Latest Public Sector News

29.05.13

Council pension schemes paying far more to investment managers

Council pension funds paid £347m to investment managers last year, up 9% on the 2011 figure.

Research by the Daily Telegraph into 89 Local Government Pension Scheme (LGPS) funds showed that the funds themselves increased in value by only 4%.

Edi Truell, chairman of the London Pensions Fund Authority (LPFA), said: “These research papers further support our assertion that creating pension scheme ‘superpools’ of up to £50bn would result in markedly reduced fees for LGPS funds, improving net returns and helping to reduce deficits.

“In addition to delivering fee reductions, pooled funds would also have the resource to invest in a wider range of asset classes, as well as to pursue more complex liability-driven investment strategies, further driving returns. There is also huge savings potential in the administration of schemes.”

The LPFA administers a pension fund providing LGPS benefits to almost 20,000 employees of 200 not-for-profit organisations and around 40,000 pensioners, many of whom used to work for the Greater London Council and the Inner London Education Authority. It also provides third-party pension services, looking after about a quarter of a million people’s pension benefits. 

Communities secretary Eric Pickles has urged councils to bring down the overall number of schemes to help reduce fees.

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