Media 62: A well-kept secret? Government proposal to intervene to invest local government pension funds in projects such as HS2
A Lancashire UNISON reader mentioned this recently and an online search confirmed a message which I had found hard to believe:
Government proposals to force the 89 local government pension funds to invest in infrastructure projects have prompted over 100,000 people to sign a petition calling for a debate in Parliament, says UNISON today (Friday).
The proposals are part of the government’s attempt to create six new multi-billion pound British wealth funds. UNISON is concerned that the move could take away funds’ ability to invest in the best interests of local government pension scheme (LGPS) members.
If these changes come into force, it could mean the new funds replace government funding for roads, bridges and railways, which might not give LGPS members the best possible return, says UNISON.
UNISON general secretary Dave Prentis said: “It’s time ministers granted a debate in Parliament on the future of the local government pension scheme. No other pension fund in the UK has this level of interference, and it’s important that MPs can scrutinise proposals affecting one of the largest schemes in the UK.
“There must be proper consultation on the introduction of the new wealth funds, one that must involve unions in any investment decisions.
“Ministers must allow council pension funds to make their own decisions on where they invest the current and future pension pots of care workers, teaching assistants and social workers, and allow them to get the best return.”
The ‘thin end of the wedge’?
From the government’s response to the petition here:
We have recently consulted on proposals to grant the Secretary of State a power of intervention . . .
(Department for Communities and Local Government) Councils must invest local government pension scheme funds in the best interests of scheme members. The Government has no intention of setting targets for infrastructure investment or removing the right of individual pension fund authorities to make their own decisions about strategic asset allocation. However, the pooling scheme assets announced at the July 2015 Budget will improve their capacity to invest in infrastructure, as well as achieving significant cost savings, while maintaining returns. (Ed: weasel words follow)
We expect that the power to intervene would be used exceptionally when there was clear evidence that a pension fund authority was not acting reasonably and lawfully.
The Government is currently considering the responses to the consultation.
– The text of the parliamentary petition is available here. Nearly 103,000 people have currently signed the petition.
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