FirstGroup First Private Firm to Consolidate Pensions under LGPS

UK-based transport operator FirstGroup, which owns US-based Greyhound bus lines, has become the first major private sector employer to successfully consolidate its pension plans’ assets within the Local Government Pension Scheme (LGPS).

The consolidation, which will be led by investment consultant Hymans Robertson, will involve the transfer of £700 million ($947.1 million) of FirstGroup’s assets from two LGPS funds—the West Yorkshire Pension Fund and the South Yorkshire Pension Authority—into the Greater Manchester Pension Fund (GMPF) to form a £1 billion fund.

The LGPS is the largest defined benefit plan in England and Wales, with more than 11,000 employers, 5 million members, and assets of £217 billion. The LGPS is a statutory public service scheme, so the plan’s benefits and terms are set out in regulations passed by British Parliament. It is administered locally through 101 regional pension funds.

“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,” said Richard Murray, group head of pensions at FirstGroup, in a statement. “This will allow us to improve cost control while maintaining members’ benefits.”

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The consolidation will bring the company’s three English LGPS funds under the control of one administrating authority, which is intended to increase efficiencies, reduce operating costs, and to align the funding and investment strategies across its plans with FirstGroup’s preferred de-risked investment strategy.

“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,” said Malcolm Stanley, senior consultant at Hymans Robertson. “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.”

Tags: FirstGroup, LGPS, Pension, Private Sector Pension, UK

New Jersey’s troubled public employee pension fund saw a silver lining Wednesday, as state officials revealed the fund’s assets reached $76.3 billion at the end of October, its highest value in more than two years.

High returns provided relief for the fund and helped cause the uptick in value. In the last fiscal year, the fund returned 13.07%.

The fund is currently at its highest value since July 2015, when it reached nearly $78 billion.

Despite hope from a ratings agency and S&P Global over the summer that the fund will turn itself around, New Jersey remains one of the worst-funded states in the country. In 2016, the fund’s assets were only able to cover 31% of its liabilities.

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According to documents from the State Investment Council, the fund has generated 4.03% so far. However, New Jersey’s long-term assumed rate of return is at 7.65%.

When measured under national accounting standards, the state and local pension fund has more than $168 billion in total unfunded liabilities. The figure is lower under state rules for debt estimation.

Although the state’s actions are in line with Gov. Chris Christie’s plan to increase contributions by one-tenth each year, New Jersey’s contributions will only amount to roughly half of what actuaries recommend. Gov.-elect Phil Murphy has aspirations to either stay in line with Christie’s plan or go above and beyond it.

Tags: Debt, New Jersey, Pension