Three local authority pension funds in the south-east are examining a possible merger in a bid to save up to £2.5m a year.
Managers of the Local Government Pension Scheme funds for authorities in Oxfordshire, Buckinghamshire and Berkshire are working on a business case which will examine the potential costs and benefits of pooling the three funds.
The move comes as ministers put increasing pressure on the LGPS funds to work together and as a special committee is established to examine fund collaboration.
The new, merged body is unlikely to be operation before 2015. An assessment of the cost of any merger would be needed as well as estimates of potential savings from fund manager, advisory and audit fees.
It is also hoped that a bigger fund will attract a better return from investments.
Oxfordshire CC leader Ian Hudspeth (Con) said: “We’re at the early stages. However if the currently ongoing work with our neighbours leads to a conclusion that we have found a value for money way of making savings that allows us to provide some additional protection to frontline services in the future, then we’ll no doubt be keen to move forward.”
In June, local government minister Brandon Lewis (Con) issued a call for evidence on LGPS collaboration.
There are currently 89 English and Welsh local government funds and Mr Lewis said he was “not wedded to the existing number of 89 funds”. However, he also accepted there were “diverse and forthright views” on the question of mergers.
Earlier this month a special committee of local government pension fund managers and others was created to examine collaboration and value for money within the LGPS.
Local authorities in London are also examining the possibility of closer working, as are pension funds in Wales.