The Department for Communities and Local Government has proposed that £85bn held by the 89 local authority pension funds should be moved into a single passive investment vehicle, triggering immediate reaction from consultants and schemes.

The government response to its call for evidence on how local government schemes could create cost savings and realise economies of scale has focused on creating passive common investment vehicles for equities and another for alternative assets.

This has picked up on a wider trend in local government pension schemes, with Shropshire County Pension Fund in September becoming the latest to up passive management to reduce its fees.

Early reaction came in from industry members including the Centre for Policy Studies' Michael Johnson and London Pensions Fund Authority chief executive Susan Martin, with some hailing it as a "defining moment" for the LGPS.

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