FirstGroup consolidates pension assets in LGPS

29 Nov 17

The transport provider FirstGroup has announced plans to consolidate its pension scheme assets within the Local Government Pension Scheme, in the first move of its kind by a private sector employer.

In transferring £700m of assets from two LGPS funds in West Yorkshire and South Yorkshire into the Greater Manchester Pension Fund, FirstGroup estimates the consolidated fund will hold assets worth £1bn.

The Greater Manchester Pensions Fund will now act as the single administrating authority for FirstGroup’s LGPS funds, which the group says will help them reduce operating costs and drive greater efficiency. FirstGroup also hopes the move will allow them more control over their overall investment strategy.

The transfer was overseen by the pension consultants Hymans Robertson and appears to have resolved any uncertainty about whether consolidations of this sort are only open to public sector employers.

The move has been signed-off by local government secretary Sajid Javid, as is required when an employer plans to move deferred and pensioner members from one LGPS fund to another.

FirstGroup is one of the largest transport providers in the UK, controlling three train franchises and a fifth of the market for bus operators outside London.

Richard Murray, group head of pensions at FirstGroup, said: “The consolidation will enable us to better manage the risks across our LGPS schemes, giving us greater control over investment strategy, an improved balance sheet, and will enable us to better manage our funding across these obligations. This will allow us to improve cost control while maintaining members’ benefits.”

Malcolm Stanley, senior consultant at Hymans Robertson, said more than 100 private sector employers had assets split between multiple LGPS funds.

“This means added complexity for these employers as they have to not only engage with each administering authority individually but also maintain separate accounting records for each of the funds in which they participate,” he said.

“By pooling its LGPS funds, FirstGroup will not only reduce the issues brought by this complexity but will also gain greater influence over its overall investment strategy.”

Kieran Quinn, chair of the Greater Manchester Pension Fund, said: “Greater Manchester Pension Fund is proud once again to be chosen as the fund of choice for both the workforce and employers.”

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