Shared services deliver council pension savings

Cambridgeshire and Northamptonshire councils merged various pensions administrative and investment services last year and are targeting three further partners, as well as a franchised option for other councils within two years, said shared corporate director for finance Nick Dawe.

The programme is currently assessing a number of expressions of interest from other local authority schemes, and is targeting a further three “very large public sector organisations”, he said.

It is “dusting down” its website and other marketing materials ahead of a planned publicity drive after easter to promote the concept, which it is “actively” looking to sell to other local authorities, he told the Public Sector Pension Reform conference on Tuesday.

The billed advantages of shared services are the potential savings in treasury management and pensions adminstration.

A fifth of the overall savings comes from sharing so-called “centres of excellence”, which can be niche expertise in investment management, and a further fifth comes from “transactional improvements”, where the partnered schemes can make use of improved investment leverage, Dawe said.

“It was a bridge too far when we were individual schemes,” he said. “[Now] we can use that market intelligence together.”

This tandem approach is placing the scheme more in the league of the likes of the West Midlands Pension Fund, Dawe told schemeXpert.com after his address.

The “scalable” model was potentially limitless in size, but the service had a two-year target size of “five very large public sector organisations”, he said. 

Shared services at the council level did not require the complex legal agreements in the pooled investment models as offered by asset managers, he said, and protected the interests of the individual councils.