London – Seven UK local authority pension funds are set to merge their assets with Border to Coast, one of the country’s largest managers of public sector retirement savings, as the government pushes forward with plans to consolidate the Local Government Pension Scheme (LGPS).
Border to Coast, which currently manages £65bn in assets for local pension funds, confirmed on Monday that it is in exclusive discussions with the funds of Cambridgeshire, East Sussex, Essex, Hertfordshire, Kent, Northamptonshire, and West Sussex. If finalised, the partnership would expand Border to Coast’s asset base to £110bn.
Background: LGPS Reform and Consolidation
The LGPS of England and Wales manages £392bn in assets across 86 administering authorities, covering the pensions of 6.7 million current and former public sector employees. Since 2015, the government has been working to merge these funds into larger “pools” to achieve economies of scale, lower costs, and increase investment capacity.
Currently, assets are invested through eight pools. The seven funds planning to join Border to Coast are part of the ACCESS pool, which has 11 administering authorities in total. The government has directed funds in the ACCESS and Brunel pools to choose a new partner pool by the end of September, after concluding their business plans did not align with its vision for the LGPS’s future.
Pensions Minister Torsten Bell and Local Government Minister Jim McMahon said the changes could unlock more than £20bn for investment in UK infrastructure and private businesses by boosting buying power and cutting costs.
Industry Reactions and Next Steps
Border to Coast joint committee chair George Jabbour welcomed the development, saying the funds “share our values of collaboration, with a focus on openness”. Councillor Jeremy Hunt of the West Sussex Pension Fund highlighted Border to Coast’s “strong governance framework and collaborative approach”.
The government has set March as the deadline for ACCESS and Brunel administering authorities to transfer their assets to a new pool.
In a similar move, the £3.4bn Wiltshire Pension Fund, currently part of the Brunel pool, announced last month it will partner with LGPS Central.
Controversy Over the Process
While the consolidation plan aims to create “megafunds” for greater efficiency, some pool managers have criticised the process as rushed. The changes could also affect asset managers currently contracted to manage LGPS investments.
If the Border to Coast talks conclude successfully, the enlarged pool would be one of the most influential investment vehicles in the UK public pensions sector, holding nearly a third of the LGPS’s total pooled assets.
