schemes — three months after the authorities moved to a joint staffing arrangement.
The Department for Communities and Local Government has published its response to a consultation on the proposed merger — which is expected to save money through a reduction in administration costs.
Regulations permitting the move had originally been expected to be introduced to coincide with the introduction of new staff employment contracts in October, but will now come into force from 26 January, though they will be backdated.
A statement from the DCLG said: “All responses to the consultation were in agreement with the principle of the merger and the general approach taken in the regulations.”
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The government has allowed the councils to produce a statement of allocation of assets and liabilities to be made within three months of the regulations being made, rather than from the merger date as originally proposed.
However, it said that a proposal by one respondent for the regulations to clarify the appropriate accounting treatment of the merger “went beyond the scope of the power under which these regulations were being made”.
All staff will now be moved to the Wandsworth fund, with the Richmond fund closing.
Chris Buss, director of finance at Wandsworth, told Room151: “The pension fund merger came about as a result of the joint staffing arrangements. We looked at whether staff could be placed in the fund for the authority in which they were spending the most time. However, this meant that most would end up in Wandsworth, with Richmond facing a lack of employer contributions and hence a big deficit.
“We also considered portioning staff evenly between the two funds but that becomes a bit artificial and bureaucratic.”
Buss said that the new pension fund will put more of its investments into the London Collective Investment Vehicle.
However, discussions were still to be had over whether both boroughs would be represented on the vehicle’s oversight body.
A report by Buss considered by councillors in both boroughs last month said that the investment approach taken by each borough had differed over recent years, “with Richmond taking a lower risk, lower fee approach and Wandsworth taking a more active stance”.
Buss said: “We are in the process of rewriting the investment strategy, but we would have had to do that anyway to avoid Wandsworth becoming cash negative.”
