Editorial: You’ve probably seen it already. The broadside delivered to the Local Government Pension Scheme by the Centre for Policy Studies’ Michael Johnson, in a letter to the FT this week.
It was a cracking blow, slamming the scheme’s latest figures on running costs, which have ballooned by a “mind-boggling” 42 per cent in 2014/15.
But only some local authority funds were using the newer Chartered Institute of Public Finance and Accountancy methodology, meaning even this figure could be understated.
It was a compelling read, containing one damning phrase after another: “dismally lax”, “staggeringly inefficient”, “self-serving empire”, “national embarrassment”.
Johnson warns of the misallocation of risk and return and “value leakage”. But he saves the best for last by throwing down the gauntlet to those running the scheme.
Illustration by Ben Jennings
“It is time that a good many of the chief finance officers, paid to ensure the proper administration of local government affairs, were required to end their masterclass in non-accountability... and leave.”
Leaving aside the reasons behind why some schemes were using the new CIPFA rules and others weren’t, the attack comes at a time when local authority funds are moving towards a new era of efficiency anyway – even if they’re still somewhat in the dark about how exactly that might look in five years’ time.
So the timing of Johnson’s comments begs the question, 'Why now'?
Whatever the reason, one side effect is that, retrospectively, the CPS will appear especially influential if it had pushed for changes that then materialised.
But the point is that significant change is coming for the LGPS and it’s coming fast. Underlying any official timescales and deadlines is the need for funds to start building friendships and allegiances with fellow local authority funds tout de suite. The collaborative projects of tomorrow will be born of the relationships formed today.
Those who don’t act of their own volition could sooner or later have their hand forced.
What funds will not want, especially smaller funds, is to be the last child standing in the playground after everyone else has picked their teams. Whichever group you’re told to join might not be the one you’re most compatible with, and the risk is your influence within that group could also suffer as a result.
Maxine Kelly is editor at Pensions Expert. You can follow her on Twitter @MaxineEK and the team @pensions_expert
