Broadstone wonders whether the Government might be contemplating a massive £150bn pension heist

Last week the Government announced that it was looking for advice on how to manage £150 billion of Local Government Pension Scheme assets in a more efficient manner. Currently these assets are spread out over 89 separate schemes.

The Government is actively looking at some degree of consolidation, but John Broome Saunders, an actuary at Broadstone, believes the Government may be thinking about more extreme measures.

“The local government scheme is unique, as it is the only major funded public sector scheme in the UK. All other public sector schemes are unfunded. If the local government scheme starts being run in a more unified fashion, instead of 89 independent fiefdoms, then it is not difficult to see that the temptation to turn the scheme into an unfunded, Government-backed arrangement may become irresistible.”

Broome Saunders believes that there is a clear precedent for this. “When the Government took on responsibility for the Royal Mail pension scheme, it trousered assets to the tune of £30 billion. The prospect of a further £150 billion dropping its way in treasury coffers may make even George Osborne drool.”