Council pension funds in 'death spiral'
The Government is facing calls to consolidate 101 local council pension funds as part of radical proposals to improve efficiency and cut costs.
A joint letter has been signed by council leaders Peter Jones and Stephen Greenhalgh, former Shadow Treasury chief secretary Lord Flight, Cass Business School professor Andrew Clare and David Blake and Centre for Policy Studies research fellow Michael Johnson.
It warns that local government pension scheme funds, which differ to other public sector schemes because they are funded, are in “a death spiral” as each scheme is being forced to use these assets to meet current pension obligations.
It calls on ministers to consolidate the LGPS into five bigger funds with assets of around £30bn and increase the transparency of the schemes by publishing third-party service costs, net and gross investment performance and membership figures.
The letter says: “The Local Government Pension Scheme is a disparate collection of 101 separate funds, mostly of sub-optimal scale and delivering sub-optimal performance. Several are now so underfunded that they are beyond the point of no return.
“The inability of the LGPS to control costs is masked by the ineffective governance tripartite of employers, central and local government.”