The government has launched a consultation on plans to combine the Northumberland County Council Pension Scheme into the Tyne and Wear scheme, in the hope of saving up to 12% in administrative and governance costs a year.
The Ministry of Housing, Communities and Local Government said changes affecting the LGPS including the introduction of the career average scheme in 2014, increased oversight by the Pensions Regulator and the application of the Markets in Financial Instruments Directive II had “significantly increased the complexity of the LGPS, and therefore the specialisation, skills and volume of work required to administer it and provide a good service.”
The merger would predominantly generate savings for employers in the Northumberland Fund – one of the smallest LGPS funds in England and Wales – that would equate to around £0.5m a year. Therefore, the implementation and transitional costs will be borne by the Northumberland fund.
South Tyneside Council is already operating a shared pension administration service for both Tyne and Wear and Northumberland County Council schemes.
Both Northumberland and Tyne and Wear are part of the Border to Coast Pensions Partnership. However, while the latter is in the process of transitioning its assets into the pool, the former has not made any investments due to the imminent merger.
Northumberland’s assets will be aligned with the Tyne and Wear fund’s new target investment strategy at the same time as the scheme moves into Border to Coast, to minimise transaction costs, the consultation stated.