The DCLG has today publicised a tender notice seeking external advice from financial experts on how to make efficiency savings from town hall pension schemes.

Banks, actuarial firms and think-tanks are among the potential bidders to advise the Government on cutting the £508m annual overheads accrued by the 89 Local Government Pension Scheme (LGPS) funds.

The successful applicant will report to ministers on how joint-working with other funded public service pension schemes could be expanded to deliver further savings.

Their research would be based on responses submitted to the DCLG's call for evidence on structural reforms to the LGPS - which opened in June and closed last month.

According to the contract notice: ‘The purpose of this research is to provide Government with robust analysis of the costs and benefits associated with structural reform of the Local Government Pension Scheme, to develop a roadmap to implementation, and to consider how that reform might be applied to other funded public service pension arrangements'.

Firms have until Monday to express an interest in tendering for the £83,333 contract.

The announcement come ahead of next year's much-anticipated outcome on the consultation on reforming the LGPS. 

Ministers are determined to narrow the wide variation in costs per member – which range from £28 to more than £300 for LGPS members, and drive more co-operation between the schemes – including mergers.

Local government minister, Brandon Lewis said: ‘This government is taking action to reduce the massive and unsustainable cost of state sector pensions with higher contributions from well-paid staff.

‘Already for the first time in recent memory, the cost of town hall pensions to taxpayers is now falling,' added Mr Lewis.

‘But there is more that can be done, which is why today I am launching a process to get professional advice and analysis from financial markets experts on ways to reduce the £508m investment management and administration bill through greater joint working, potential fund mergers or pooled investments and increased data transparency that will make the pension scheme more accountable to its taxpayers.'

The tender is one of the early uses of Whitehall's contestable policy fund, an annual £1m cash pot which allows departments to outsource the writing of reports and papers that aid decision-making.  The first such example of the match-funded scheme was the Institute for Public Policy Research's report on accountability among ministers and senior officials.

Francis Maude, minister for the Cabinet Office said: ‘Ministers need the best possible policy advice to ensure better public services and value for taxpayers.

‘Because Whitehall does not have a monopoly on policy-making expertise we want open policy-making to become the default in Government,' he added.