Compromise and unity should not preclude variety

The prize for success in this process is potentially huge – the creation of substantial asset pools delivering better investment returns, significant cost savings and, ultimately, more sustainable long-term benefits for pension scheme members.

Not surprisingly, the obstacles to attaining such a valuable prize are daunting. It is an enormous and complex process involving some £250bn of assets held by 91 LGPS funds across England and Wales, each with its own governance structure, investment strategy, risk profile and administration arrangements.

But the challenges are being overcome thanks to the expertise, creativity and sheer hard work of the local government pensions sector.

These qualities are not exclusive to the LGPS. Similar levels of knowledge, vision and commitment are widespread across the broader pensions and investment industries, which raises the intriguing possibility that colleagues in other pension funds, across both public and private sectors, could apply their expertise to achieve similar rewards.

Indeed, there are indications that this is more than just a possibility. The Department for Work and Pensions’ recently published white paper on DB pensions outlined its plan to consult on changes to facilitate consolidation on a much wider scale than just in the LGPS.

I find it especially encouraging that, through calls and meetings, including conversations at the recent Pensions and Lifetime Savings Association’s Investment Conference in Edinburgh, I am sensing a genuine interest from beyond the LGPS in the work we have done, and what others can learn from our experience.

None of the progress achieved by LGPS pooling could have been done without a willingness to work together to achieve common goals, both within and between the pooled entities.

This inevitably means some compromise, and an acceptance that some collaborations will follow different routes. Unity should not preclude variety.

But if there is one lesson the broader pensions community can learn from the process we are undergoing, it is that we can achieve more by working together than by ploughing our own, individual furrows.

Susan Martin is chief executive of the Local Pensions Partnership