By Professor John Clancy and Professor David Bailey
22nd January 2026

Stairway to scandal:
How £1.1 billion of taxpayers' money was handed over by West Midlands Pension Fund in management expenses

Annual payment to managers now £142 million.

Doubled since 2018, when it was £68 million.

Expenses up by 12 percent or £15 milion this year, whilst Council cuts and redundancies made, and council wage increases limited.

Managers' top slice is the same each year, regardless of investment returns.

If Bradford, rather than Wolverhampton, had run the fund, investment returns even better, but for 1/8th of the price!

Fund £22 billion asset base barely ever used to pay out any pensions or retirement lump sums.

This year's £142 million payout indicates fund will find a further £1.4 billion in assets down the back of another sofa over the next 10 weeks, having already found £1.1 billion last month, to hit £24 billion.

You thought the point of the UK Local Government Pensions Scheme (LGPS) was to pay out pensions to former local government workers, right?

Well, since 2016 in the West Midlands at least, another priority has dominated: deducting from the fund

£1.1 billion

in fund management expenses, almost entirely to investment managers.

Whether you look at this in terms of assets, or revenue, or both, this is taxpayers’ money, and it’s a scandal.

Since just 2022, £623 million has been deducted from the West Midlands pension fund in management expenses.

And last month we passed the milestone:

a £1.1 billion

management expenses payout
since 2016.

That's according to Wolverhampton City Council Pension Fund’s 12th December Budget documents.

Wolverhampton City Council runs the West Midlands Pension Fund for reasons lost in the mists of time.

In 2018 the fund shelled out £68 million in management expenses, following political pressure (from this blog's co-writer, John Clancy) on the fund managers to cut their costs like everyone else. Cynically, after the fund's boss promised to get a grip on costs, they were ramped back up again from 2018, and then some!

This financial year it will be £142M.

It’s an actual top slice: almost exactly the same proportion of the fund - every single year.

It’s also a top slice which is entirely independent of the performance of these managers, of which more later.

But it's a good job too (for the managers' bank balances) because its performance has been barrel-scrapingly appalling. And as we've already pointed out, last year's £128 million expenses payout was for an embarrassing, truly woeful 1.7% return on investment.

We can reveal that in the ten years 2016-2025, despite handing over £1 billion in taxpayers' assets for management expenses, the fund actually lost at least £1.5 billion compared to performance elsewhere.

That main elsewhere was West Yorkshire. Bradford Council runs West Yorkshire's Pension fund just as Wolverhampton runs that of the West Midlands.

And if Bradford, rather than Wolverhampton, had run the West Midlands Pension fund, here's how it would have gone:

It's a triple whammy. There's the loss of the £1 billion, but there's also the lost investment returns on those squandered assets, and then there's the poorer performance of the West Midlands' investment choices.

Bradford's 10-year return on investment assets for West Yorkshire was an impressive 97% for its £137 million in expenses.

Wolverhampton, by contrast, got only 91% for its £1 billion in expenses.

£1 billion knowingly, obstinately and persistently squandered by Wolverhampton City Council on behalf of 700+ taxpayer-funded state employers across the West Midlands. This, despite repeated warnings that their costs were out of control.

Every council, every state school, every FE college in the West Midlands is part of the West Midlands Pension Fund. So are the pensions of non-uniformed staff of the West Midlands Police and the West Midlands Fire and Rescue. It's not just about council workers.

This loss of £1 billion impacts directly on their budgets. They pay higher employer pension contributions because of this annual top slice to the investment managers. We calculate, as much as 4% extra on every employee's pay slip.

That's money which could have been spent on public services in the West Midlands, but has instead been squandered into the pockets of wealthy investment managers across the globe.

They're paid their fee basically just for turning up to work. Or, perhaps, just turning up to the place of work, because they're not really paid to work.

Quite literally, win, lose or draw, it’s the same number of points.

If they lose you a load of money, or win you a load of money, they still get paid the same proportion of the fund.

When we deal with the huge sums involved in pension funds we refer to proportions in basis points (bps), which are hundredths of 1% (half a percent is 50 bps, three-quarters is 75 basis points etc.)

And since 2020 it's been a choice of either 58,59 or 60 bps, regardless of investment performance. It's just a direct debit payday every time.

Whilst 60bps might not sound a lot (you'd hardly notice it each year), multiplied over 10 years it's 600bps. That ends up at roughly 6% of the fund. A £22 billion fund. Notice it now? Kerching!

As we said in our last blog if you pay income tax, National Insurance, Fuel tax, Council tax, other asset taxes, or VAT, this is your money being diverted into the coffers of investment managers.

The fund repeatedly tries The Tom Jones Defence to suggest that what it is doing in terms of expenses is not unusual.

It's really a kids' playground defence: it's not just us, Miss, they're doing it too!

Well, we know from Bradford that there are proper Grown-Ups in the room doing what's right. And running almost exactly the same-sized fund, and containing the next largest city after Birmingham, Leeds.

If you refer to our blog on the 20th of November where the Investment fees of every one of the 97 LGPS Funds is listed, there are as many as 51 funds which pay less as a proportion than the West Midlands Fund.

Over the last 10 years, over 99% of the pensions and retirement lump sums of the pensioners in the West Midlands Pension Fund have been met from employee contributions, and mainly mega-contributions from taxpayer-funded employers across the region. And the average pension to (mainly women pensioners in poverty) is no more than £330 a month.

So it's ended up being a pretend pension fund, a PPP. One whose £24 billion asset base only pays out pensions once in a blue moon.

But it does other things as regular as clockwork, like top-slicing now £142 million a year in fees.

And so it fulfils its real basic object: hoarding £24B of taxpayer assets, twice what is needed to pay ALL of its current and future pensions.

And so fund investment managers' mega-expenses, and keep them with megafund assets to 'work' with.

And in doing so, helping to wreck public services.