FirstGroup consolidates £700m in Greater Manchester LGPS
Transport operator FirstGroup has consolidated its pension scheme assets within the Local Government Pension Scheme (LGPS) in what is believed to be the first move of its kind.
The company has transferred its existing £700m assets from the West Yorkshire and South Yorkshire pension funds into the Greater Manchester Pension Fund (GMPF), where it already has around £300m worth of assets.
The move, which was approved by the secretary of state for communities and local government, is designed to improve efficiency, operating costs, and the alignment of its funding and investment strategies with the company's de-risking strategy.
Group head of pensions Richard Murray said members would benefit from the transfer, which he had previously thought impossible for a private sector employer.
"Initially we thought that consolidation within the LGPS would only be possible for public sector employers, but working together with Hymans Robertson, we made a case for FirstGroup, as a private sector employer, to do the same," he said.
"The consolidation will enable us to better manage the risks across our LGPS schemes, giving us greater control over investment strategy, an improved balance sheet, and will enable us to better manage our funding across these obligations. This will allow us to improve cost control while maintaining members' benefits."
The consolidation was aided by Hymans Robertson, whose senior consultant Malcolm Stanley said FirstGroup's situation - where its assets were split between several funds - was not unique.
"There are over 100 private sector employers participating in multiple LGPS funds," he said. "This means added complexity for these employers as 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. This complexity adds burden both in cost and management time.
"By pooling its LGPS funds, FirstGroup will not only reduce the issues brought by this complexity but will also gain greater influence over its overall investment strategy. Ultimately, it will be able to work with the GMPF to design a bespoke investment strategy that better reflects its mature liabilities and benefit scheme members."
GMPF chairman and Tameside Metropolitan Borough Council executive leader Kieran Quinn added: "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."
The GMPF will next year adopt a segregated mandate structure with the West Yorkshire and Merseyside funds within a £35bn Northern Pool. The arrangement will also see an investment company set up to run collective investment vehicles in alternative asset classes.
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