The government’s decision to call time on two pension pools: Access and Brunel Pension Partnership has cast deep ripples through the Local Government Pension Scheme (LGPS), meaning 21 funds need to find a new pool home.
At the PLSA LGPS conference in Bedfordshire, Jennifer Devine, head of the Wiltshire Pension Fund, and member of the Brunel pool, gave a personal account of the shock and difficulties this decision has had on those affected.
“We received a letter saying that Brunel’s business plan did not meet the government’s vision for the future of the LGPS, so the funds were invited to find another pool to partner with,” she said. “When I received the letter I thought, ‘brilliant, this is shaping up to be a quiet year’. Then when I processed it a bit, it was quite shocking.”
Devine added: “I think what we had expected perhaps was an ‘amber,’ where some areas of the plan that didn’t exactly match what the government wanted and we would perhaps get some pressure to work harder to work on those. I was not expecting a red light.”
She noted though, once it had all been processed, there was some form of welcome in its clarity, albeit there were parts of the proposals she didn’t like. “When I received the letter it was so clear in what it was asking us to do that it did kick me up the bum and gets you started on thinking how we were going to move forward,” she said.
“There is an awful lot of risk for us in this process,” Devine added. “As well as looking for a new home for ourselves we need to think what the other 20 funds who need to find a new home doing, where are they going to land.”
Devine said the process is not like a procurement exercise, where the fund can go out and look at their options. “Those options may not look the same in a few months time when everyone has made their decision,” she said.
Devine also noted the fund will incur costs as a result of the government’s decision.
“It will be a really costly process,” she said. “The 21 funds are being heavily penalised. There will costs in leaving our pool. There will be costs in joining another pool. And you cannot move billion of pounds without spending millions of pounds. So it is going to be an expensive process.”
Devine revealed that having held discussions with central government those extra costs will be on the fund itself.
Devine revealed that the timings are also a challenge.
“When the funds wrote their business plans and sent them in that was already within tackling challenging timeframes,” she said. “Then to take on a whole new set of funds into the mix, is a lot of pressure on everybody.”
“We are relying on a lot of good will and sympathy from a lot of people within the LGPS to take in us orphans and give us a new home,” she added.
And giving some insight to how they are approaching finding a new home, Devine added: “This is going to have to be, like pooling has been so far, an enormous continuation of compromise and working together. We have a long relationship working with our partner funds and we want to maintain that no matter where we all end up.”
There are clear financial and investment reasons to work together, she noted.
“We are all going to have to work together on looking after Brunel as it ceases to exist: it has over £2bn of foreign investments. So we need to look after that as shareholders of the company.”
Looking to the future, Devine noted: “I know there may be more consolidation in the future, I bloody well hope there isn’t.”
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