Local Government Pension Scheme
The question
To ask the Secretary of State for Housing, Communities and Local Government, what assessment has been of the potential impact of the Local Government Pension Scheme pooling has (a) increased and (b) reduced (i) administrative costs and (ii) fund performance.
Answered by Alison McGovern
The scale and expertise of the asset pools have delivered a step change in the expertise, capacity and resilience of the Local Government Pension Scheme. Since the inception of asset pooling, the total costs reported by LGPS asset pools is £792 million, but they have delivered net savings of £1.17 billion.
The reforms currently being implemented will bring all LGPS assets under pool management, delivering scale and consolidation, and facilitating greater access to a wider range of asset classes including private markets. In the new pooling landscape, asset pools will have the ability to bring investment capacity in-house and make investments directly rather than via an intermediary, and the opportunity to negotiate lower management and performance fees.
The government recognises that there are transition costs associated with implementing the reforms. These transition costs will, however, be one-off upfront costs that will shape the scheme for the coming decades and set it up for even greater success for the future. We expect that they will be recouped in the long-term through savings and improved investment performance.
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