Government's pension merger plan could cost Brits millions

Yahoo

20-06-2025

The government has announced plans to merge pension pots, but the move could cost Brits millions of pounds, experts have warned.
The police was originally a Conservative one, belonging to the 86 funds in the Local Government Pension Scheme, which collectively holds the retirement savings of 6.7 million Brits who are or have been employed by local government.
Now, the Labour government has brought it back as part of the Fit for Purpose consultation, which aims at reducing the costs involved in managing the investments.
Read more: Millions of UK households told to spend £49 before end of Friday
However, experts have raised concerns about its implementation, with the LGPS addressing the issue at the Pensions and Lifetime Savings Association's annual local government conference in Bedford, the Daily Express reports.
Under the proposals, government and regulatory approval needs to be given for a fund to set up as a superfund.
If it does not get approval, it will need to merge with a fund that has got approval.
Jennifer Devine, head of Wiltshire pension fund, part of the Brunel Pension Partnership said: 'This is going to be a really costly process for us as well, those 21 funds who didn't get the green light to go forward are being quite heavily penalized here.
'Really, there will be costs in leaving our pool. You can't move billions of pounds without spending millions of pounds.
"The understanding I have from speaking to the central government is that that's just on us. Those are on our costs, and we just have to weather them.'
The Express spoke to other delegates, with one saying: "When a fund doesn't get permission to go forward, and therefore has to merge with a fund that has then what happens is that you are effectively winding up a company, in order to merge with another."
"Think of all the costs involved in that, it's not going to be cheap and it could run into the billions of pounds."
Another delegate said: "It won't be the pension funds paying the costs, because these pensions are guaranteed to pay out, any cost will have to be met by central government which means the taxpayer."
Join our dedicated BirminghamLive WhatsApp community for the latest updates sent straight to your phone as they happen.
You can also sign up to our Money Saving Newsletter which is sent out daily via email with all the updates you need to know on the cost of living, including DWP and HMRC changes, benefits, payments, banks, bills and shopping discounts. Get the top stories in your inbox to browse through at a time that suits you.