The UK government pushed for a reduction in the number of pension funds in England and Wales and instructed them to form larger and what are perceived as more sustainable funds. At the same time, the Chancellor also suggested that pension funds should be investing heavily in Government Infrastructure projects. This interference in investment policy was rejected by both politicians and Pension Committees however, mergers still went ahead.
In Scotland, there was no such pressure. The Scottish Government did however want Pension Funds to work closer and more collaboratively. Falkirk and Lothian’s funds have worked closely throughout the years and indeed have a shared investment strategy and have even invested in the same projects. Additionally, in order to reduce costs, Falkirk has also utilised Lothian’s internal investment managers.
This history of close collaboration and similar investment philosophy meant that exploring was the next logical step. Both funds have investigated the expected benefits, disadvantages, costs, and risks of a merger, and this review is now complete with favourable results.
Work to take this proposal forward will continue this year, subject to approval by both the City of Edinburgh and Falkirk Council, and regulatory approval in both Scotland and the UK. If approved, the merger is expected to take place in 2023.
More detail can be found in the Pension member’s merger and Q and A documents.