11.05.16
Government ignores Unison concerns about pension fund regulation changes
Pension scheme investment decisions will remain under the control of local authorities, the government has insisted in response to a Unison petition on the government website which warns that proposed changes could breach European law.
The petition, which has 73,509 signatures at the time of writing, calls on Parliament to debate the proposed changes and echoes existing warnings that they could lead to pension schemes being used to support government infrastructure projects instead of providing returns for their members.
It says that they could breach Article 18 paragraph 3 of the EU Directive 41/2003 Institutions for Occupational Retire Provision, which says that EU states shall not require institutions located in their territory to invest in particular categories of assets.
In its response, the DCLG that the proposed changes will not take away investment decisions from councils.
“Councils must invest local government pension scheme funds in the best interests of scheme members,” said the department. “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.”
Dave Prentis, general secretary of Unison, said: “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.
“It’s up to council pension funds to decide where to get the best return on their investments. Council pension funds must be able to make their own decisions, not be told where to put their cash by ministers.
“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.”
The DCLG said that councils will be required to compare their infrastructure investments against those carried out by leading pensions funds and that they are consulting on proposals to give the communities secretary the power to intervene in pension funds.
The petition needs 100,000 signatures to make it a mandatory topic for debate.
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