LONDON | A proposed London Pensions Mutual would attempt to square the circle of austere consolidation and need for growth. The mega-pension fund could have assets in excess of £30 billion. It could also allocate up to 7.5% or £2.25 billion of its portfolio towards local infrastructure projects, taking advantage of changes announced by the coalition government in Downing Street to facilitate private investors’ and pension funds’ participation in UK infrastructure projects.
London’s councils said Tuesday they were drawing a joint programme for their pension funds so local authorities would make savings worth over £30 million in management fees for running what currently are 34 separate retirement schemes. The British capital’s 32 boroughs, the City of London Corporation and the London Pensions Fund Authority would be members of the mega-pension fund.
Sir Merrick Cockell, The Local Government Association’s Merrick Cockell told The Daily Telegraph:
“Each scheme has separate advisers, administrators, fund managers with their performance fees; if councils work together that cost can be steeply cut.”
Jon Rogers, member of the National Executive Council (NEC) of UNISON, had warm words for the initiative, too:
“Bringing together the management of the 34 London local government pension funds could achieve economies of scale at the expense of the private fund managers (who currently take a slice of our money in return for deciding where to invest it).”
Although Rogers said the unions would have to be alert about job losses incurred during the consolidation process, he concluded that
“there is, however, no reason ‘in principle’ to oppose replicating in London the structure which already exists elsewhere in England, where County Councils (or other joint bodies based on the former Metropolitan County Councils) run pension funds which also cover Districts (and unitary authorities).”