FirstGroup PLC's pension fund assets are being consolidated within a pool of local government pension schemes, making it the first private-sector employer to consolidate its pension fund assets within an LGPS pool, said a news release from actuarial firm Hymans Robertson, which is assisting FirstGroup with the changes.
Some £300 million ($400 million) of the Abderdeen, Scotland-based transportation company's pension assets are currently managed by the £22 billion Greater Manchester Pension Fund, Manchester, England, an underlying pension fund in the LGPS pool. Another £700 million, which is currently held in two other underlying LGPS pension funds — the £11.3 billion West Yorkshire Pension Fund, Bradford, England, and the South Yorkshire Passenger Transport Pension Fund — will be transferred to the Greater Manchester Pension Fund, said a separate news release on the GMPF's website.
Although the Transport Act of 1985 privatized buses in Great Britain, FirstGroup remained part of the pool of local government pension schemes, a company spokesman said in an email.
"Initially, we thought that a consolidation within the local government pension scheme (pool) 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," said Richard Murray, group head of pensions at FirstGroup, in the Hymans Robertson news release.
"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," Mr. Murray added. "This will allow us to improve cost control while maintaining members' benefits."
Added Malcolm Stanley, senior consultant at Hymans Robertson: "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," Mr. Stanley added. "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."
The FirstGroup spokesman said the company and GMPF are discussing the final investment strategy. He did not provide further details.