The government has been encouraged to avoid introducing "unachievable" short-term deadlines for the completion of asset transfers for the Local Government Pension Scheme (LGPS), ahead of its pensions investment review.

The government recently launched a call for evidence to help inform the first phase of its pension investment review, which will aim to boost investment, increase pension pots and tackle waste in the pensions system.

In its response, the Pensions and Lifetime Savings Association (PLSA) said that the introduction of asset pooling in the LGPS has mostly been delivered successfully in line with the original policy - to create asset pools of around £25bn and deliver investment cost savings.

Indeed, to date, 39 per cent of assets have been transferred, a further 31 per cent of assets are under pool management, and annual cost savings of £180m have been delivered.

The PLSA pointed out that, since pooling was introduced, the government has also asked the LGPS to invest in a range of different asset classes, which it has responded to.

However, the PLSA clarified that whilst completing the transfer of remaining assets to pools is important, this needs to be done in a pragmatic way that is not destructive of value or incurs unnecessary investment losses or costs.

Given this, it warned the government against the introduction of unachievable short-term deadlines for the completion of asset transfers, arguing that an orderly transition of assets is needed instead.

The PLSA also said that whilst it supports the continued development of the LGPS pool model, more critical to success than a particular design of the pooling model is clarity of roles and responsibilities of funds and pools.

Responding to the call for evidence more broadly, the PLSA argued that whilst pension fund consolidation can lead to better outcomes for savers, it is not a "silver bullet" for driving investment into UK productive finance and should form part of a much broader strategy.

PLSA chief policy counsel, Nigel Peaple, said: “We agree with the government that larger pension funds are better able to undertake the complex and costly governance of managing private assets, which can have higher performance, albeit often at higher risk.

“We support the government in taking measures to achieve greater scale in pension funds, where this is in the interest of scheme members, but scale alone will not result in higher investment in the UK."

This is in line with broader industry responses to the call for evidence, with industry organisations arguing that the focus should instead be on creating conditions that enable diversified investment strategies, rather than relying solely on size

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