LGPS & DC Consolidation of Assets

My Ref:  MRP32/1

 

27^th November 2025

 

Circular No: NP/208/25

 

To: The Secretary All Branches & Regional Councils

 

Dear Colleagues,

 

LOCAL GOVERNMENT PENSION SCHEME (LGPS) & DEFINED CONTRIBUTION (DC) CONSOLIDATION OF ASSETS

 

Please be advised the following resolution was received from our Yorkshire and Lincolnshire Regional Council:

 

“This region notes with great concern the announcement recently from HM Treasury regarding the creation of Mega funds with the intention of merging LGPS and Defined Contribution pensions.

 

It concerns this region that having only recently resolved one national dispute, the Labour Party would appear to be spoiling for a fight of their own.

 

This region believes that pensions are deferred wages to allow us and our members nationally to live a dignified life in retirement. Further this region believes that any attempts at altering any pension scheme be that the LGPS or Defined Contribution without meaningful negotiation and consultation with those affected and their representatives is nothing short of theft.

 

This Region requests that;

 

• The General Secretary or anybody delegated by him in his absence to place this matter for discussion during the next discussions they have with GBR or its current Shadow Equivalent

 

• The issue of mega funds and defined contribution schemes is placed on the agenda of all affected Company/Divisional Councils for discussion at the earliest given opportunity with Full Time Officers included, reporting back to our NEC any outcomes or plans detailed by the TOC’s, these reports to be disseminated amongst branches and or regional councils nationally for discussion

 

• Where no such Company/Divisional Councils meetings are scheduled to take place that these meetings are requested to happen, with full reports back to our NEC for dissemination to the branches and or regional councils nationally for discussion

 

• A immediate lobby of all reps who are elected onto the various pensions committees across the combine where we have Defined Contribution and Local Government Pension Scheme Members to highlight our opposition to changes to the scheme that could see our members effected.

 

• Once all reports have been received and disseminated for discussion an immediate set of strategy meetings to be called at regional council level to discuss a plan to protect our pension scheme.

 

• Further to regional meetings our Local and Company/Divisional Councils reps to place this matter for discussion amongst their membership with clear and concise information of what these proposals mean.

 

• As necessary a political lobby begins of our Parliamentary Group MPs in all political parliamentary places within the United Kingdom.

 

• Once all information is known regarding these changes and how DC and LGPS schemes will be affected, regular briefings are given to our members in clear and concise detail about what this means for them.”

 

On 26th November 2025 the RMT Member Pension Schemes Subcommittee submitted the following report which was adopted by the NEC:

 

“We note the concerns raised within the resolution from our Yorkshire and Lincolnshire Regional Council. Many of these concerns relate to the potentially removal of member representation which we acknowledge. As such the RMT has agreed to assist with the funding of a TUC research project in respect of the importance of having pension scheme members representation on trustee boards and governance committees.

 

Considering the resolutions we instruct the General Secretary to raise our concerns with our Parliamentary Group.

 

We also instruct the General Secretary to issue a Circular to all Branches explaining the differences between the two proposals bring made in respect of DC and LGPS consolidation.”

 

As instructed in the decision, please find below in the appendix the differences between the LGPS and DC consolidation proposals. 

 

Yours sincerely

 

Eddie Dempsey

General Secretary 

 

Appendix

 

Local Government Pension Scheme Consolidation and Defined Contribution “Mega Funds”

 

As part of the Government’s pension reforms it was formally announced in November 2024 that Local Government Pension Scheme (LGPS) assets would be pooled into megafunds and similarly Defined Contribution (DC) pension schemes assets would also be pooled into megafunds. 

 

The Government believes that these reforms will unlock up to £80 billion worth of pension scheme assets which will be used to stimulate UK economic growth by investing in infrastructure and businesses. projects

These two proposals were first considered in July 2023 by the last Government as part of the “Mansion House Reforms”.

 

LGPS

 

It is estimated by the Government LGPS in England and Wales will have assets worth around £500 billion by 2030. These assets are currently split across 86 different local authorities, managing assets between £300 million and £30 billion. These assets are managed by local government officials and councillors managing each fund.  

 

The Government believe that by consolidating the assets into a handful of megafunds run by “professional fund managers” will allow them to invest more in assets like infrastructure, supporting economic growth and local investment on behalf of the 6.7 million public servants – most of whom are low-paid women - whose savings are managed.  

 

DC Pension Schemes

 

The Government has estimated that DC pension schemes are set to manage £800 billion worth of assets by the end of the decade.  

 

There are currently around 60 different multi-employer DC schemes in the UK. The Government will consult on setting a minimum size requirement for each of these funds to ensure they deliver investment potential for its members.  

The Government will also consult on measures to facilitate this consolidation into megafunds, including legislating to allow fund managers to more easily move savers from underperforming schemes to ones that deliver higher returns for them.

 

Possible Implications of the proposals

 

It is important to note that the two proposals are not to push LGPS members into DC arrangements or DC members into LGPS. However, there are concerns in respect of both proposals that they are not necessarily being made in the best interests of pension scheme members.

 

As an example, there is no evidence that taking LGPS assets out of local authority control will improve funding or member representation. As an example, there is no proposal to maintain trade union representation in a new LGPS governance structure.

In respect of DC Mega Funds again there are concerns regarding governance and transparency in relation to member representation, and indeed pension security.

 

As noted in the NEC decision, the RMT has taken the decision to take part and assist with the funding of a TUC research project in respect of member representation on pension schemes. As part of this research the impact of the LGPS and DC megafunds will be considered.

 

Updates to follow.