Pension funds, not ministers should decide where to invest their members’ money
(Unison press release: https://www.unison.org.uk/news/press-release/2016/01/local-government-pension-funds-not-ministers-should-decide-where-to-invest-their-members-money-says-unison/)
Local government pension funds must be able to decide where to invest their money in the best interests of present and future pensioners, and should not have their investment decisions dictated by the government, says UNISON today (Thursday).
Ministers have drawn up plans to enable the 89 funds that make up the local government pension scheme (LGPS) to pool their combined assets so that they are large enough to invest in huge infrastructure projects.
To allow the LGPS funds to invest in big projects like new motorways, bridges or housing developments, the government wants to see the creation of wealth pools that are at least £25bn in size.
While UNISON is not opposed to the funds coming together so they can invest on a grander scale, the union is much less enthusiastic about the government being able to direct where scheme members’ money is invested.
It must be the combined funds – and not government ministers – that decide where to invest scheme members’ future incomes, in ways that are in their best interests, and not that of the government, says UNISON.
The union believes union-nominated representatives should be appointed to the new pool governance structures so that any investment works for the millions of teaching assistants, refuse collectors, homecare workers and other town hall workers whose pensions are held by the scheme, says UNISON.
UNISON General Secretary Dave Prentis said: “Pension funds are supposed to invest for the benefit of fund members, and should not be used as a substitute for investment that should be coming from the public purse.
“Making pension funds plough their assets into the latest government initiative could very well mean poor returns for workers in the LGPS pension scheme. Funds should not have to risk gambling away their members’ retirement incomes by subsidising an infrastructure project that should be funded from government coffers or by the private sector.
“The local government pension scheme should not be a sovereign wealth fund for the government to spend as it sees fit.”
Notes to editors:
– A pensions briefing on the government plans is available here
– UNISON has long argued that the LGPS should be ‘cost transparent’ and welcomes the proposal that the asset pools should be. Transparency will allow funds to make significant improvements in investment returns, says UNISON.
– UNISON has argued that the LGPS should invest in line with European law, just like other pension funds, and should not be singled out for special intervention.
– The government is consulting on a ‘pooling’ of the LGPS funds and investment criteria. The consultation ends on 19 February 2016.
– The England/Wales LGPS Scheme Advisory Board, the Law Commission and UNISON have requested that the government apply the investment regulations applicable to all other pension funds in the UK and the European Union – EU Directive 41/2003 Institutions for Occupational Retirement Provision (IORP).
– All UNISON press releases can be found atwww.unison.org.uk/news/media-centre/
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Posted on28 January 2016