Feature | Pooling


In 2015 the then Chancellor of the Excheq- uer, George Osborne, promised to “shake Britain out of its inertia” by pooling local government pension scheme (LGPS) assets into sovereign wealth funds. This, he hoped, would see fees fall and investment in infrastructure rise. Fast forward four years and a lot has changed.


Eight LGPS pools have been formed across the country and billions of pounds worth of assets have been merged, but the “sover- eign wealth fund” label was discretely ditched along the way. Amid political con-


cerns that central government could inter- fere with the investment strategy of local authority pension schemes, a much more laid-back approach to consolidation has been taken. As a result, eight different approaches to merging pension scheme assets have emerged.


The initial announcement to pool the assets of 89 local authority pension schemes proved controversial. Whilst welcomed by some for its potential cost and efficiency benefits, the proposals were opposed by public sector union Unison. It feared that


32 | portfolio institutional | December-January 2020 | issue 89


the government could use the more than £200bn of savers’ assets managed by such schemes to make up for the lack of infra- structure investment by the state. Another concern was that the policy could expose members to excessive risk stemming from having higher allocations of illiquid assets. Moreover, fears were being raised that any cost savings could benefit the government, rather than scheme members. Unison was not alone in having reserva- tions about the policy. Indeed, within two months of Osborne’s announcement, more


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44