Cockell calls for lifting of pension investment restrictions

11 Sep 14
A former chair of the Local Government Association has called on ministers to lift the restrictions on the investments that members of the Local Government Pension Scheme can make in a bid to help reduce the deficit in the schemes.

By Richard Johnstone | 11 September 2014

A former chair of the Local Government Association has called on ministers to lift the restrictions on the investments that members of the Local Government Pension Scheme can make in a bid to help reduce the deficit in the schemes.

Sir Merrick Cockell, who is now the deputy chair of the London Pension Fund Authority, said the government should go further than plans already set out by the Department for Communities and Local Government to expand the use of common investment vehicles between funds.

Currently. LGPS funds face caps on the amount they can invest in different classes of asset.

Cockell said that the government was focused on making changes to the LGPS this year, with the aim of reducing the deficits in public pensions.

However, he said there was a need to go further than current plans so the £4.8bn pension fund could get ‘direct access to asset classes that provide the long term returns that are the best match for our liabilities’, he told the LPFA’s annual Fund Member Forum in London on Tuesday.

‘We have sent this message very clearly to the government and are encouraging others to embrace this.’

Responding to the comments, Nigel Keogh, CIPFA’s pensions technical manager, told Public Finance said the institute shared Cockell’s view.

‘We would agree that the LGPS investment regulations are in need of modernisation and urge DCLG to address this at the earliest opportunity,’ he said.

Also at the forum, pensions expert Ros Altmann said collaboration and partnership between LGPS funds could help address the impact low interest rates and government debt yields are having on deficits.

‘There is a real need for more creative investment solutions, for example, smaller funds coming together with larger funds to invest on a collective, active basis,’ she said.

‘This will bring benefits in diversification and economies of scale, as well as improved governance and greater expertise. It will also allow funds to access asset classes such as infrastructure, which deliver long-term returns that match pensions liabilities.’


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