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Treasury plans £10bn council pension raid

Chancellor George Osborne is planning to raid local authority pension funds to help finance UK infrastructure projects, according to The Times.

In his autumn statement, Osborne (pictured) said the Government planned to spend an additional £30bn on infrastructure in the next 10 years, with £20bn expected to be raised from private sector pension funds. The remaining £10bn will come from extra Government spending.

However, The Times says Treasury sources now say at least £10bn of the the £20bn will come from local government pensions.

In November, the National Association of Pension Funds and the Pension Protection Fund signed a memorandum of understanding with the Government to help pension funds invest more in infrastructure.

ABI director general Otto Thoreson wants the Government to create a new class of infrastructure bonds to facilitate investment from insurers and pension funds.

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Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. So, on the basis that as much as 25% of the council tax we have to pay are gobbled up on pensions, our bills on this front will be going up still further. Great.

  2. Now for the Tsunami! Does the Chancellor know what he is doing?Gordon Brown(god bless his soul,if he has one) is a great example of how ‘not’ to do such crazy things.When will these people learn?These are the so called ‘leaders’ ,and crackpot ideas are their only way of thinking as most of them have never had a proper job or had to live in the real world.

  3. As said above do these men never learn? This a ridiculous idea, is Osborne so bereft of ideas?

  4. Politicians never learn. They don’t want to waste time thinking about the unintended consequences as GB shows…

  5. At first I thought that this could be a potential disaster in the making then after some thought I realised that it could actually be far worse.

  6. Not The Times paywall scam, report story exclusively covered by the Times and include a link to the Times…effectvlely a newsvert for the Times to get us to pay for their site..

  7. “ABI director general Otto Thoreson wants the Government to create a new class of infrastructure bonds to facilitate investment from insurers and pension funds”.

    Two key words might just be “bonds” & “investment” which may indicate that the “raid” that’s being contemplated is not quite the same thing as Gordon’s straightforward snaffling.

  8. Devoid of ideas and a back bone, Osbourne ( I believe the mexciana spanish translation is chihuahua), is simply following orders from institutions who at this time and for some time to come should be keeping their collective heads down. I’ll go for an increase in council tax of 25% as long as the personal allowance is raised to £12,000 and the tax rate upto £50k is 10% and 20% thereafter and corporation tax is reduced to 5%, local business rates are halfed nation wide. Then VAT is dropped to 6%, fuel duty reduced by 56% and employers no longer contribute national insurance payments for their employees. This might mean cancelling our neverending engagement in Afghanistan, or all our other pomp and prestige moments around the globe, but I think its a fair trade off!

  9. What might be called’ the madness of (king) George!!

  10. ‘you cannot be serious’
    ‘i cannot believe it’
    ‘Just like that’
    All well know sayings that can be used to describe the latest bit of lunacy from our Leaders!
    A prize for the original source of each?

  11. Most of these responses appear irrational, perhaps inflamed by the ‘raid’ headline.

    My reading of the press coverage is that the Government is encouraging pension funds to invest existing assets in infrastructure projects. At most this is a direction for investment not a ‘raid’, and no reason why tax would rise as a consequence, unless there is something I’ve missed?

    Business Secretary Vince Cable says that the government “would offer long-term investors assurances and clarity about a “steady return” on their money” – what’s wrong with that?

    Pension fund trustees and administrators have a legal duty to invest their assets responsibly, so any infrastructure offering will have to meet normal criteria for investment, won’t it?

  12. Terence P. O'Halloran 11th January 2012 at 11:58 am

    I have read the piece through a number of times and come to an entirely different conclusion.

    Tescos give shares to their employees through internal savings schemes. It gives incentive, we are told, to do a great job and improve the end product, the service given, and thereby increase the value of the investment. It is called incentivising.

    Surely if local authority employees can gain financially through their pension arrangement along the same lies as the Tesco employees and ESOPS that will keep costs down and incentivise the cost / benefit analysis that many of us crave from public institutions.

    As @Peter points out, this is a fund investment strategy, not a GB raid on funds. Perspective needs to be maintained. My perspective indicates a positive note of optimism in the initiative.

  13. Paul
    There is nothing irrational about experiencing the same scenario but from a different perspective.
    Surely the focus of any investment is not to be specific in its terms of market place,more to be a sensible and risk averse opportunity.
    By aiming to provide ‘pension fund managers from the Council sector’ with a wonderful opportunity it seems to me that this is the irrational part you refer to!
    Why is this sector anymore suitable than any other,and what does the Chancellor expect to get from this initiative?
    The answer is quite simple-the funds are easy meat!!

  14. From the admittedly potentially biased “Conservative Home Bloggs” website (although purely making a factual statement) is;-

    “Osborne to raid £140bn town hall pension pot” says the headline to a report (£) in The Times. It actually refers to an proposal from councils to offer to fund infrastructure projects rather than making more conventional, private sector, commercial investments. But presumably they would only provide such funding if the safeguards and returns were attractive.”

    As Paul & Terence said you need to read beyond the word “raid”. Of course whether or not such an investment is a good idea is quite legitimately a matter for debate, but lets not go charging down the “not another insane tax charge on pensions” road without at least checking the facts.

  15. If this really is a good investment opportunity why does it have to be targeted at Local Government Pensions at a time when there is already threat of strike action over loss of benefits to members? Surely a sound financial investment will attract money from a variety of sources??

  16. As an investment private sector funding of hospitals has been a huge success for the PPI companies that invested (at the taxpayers expense over many years to come). Therefore why shouldn’t Council Pension fund managers chose to invest in similar infrastructure projects (hopefully not on quite such advantageous terms) rather than invest in conventional portfolios which could suffer over the coming years?

    Not a raid but an investment opportunity – a case of the media over dramatising the reality (nothing new there)!

  17. @Morty – the article said;-

    “…….with £20bn expected to be raised from private sector pension funds. The remaining £10bn will come from extra Government spending.”

    All too easy when given the headline “Government raids public pensions” to miss the details……

  18. I was wondering where the £33bn for the high speed link was coming from…

  19. CJ | 11 Jan 2012 11:06 am

    You missed out the fact that Wigan are going to take the Premership Crown come May 2012! hahahaha …………………..

  20. At Anonymous 11:25am

    In reply to your question:
    – John McEnroe
    – Victor Meldrew (think that was ‘I don’t believe it’) unless I have this one wrong
    – Tommy Cooper

    Sorry what was the topic again??

  21. At least Gordon Brown’s pension ‘raid’ was balanced with a 2% cut in Corporation Tax in the same budget – or has everyone forgotten that?

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