Unison is calling for the 11 Scottish local government pension funds to merge into a single £42bn fund, following an official consultation that has split the sector.
In a statement the trade union backed consolidation in the sector, acknowledging the strong funding position but saying that scale would boost investment clout, tackle fee transparency, cut costs and facilitate investment in infrastructure.
“Change is always difficult and there are significant vested interests who will oppose change,” it said.
“Pensions are one of our members most important benefits and they need to be protected, not just today, but in the long-term. This may appear to be radical reform, but in the worldwide pensions sector it will be seen as common sense.”
Unison’s view contrasts with some funds in the sector, including Strathclyde, which accounts for around half of the funds in the Scottish Local Government Pension Scheme (LGPS).
Last year Strathclyde announced its opposition to a merger, with its director Richard McIndoe telling the LGC Investment Seminar Scotland that the problems facing the Scottish LGPS were “not structural”.
A poll at the event showed half the room backed closer collaboration between Scottish funds, while 37% were in favour of mergers. Many in the sector in Scotland are awaiting further developments in England and Wales, where funds are ‘pooling’ assets but retaining some control over strategy.
Lothian, the second largest LGPS fund in Scotland, has argued in favour of voluntary mergers.
A consultation on the matter closed in December and has yet to report back.
The debate has gained some political traction in Scotland with Green MSP Ross Greer telling The Herald: “The proposals spearheaded by Unison, to merge the eleven existing funds into a single national system with much stronger environmental and social considerations in its governance is worth considering.
“Their argument that a single national fund would be subject to much more scrutiny and more likely to clean up its investments is compelling. But it’s not without issues of its own. The existing funds do have an element of democratic governance, with elected councillors and trade union representatives on their boards.”