25.10.16
Government urged to stop ‘interfering’ in LGPS funds after Commons debate
New government regulations could interfere in the local government pension scheme (LGPS), unions have warned.
Yesterday MPs held a Westminster Hall debate on the changes to the LGPS, which are due to come into force on 1 November, following a 106,000 signature petition from Unison.
The proposals will create eight common investment vehicles to decide how local government pensions are invested.
Unison believes that this could lead to funds being invested in infrastructure projects instead of in their members’ interests. It also says that the government would require funds to make their investments in accordance with UK government foreign policy, which it said would breach EU directives.
At the debate, Labour MP Jack Dromey said that the proposals were “not only illegitimate but potentially unlawful” and that the government should “go back to the drawing board, sit down with the trade unions and negotiate a sensible way forward”.
Marcus Jones MP, the parliamentary under-secretary for communities and local government, said: “I want to reassure those scheme members that their pensions are certainly not at risk and that we are giving local authorities more and not less control over investments.”
He added that infrastructure investment was “increasingly seen as a suitable option for larger pension funds with long-term liabilities” and that around 0.3% of LGPS assets were currently invested in infrastructure, whilst other funds invested 10-15%.
Dave Prentis, general secretary of Unison, said: “Ministers have created uncertainty by saying it is for LGPS funds to decide how they invest while reserving the right to intervene.
“It is unprecedented for the government to interfere in funds and is a breach of EU law, which clearly says member states shall not require institutions to invest in particular categories of assets.
“The government must listen to the House of Commons debate and move to clarify once and for all that it is for LGPS funds to decide their own investment strategy.”
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