Pensions UK advises against more change for LGPS
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Pensions UK is highlighting the successes of the Local Government Pension Scheme in a new publication, making the case for building on the existing scheme rather than fundamentally altering it as some have proposed.
In 'Local Government Pension Scheme: Supporting local workers, delivering local growth', the association stresses that the scheme contributes to the retirement adequacy of 7.6m primarily lower-paid members – the average member is a 47-year-old woman earning £18,000 a year, with a pension of £5,000 a year – thereby helping to reduce the benefits bill.
"Closing access to the LGPS would worsen the retirement adequacy challenge. Moving new local government workers into less secure pension arrangements would risk lower retirement incomes for future cohorts and would exacerbate the adequacy crisis highlighted by the Pensions Commission," the report reads.
The publication comes after Reform UK's deputy leader Richard Tice said in February that his party would close the LGPS to new joiners and turn it into a sovereign wealth fund, “patriotically backing British companies” and helping to build “hundreds of thousands” of affordable homes.
As politicians across the spectrum focus on the scheme's impact on the UK economy, Pensions UK points out that the LGPS in England and Wales invests 17% of its assets, about £68.6bn, in UK business, infrastructure, housing and regional growth, suggesting the actual figure could be as high as 28%.
It also notes that the vast majority of constituent funds have healthy funding levels – the average in England and Wales stands at 122% – allowing contribution rates by councils and other employers to fall, and that investment performance has been about 7% a year over the past 10 years.
Against this backdrop, Pensions UK believes the priority should be implementing current reforms effectively, strengthening the pipeline of investible UK assets, improving public-private partnerships and removing barriers for long-term pension capital.
