The government has launched a consultation into ways of reducing the costs of the Local Government Pension Scheme by increasing fund co-operation, transparency and accountability to taxpayers.
Figures published for the Local Government Pension Scheme show there is scope for reforms to improve performance and reduce management and administration overheads, which cost taxpayers £471 million in England.
These range from £28 to over £300 per scheme member across the 89 funds.
The government has made it clear it is not wedded to the existing number of fund schemes. Ministers want to see more co-operation within the 89 pension fund schemes and are open to the possibility of structural changes such as mergers.
The London Pension Fund Authority has estimated that pooling fund assets and resources could have benefits of as much as £750 million a year.
Asset managers earned £353 million from local government pension funds in England in 2011 to 2012. This was a twelve per cent increase on the previous year. In the same period the market value of investments held by pension schemes only increased by four per cent to £148 billion.
The government is also consulting on how the Local Government Pension Scheme can achieve a higher level of accountability to local taxpayers including through an improvement in the availability of transparent and comparable data.
Local Government Minister Brandon Lewis said: “This government is taking action to reduce the massive and unsustainable cost of state sector pensions with higher contributions from well-paid staff and for the first time in recent memory, the cost of town hall pensions to taxpayers is now falling.”
He added: “But more that can be done, which is why today I am launching a process to find ways to reduce the £471 million management and administration bill through greater joint working, fund mergers and increased data transparency that will make the pension scheme more accountable to its taxpayers.”