First Group consolidates Local Government Pension Scheme assets to create £1bn fund


Transportation organisation First Group has consolidated its pension scheme assets across three Local Government Pension Scheme (LGPS) arrangements to create a £1 billion fund.

The organisation will consolidate its pension schemes’ assets by transferring £700 million from the West Yorkshire LGPS and the South Yorkshire LGPS into the Greater Manchester Pension Fund (GMPF). This will form a combined pension asset fund of £1 billion.

The consolidation, which is being led by Hymans Robertson, has been designed to bring First Group’s three English LGPS funds under one administrating authority in order to drive efficiencies, reduce overall operating costs, and align the funding and investment strategies across the schemes to adopt a de-risked investment approach.

The LGPS is an umbrella defined benefit (DB) pension scheme that is available for employees who work in the public sector or for staff whose employer participates in the scheme. Employees under the age of 75 are eligible to join the LGPS. There are three key schemes; one covering England and Wales, one covering Scotland and one covering Northern Ireland.

Richard Murray (pictured), group head of pensions at First Group, said: “Initially, we thought that a consolidation within the LGPS would only be possible for public sector employers, but working together with Hymans Robertson, we made a case for First Group, as a private sector employer to do the same. First Group has a long-standing relationship with all three LGPS funds and worked closely with them and their advisers to achieve this consolidation. Through the process we received support from all our stakeholders and this culminated in approval by the secretary for state. The success of this consolidation is no small part a result of these great working relationships.

“The consolidation will enable us to better manage the risks across our LGPS schemes, giving us greater control over the investment strategy, an improved balanced sheet, and enable us to better manage our funding across these obligations. This will allow us to improve cost control while maintaining members’ benefits.”

Malcolm Stanley, senior consultant at Hymans Robertson, added: “First Group’s LGPS pensions, with mostly retired employees, were split between several funds. This scenario is not unique; there are over 100 private sector employers participating in multiple LGPS funds. This means added complexity for these employers [because] 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.”