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First private sector employer consolidates assets in LGPS

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Transport operator FirstGroup is to consolidate its assets in the Local Government Pension Scheme into one regional fund as the first major employer to do so.

FirstGroup is a contributing employer to the scheme, and previously paid in for employees who were members of the West Yorkshire and South Yorkshire funds. It will transfer the £700m it held in the two Yorkshire funds to the Greater Manchester Pension Fund, to form a £1bn pot.

It is the second major transfer of assets into the Manchester fund from other LGPS funds, and the first major consolidation involving a private sector employer. Probation trusts previously participated in 35 different English and Welsh LGPS funds, but in 2014, the Ministry of Justice transferred all probation trust pension assets to the Manchester fund, following a competitive bidding process.

According to actuarial firm Hymans Robertson, which advised on the consolidation, more than 100 private sector employers paying into the LGPS participate in more than one regional fund.

The aim of the consolidation is to reduce operating costs and “align the funding and investment strategies across its schemes with FirstGroup’s preferred de-risked investment strategy”.

Richard Murray, group head of pensions at FirstGroup, said: “Initially we thought a consolidation within the LGPS would only be possible for public sector employers, but working together with Hymans Robertson, we made a case for FirstGroup to do the same.

“FirstGroup has a longstanding relationship with all three LGPS Funds and worked closely with them and their advisers to achieve this consolidation.”

Malcolm Stanley, senior consultant at Hymans Robertson, said if a private sector employer paid into more than one LGPS fund it resulted in additional complexity.

“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.

Kieran Quinn (Lab), chair of the GMPF, said: “GMPF is proud once again to be chosen as the fund of choice for both the workforce and employers.

“We continue to drive forward and innovate with our stakeholders to provide sustainable and affordable pensions for workers who deliver vital public services, such as public transport, which keep the economy of this country moving.”

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