The Pensions and Lifetime Savings Association (PLSA) has urged the government to be wary of the costs and impact on members when pushing for mergers within the Local Government Pension Scheme (LGPS).
The government has told two LGPS pools, ACCESS and Brunel Pensions Partnership, that their models do not fit its requirements and they should merge with other pools.
ACCESS has been particularly vocal in its disapproval of the government’s decision, which was made following the ‘Fit for the Future’ consultation.
In a statement, the PLSA said: “In considering specific mergers, the interests of local authority pension scheme members should be paramount. For that reason, the PLSA advocates a process for considering pool mergers that is transparent, fair, evidence-led and fully costed.”
The trade body argued that pools “should not be penalised for adopting a business model that is different from the direction now proposed”.
In its response to the ‘Fit for the Future’ consultation, the PLSA pointed out that pools chose the models that “worked best and were most effective for them” at the time.
“Although some of them did opt for an FCA authorisation model, this was not a requirement set into regulation or statutory guidance,” the trade body emphasised.
The PLSA also highlighted the cost of changing existing arrangements. ACCESS has estimated that merging with another pool could cost as much as £100m.
“Given the consequences of any decision, specific, quantifiable evidence should always be provided to demonstrate the value for money of a change in pooling structure, whether that is developing an existing model or requiring a merger,” the PLSA said.
ACCESS claimed on Friday that the Department for Work and Pensions and the Ministry for Housing, Communities and Local Government had not supplied any “analysis or counter-factual evidence”, and had not explained how ACCESS’s partner funds would be reimbursed for any costs incurred as a result of “undesirable pool or fund-level mergers”.
The PLSA called for “continued dialogue between the affected pools and the government to deliver solutions that are in the best interests of members”.
