The UK government’s ambition to see all local government pension schemes pooled in so called ‘megafunds’ took a step closer to realisation this month as six new schemes joined LGPS Central taking pooled assets to GBP100 billion.
The Gloucestershire, Hampshire, Norfolk, Oxfordshire, Suffolk, and Wiltshire local authority pension funds have signed a memorandum of understanding to join LGPS Central’s existing eight schemes, creating a megafund covering 5,000 employers and 1.6 million scheme members.
Before the new additions, LGPS Central said pooling is set to drive an estimated cumulative cost saving of around GBP300 million by 2030; efficiencies that will grow further as more funds join and the AUM increase.
With GBP392 billion in AUM the LGPS is one of the world’s largest funded pension schemes and is seen as ripe for supporting the UK government’s growth ambitions.
Since 2015, the 86 administering authorities have created eight separate pools designed to power economies of scale and broaden investment strategies.
However, the government says: “Few in the scheme would disagree that pooling has not delivered to its full potential and that change is needed to ensure that the scheme continues to perform in the long-term best interests of members, employers, local communities and the wider UK economy.”
As part of a swathe of pension reforms designed to ‘unlock the LGPS investment potential’, the Pension Scheme Bill mandates that local authority scheme must be in pools of at least GBP25 billion by 2030.
Joanne Segars, Chair of the Board at LGPS Central Limited, says: “This is a landmark moment for LGPS Central and for pooling across the UK. The decision by six prospective Partner Funds to join us is a clear endorsement of the robust investment platform, responsible investment focus, and collaborative culture we’ve built alongside our current partner funds. Together, we will continue to deliver scale, value, and sustainable outcomes for all our partner funds, their participating employers and scheme members”.
Mark Smith, Head of Oxfordshire Pension Fund, adds: “We believe this partnership will enable us to achieve greater scale, improved opportunities, and increased innovation in our investment portfolio, while ultimately delivering long-term value for Scheme Members and Employers. This partnership marks a significant step forward in that journey.”
LGPS Central is the second megafund to announce new additions this October after the Border to Coast Pensions Partnership confirmed that it will expand to include 18 LGPS funds with more than GBP110bn in AUM from April 2026.
Once complete, the expansion will see seven new funds – Cambridgeshire, East Sussex, Essex, Hertfordshire, Kent, Northamptonshire, and West Sussex – join the existing 11 Border to Coast partners.
