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The Actuary The magazine of the Institute & Faculty of Actuaries

LGPS actuarial services procurement could be merged to cut costs

Procurement of investment and actuarial services for local government pension schemes could be pushed into regional and national frameworks in a bid to harness efficiency savings, the government says.

Delegates at the National Association of Pension Funds’ Local Authority Conference today heard ministers are hoping to amalgamate the procurement responsibilities of 89 local funds in a bid to harness efficiency savings.

LGPS schemes currently procure services individually, but the Department for Communities and Local Government is hoping to fuse some funds together to save money.

The department’s parliamentary under secretary of state Bob Neill MP said: "You have 89 separate authorities spending scarce resource on 89 separate procurement and tendering processes - is that the most sensible and cost effective approach?

"On average the scheme spends about £400m a year on in administration and fund management costs. There is significant potential for efficiency savings."

The department has already established a working group, which met in early April to help funds looking to undertake joint procurement.

"I see the working group as a catalyst for change to ease the path for those authorities wishing to explore novel and innovative ways of procuring investment, actuarial administration and legal services," Neill added.

Neill also said schemes could get more power under its localism agenda.

He said the government was looking to change the power of general competence for schemes to give them the same legal powers as corporations.

This would mean a change in the investment powers of the LGPS, putting it on a similar footing the private sector.

A preliminary report on the scope of the changes will be submitted in the autumn.

[Source: ProfessionalPensions.com