U.K. government challenges local authorities to pool pension fund listed assets faster

The U.K. government is challenging local authority pension funds to "move further and faster on consolidating assets" into one of the existing investment pools.

Chancellor of the Exchequer Jeremy Hunt announced his so-called spring statement, which outlines the government's economic plans and provides an update on the state of the economy, on Wednesday. In a document on its website containing further details of the statement, the government said it wants local authority pension funds to transfer all listed assets to one of eight existing pension fund pools by 2025.

The document said that the government will soon propose the acceleration of the pooling of listed assets to March 2025. The proposal, which will be outlined in a consultation paper, could mean that the existing pools will be in charge of more than £50 billion ($60.1 billion) in assets, which it said will "optimize benefits of scale."

In 2013, the U.K. government required about 90 local authority pension funds to outsource their assets to eight pools. Pension funds have already been pooling assets.

The value of listed assets already pooled across the eight pools could not immediately be learned.

In the upcoming consultation, pension funds will also be asked to consider investing in illiquid assets such as venture and growth capital, as the government wants to move £364 billion of local authority assets into these types of long-term investments to help bolster the

Investment consultants and the retirement industry association cautiously welcomed the statement, which also abolished some taxes on retirement savings. Sources added that they are waiting for more detail on the government's plans for pooling, however.

Iain Campbell, senior investment consultant at Hymans Robertson, said in an emailed comment: "It is positive to gain further information from today's spring statement on the government's desired future path for LGPS pooling."

"Great strides have already been made with regards to the transferring of assets to pools, however this new potential deadline to pool all listed assets by March 2025 is a step-up in expectations from government. We welcome further detail on this in the forthcoming consultation, such as what is classed as listed, as well as how passive assets will be considered," he added.

In a separate emailed comment Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association, said the additional tax relief provides a boost to workers to increase their savings over the long term.

"These changes will also allow additional scope for savers to contribute lump sums, perhaps from an inheritance or a redundancy payment, into their pension to meet any shortfalls before they retire," he said.