Pensions Update May 2022

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.

Scottish Pensions Bulletin No.60 May 2021

Pension contributions, from members and employers, are currently managed by 11 different pension funds across Scotland. Some are small – £400m – and some are huge – £27bn at Strathclyde. Most funds simply pass the funds to external investment managers to invest.

Pension contributions, from members and employers, are currently managed by 11 different pension funds across Scotland. Some are small – £400m – and some are huge – £27bn at Strathclyde. Most funds simply pass the funds to external investment managers to invest. Research by UNISON and the LGPS Scheme Advisory Board suggests that funds, and therefore members, are being ripped off. A single fund for Scotland could save £100m a year, according to Lothian Pension Fund by getting economies of scale, bringing some investment management in-house, and exposing the vast hidden fees which are charged at every opportunity. A bigger single fund could al-so improve the “Environment, Social and Governance” (ESG) of investments, helping to drop fossil fuel investments and invest more ethically. It could even help more local investment using in-house expertise. Read more..