One of the previous Chancellor's flagship policies was to propose the pooling of £200 billion in LG investments into 6 funds. The proposals seem to have slowed but the timetable represents a massive change in terms of financial risk, governance and accountability. Overall its yet another big ticket issue for the sector to focus on, along with adult social care, housing, jobs , skills , business rates etc.
As big-ticket pressures on local government finance dominate the headlines, particularly in the week of Philip Hammond’s first autumn statement, Local Government Pension Scheme pooling looks like a side-issue. Who would worry about the retirement fund of council officers when authorities do not know how they will fund social care after 2020? But the administration of £200bn is not to be sneezed at – or at least, its maladministration would be big news. Pooling is a fundamental change to the way LGPS funds work. Since the early 1980s the management of the funds has been increasingly outsourced to city firms as the investment world grows ever-more complex. Funds pooling their investments, to secure lower fees from external managers and strengthen their in-house efforts, is not a reverse of that, but it is a step towards a ‘third way’.