By Judith Ugwumadu | 21 October 2013
The government is to seek advice from financial markets experts to identify ‘vital’ administrative savings in the management of town hall pensions, the local government minister has announced.
Brandon Lewis said the government was looking for input from external organisations, such as banks, actuarial firms and think-tanks, as part of the coalition’s drive for more open policy making.
Speaking on October 18, 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.’
But there was more that could be done, he said.
‘[Last week] I launch[ed] a process to get professional advice and analysis from financial markets experts on ways to reduce the £508m investment management and administration.’
This, he said, would be achieved ‘through greater joint working, [with] potential fund mergers or pooled investments and increased data transparency that will make the pension scheme more accountable to its taxpayers’.
Lewis said the Department for Communities and Local Government would be one of the first Whitehall departments to take up the Cabinet Office’s Contestable Policy Fund, which was established to enable ministers to commission policy advice from beyond Whitehall.
The commissioned work will consider three options for reducing the LGPS’s investment overheads: the provision of a single national investment fund vehicle; a small number of closely aligned combined investment vehicles; or merging of the 89 existing funds into fewer, larger funds.
Cabinet Office minister Francis Maude added: ‘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.’
‘The Contestable Policy Fund allows ministers to draw directly on thinking, evidence and insight from experts beyond Whitehall.’
The department said that the successful organisation would be expected to have experience of pension fund management and to provide a robust cost-benefit analysis on when the potential savings could be delivered across 89 different local government pension scheme fund administrators. Proposals will be presented to both DCLG and Cabinet Office ministers for consideration. The bid closes on 21 October 2013.
