The London Pension Funds Authority has repeated its call for mergers of council pension funds following the publication of two surveys suggesting that fees are excessive in the sector
Research by the Daily Telegraph into the 89 funds that comprise the Local Government Pension Scheme found that £347m had been paid to investment managers last year. This represented a rise of 9%, while the value of the funds had only increased by 4%.
Similarly, the Financial Times claimed that some LGPS funds were paying fund managers three times as much as other schemes of the same size.
Edi Truell, LPFA chair, said the findings backed up the authority's call for pooled funds for London and other areas. He suggested there was 'huge savings potential' in the administration of schemes.
'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,' said Truell.
'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.'
LGPS mergers have been suggested for some time, most recently by local government minster Brandon Lewis in announcing a review of investment regulations.
'I am not wedded to the existing number of 89 funds in England and Wales,' he said. 'If it takes a smaller number of funds to improve the efficiency and cost-effectiveness of the scheme, I shall not shy away from pursuing that goal.'
