Local authorities will no longer be able to borrow money from the local government pension scheme funds and will be forced to ring fence assets in separate bank accounts. http://www.ipe.com/news/uk-public-authorities-forced-to-ring-fence-pensions_33776.php
The amended legislation will also ensure pension fund assets are kept separate from general council funds, although this change will not be effective until April 2011 to allow authorities to bring their administration processes up to date.
The union has been campaigning to improve the governance of the LGPS and these changes would not have happened without the union’s intervention. Changes to the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009 will outlaw administering authorities from plundering pension funds for cash; something which has been illegal in the private sector since 2007.
While the changes are far from perfect, they are a step forward, from April 2010 the employers will not be able to borrow our money and pay us back with low interest rates, which is what they have been doing for years. According to our Capital Stewardship campaign who went through LGPS accounts, in the last financial year 63 councils borrowed a total of £2.75bn at interest rates equivalent to 0.33%, this returned a paltry £9m in return to the funds. Commercial rates of interest would have seen a return of £140m.
There is still a battle to be won and improve the current governance arrangements and require the funds to be invested in the best interests of us the scheme members these are the requirements of Directive 2003/41/EC on the Activities and Supervision of Institutions for Occupational Retirement Provision or the IORP Directive. Watch this space.
