One of Britain’s largest town hall pension funds is scrambling to find a new management team despite a Government deadline being less than three months away.
Labour-heavy Northern LGPS has been told to overhaul its board to comply with new ‘pooling’ rules, which aim to boost growth by creating six ‘mega-funds’ in the biggest shake-up of the £450 billion Local Government Pension Scheme (LGPS) in years.
Ministers hope that by reducing the number of LGPS ‘pools’ from eight they will benefit from economies of scale when they invest, such as public sector funds in Canada and Australia. They also insist all local authority pools are regulated by the Financial Conduct Authority (FCA).
Northern LGPS, which manages £70 billion of assets for almost 900,000 council workers’ nest eggs, had resisted this change, arguing it would increase costs.
New rules: Labour-heavy Northern LGPS has been told to overhaul its board
But it is now looking for a new chairman, chief executive, chief risk officer, chief investment officer and non-executive directors by the end of March – and all must be FCA-approved.
‘It’s a short time-frame, but we’re well under way,’ said Paul Bettye of headhunters Hoffmann Reed, who is leading the last-minute search. He added internal candidates would be considered. The new hires will replace an ‘oversight board’ of councillors and union officials from the Greater Manchester, Merseyside and West Yorkshire pension funds that form Northern LGPS.
‘They were just pretending to be a pool,’ said one source. ‘They never had a company or employees, which really annoyed central government.’
The LGPS is one of the largest pension funds of its kind in the world, spread across 86 councils and the Environment Agency. Up to a quarter of council tax goes on pension contributions to staff, who receive an inflation-linked income for life when they retire. The LGPS has a record surplus of £147 billion, according to pensions consultant Isio. The Government wants to use some of that to invest in home-grown ventures.
But it has been criticised for ordering two pools in the Tory shires to disband and merge with other funds by March.
DIY INVESTING PLATFORMS
AJ BellAJ Bell
Easy investing and ready-made portfolios
Hargreaves LansdownHargreaves Lansdown
Free fund dealing and investment ideas
interactive investorinteractive investor
Flat-fee investing from £4.99 per month
FreetradeFreetrade
Investing Isa now free on basic plan
Trading 212Trading 212
Free share dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
Share or comment on this article:
Race to secure new board at £70bn pension fund Northern LGPS