The UK’s largest public-sector pension scheme has said it is under political pressure from the government to drop active managers following the ongoing Neil Woodford scandal.

Speaking to the Financial Times, a senior executive with the £275bn Local Government Pension Scheme said government officials want the scheme to switch into passive management.

Jeff Houston, secretary to the LGPS advisory board, said a 2013 analysis by consultants Hymans Robertson found the scheme could save up to £230m a year in investment fees and £190m in transaction costs by moving all listed assets to passives.

“There are elements within government that want the LGPS to be passive and are trying to find a way for that to happen,” Houston said. “There is a belief we are forgoing savings by not going passive.

“Things like Woodford come along and you get that knee-jerk regulatory reaction…the easiest thing is to just stop them having that ability to invest in actives.”

Star fund manager Neil Woodford was forced to suspend trading on his £3.7bn flagship Equity Income fund in June after the Kent County Council Pension fund, a member of the LGPS, made the decision to pull its £263m investment.

It caused the Bank of England to launch a review into the £1.2trn open-ended fund market to see if there are rules required to minimise risks to financial stability.

Houston continued: “Understandably there are people within government going why haven’t you done that [move to passives].”

Legal & General Investment Management and BlackRock, who run £69bn and £16.5bn of LGPS assets respectively, are the two asset managers that would likely benefit from any switch to passives.