The London Pensions Fund Authority has welcomed the findings of new research into local authority pension funds, which shows that LGPS funds could be paying hundreds of millions of pounds more than necessary to City fund managers.
The research into the 89 LGPS funds, conducted by the Daily Telegraph, found that council pension funds paid £347m to investment managers last year, up 9% on the 2011 figure. At the same time the funds themselves increased in value by just 4%. Local Government Minister Eric Pickles urged councils to bring down the overall number of schemes to help reduce fees.
The report was published at the same time as the Financial Times found that some LGPS funds were paying fund managers three times as much as other schemes of the same size.
Edi Truell, Chairman of the LPFA, commented: “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.”
