The union today called for the law to be changed to make it clear it is for Local Government Pension Scheme funds to decide where they invest their cash as part of proposed reforms to pool assets across the 89 funds in England and Wales.
At the 2015 Conservative Party conference, chancellor George Osborne first called for the assets of the 89 Local Government Pension Scheme funds in England and Wales to be merged into six wealth funds, containing at least £25bn of scheme assets each. He said the merger would boost investment in infrastructure.
Following this, seven interim proposals were submitted for approval to ministers in February.
Unison said today that it was not opposed to the creation of these new funds but was concerned that ministers intend to take powers to direct how funds invest scheme members’ money.
Therefore the union called for the law to be changed to make it clear that investment decisions are for each fund to take.
A petition calling for this change has received over 73,000 signatures, above the 10,000 needed to require a formal government response.
Published today, the government stated that LGPS investment decisions would remain a matter for each fund, but councils should compare their investments in infrastructure against the example set by leading global pension fund investors.
“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,” it stated. “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.
“We have recently consulted on proposals to grant the secretary of state a power of intervention which would further protect members’ and taxpayers’ interests. 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.”
However, Unison general secretary Dave Prentis said a change in the law would still be required.
“Ministers have failed to address the key point of the parliamentary petition, which wants it written into law that council pension funds, not the government, should decide where LGPS funds are invested in the best interests of scheme members,” he added.
“We await the publication of new investment regulations, and hope that the government will amend the law so that council pension funds know it is down to them where to invest their cash.”
