• Private sector employer becomes the first to consolidate its funds within the LGPS

FirstGroup, the leading transport operator, has become the first major private sector employer to successfully consolidate its pension schemes’ assets within the Local Government Pension Scheme (LGPS). Led by Hymans Robertson, the consolidation will involve the transfer of £700million of FirstGroup’s assets from two English LGPS funds (West Yorkshire and South Yorkshire) into the Greater Manchester Pension Fund (GMPF) to form a £1bn fund.

This will bring its three English LGPS funds under the control of one administrating authority, with the aim of driving efficiencies, reducing operating costs and crucially to align the funding and investment strategies across its schemes with FirstGroup’s preferred de-risked investment strategy.

Richard Murray, Group Head of Pensions at FirstGroup commented:

“Hymans Robertson has unrivalled expertise within the public sector and has advised us for a number of years. We were aware that they had project managed the successful consolidation of the Ministry of Justice LGPS funds and that their experience in this area would guide us.

“Initially we thought that a consolidation within the LGPS would only be possible for public sector employers, but working together with Hymans Robertson, we made a case for FirstGroup, as a private sector employer to do the same.  FirstGroup has a longstanding relationship with all three LGPS Funds and worked closely with them and their advisers to achieve this consolidation. Through the process we received support from all our stakeholders and this culminated in approval by the Secretary for State.  The success of this consolidation is in no small part a result of these great working relationships.

“The consolidation will enable us to better manage the risks across our LGPS schemes, giving us greater control over investment strategy, an improved balance sheet, and will enable us to better manage our funding across these obligations. This will allow us to improve cost control while maintaining members’ benefits.”

Malcolm Stanley, Senior Consultant at Hymans Robertson added:

“FirstGroup’s LGPS pensions, with mostly retired employees, were split between several funds. This scenario is not unique - there are over 100 private sector employers participating in multiple LGPS funds. This means added complexity for these employers as they have to not only engage with each administering authority individually but also maintain separate accounting records for each of the funds in which they participate.  This complexity adds burden both in cost and management time. 

“By pooling its LGPS funds, FirstGroup will not only reduce the issues brought by this complexity but will also gain greater influence over its overall investment strategy.  Ultimately, it will be able to work with the GMPF to design a bespoke investment strategy that better reflects its mature liabilities and benefit scheme members.”

Cllr Kieran Quinn, Chair of the Greater Manchester Pension Fund and Executive Leader of Tameside MBC commented:

“Greater Manchester Pension Fund is proud once again to be chosen as the Fund of choice for both the workforce and employers.  We continue to drive forward and innovate with our stakeholders to provide sustainable and affordable pensions for workers who deliver vital public services, such as public transport, which keep the economy of this country moving.”