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04.05.16

Peers call for safeguards to ensure LGPS reforms benefit members

Local Government Pension Scheme (LGPS) reforms need safeguards to ensure that their investments remain primarily in the interests of members and not the interest of the government, peers said in a debate yesterday.

Lord Whitty, a former Labour minister in the Department for the Environment, Food and Rural Affairs, said that the new reforms designated pension funds as British wealth assets, meaning they could be pressured to invest in the interests of the Treasury.

He said the government should accept recommendations from the LGA and the Law Commission that provisions should be written into the new regulations specifying that investment should follow the interests of members.

Lord Whitty said: “Whatever the merits of the pooling and merging system between local authority funds, there is a fear that they may be ​advised to move in directions which reflect the priorities of the Treasury rather than those of the members.”

Baroness Williams, parliamentary under-secretary to the Department for Communities and Local Government, replied that investing in members’ interests remained funds’ primary legal responsibility and that there was no need for specific changes to the regulations.

Another Labour peer, Lord Watts, said there was still “concern” that the Treasury would try to influence local authority pension decisions.

Baroness Williams replied: “The Treasury has no will to start meddling in local decisions as regards directing at pool level.”

However, she said that the Treasury may intervene where funds were being managed poorly.

LGPS has previously been called a “national embarrassment” for its poor leadership, but the reforms have also been open to complaints that they involve a dangerous degree of deregulation and do not allow pension fund members to campaign for their money to be ethically invested.

 

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