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In a letter to several government ministers, Michael Johnson, research fellow of the right-of-centre think tank, said: "The LGPS (Local Government Pension Scheme) comprises 101 separate funds. Many of them are of sub-optimal scale, delivering sub-optimal performance.
"It would make eminent sense to bring them together, into what would then be the largest pension fund in the UK, with some €179 billion in assets.
"Large pension funds enjoy substantial economies of scale, including commercial clout when transacting with the financial services industry."
UK trade unions are in favour of LGPS fund consolidation, he said, citing their submissions to Lord Hutton's commission and subsequent conversations he has had with the public service trade union, Unison, and other unions.
"They understand that the subsequent improvement in fund performance, care of lower costs, would justify a significantly smaller increase in employee contributions than is currently being sought by the coalition, perhaps by 50 per cent", he said.
Consolidating the LGPS funds would, Johnson said, be in tune with the National Association of Pension Fund's call for 'super trusts' to be set up.
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