"Breaking the LGPS out of its pre-Maxwell time warp"

Check out UNISON Dave Watson post "I was speaking in a panel debate on governance at a well-attended Scottish Local Government Pension Scheme (LGPS) conference in Edinburgh today.

The LGPS is facing some major changes to governance structures and pension funds are focused on what this means for the existing funds. The essence of my argument was that the LGPS is stuck in a pre-Maxwell time warp.

For those not familiar with the history of pensions governance, Robert Maxwell committed a massive fraud by plundering his employees' pension funds in order to shore up his companies. As a result, pensions law changed to include better member representation on pension funds and a legal separation from the employer.

This has been followed through in European law through the provisions of the IORP Directive. The LGPS is probably the last pension fund to operate with limited member representation and there is no separation from the administering authority.

The pensions committee of Scotland's eleven funds are simply council sub-committees with councillors making the decisions. UNISON believes the current structures are unlawful, but they have to change anyway to comply with the UK Public Service Pensions Act.

A consultation paper that sets out the issues will be published this week. Even more challenging for the current funds is the concept of scheme merger or at least shared services. UNISON has commissioned expert evidence that leads us to believe that larger funds perform better and reduce investment costs.

Paying £millions to the same 'masters of the universe' who created the financial crash, is a particular concern to our members who are suffering the consequences with pay and job cuts.

Interestingly, another presentation at the conference came to a similar conclusion on external fund management costs. In the current financial environment, paying too much to fund managers means even bigger cuts in services.

The same applies to poor investment performance. In addition, we could use the £24bn of assets in the Scottish funds for useful local investment, rather than investing almost half of it abroad.

Strengthening LGPS scheme governance is long overdue and members have a right to have a meaningful say in the decision making process".

“The Battle for the LGPS Governance”

Today I went to the first UNISON national seminar on the Local Government Pension Scheme (LGPS) -“Representation and Governance” in central London.

While I appreciate that for some strange reason, many folk do not appear to value the governance arrangements of the LGPS. I and about 75 others from across the land disagreed and had made our way to the NUT headquarters in Kings Cross to take part in this event.

The seminar was chaired by UNISON NEC member Jane Carolan and the opening speaker was UNISON General Secretary, Dave Prentis. Dave pointed out that the LGPS had an estimated 3.6 million members and the total value of all investments in the scheme was around £125 billion. How well this scheme is run is actually of importance not only to scheme members, but also to some extent, the wider British economy.

There was a number of speakers including the “enemy” (joke of course) CLG civil servants Bob Holloway and Terry Crossley. By co-incidence, both the CLG and UNISON speakers, used the same photo of the first major pension thief, Capt Bob Maxwell, in their presentations. He of course, stole hundreds of millions of pounds, from the “Mirror” pension scheme.

The presentation on the LGPS and EU Directive 41 “Institutions for Occupational Retirement” (aka “IORP”) was, believe it or not, absolutely fascinating.

In the past there has been a dispute between senior civil servants and union negotiators whether the LGPS was a “Bath” or a “Sausage machine”. Today, we also learnt that there was a discussion on whether or not it was a “duck” as well? The plot thickens.

It’s getting a bit late and there was too much to post tonight. So I will post various stuff I found interesting later on in the week.

Update: I forgot to mention the Maxwell connection and the LGPS. In order to stop pensions theft and other bad practices the Government commissioned the Goode Report. One of the recommendations of this report was that the LGPS should have staffside representation with statutory rights (short of voting rights). However, due to "opposition" from employers this was never implemented. Why?