Member representation gap on LGPS harms funds

The Pensions Institute report said a lack of expertise and continuity especially in smaller schemes was causing "serious weakness" in governance.

John Gray, a Unison representative on the Tower Hamlets LGPS, and chair of the defined benefit working group of the Association of Member-Nominated Trustees, said the root of the problem was the conflict between councillors’ fiduciary duty to council tax payers and the pension scheme’s duty to its beneficiaries.

He said: “This dichotomy does mean that some LGPS schemes have indeed made poor decisions based on council tax considerations. However, this is not just a London thing.”

For private sector DB schemes, there is a requirement that a third of trustees represent members, but there is no such requirement in the public sector.

Gray added: “Some schemes have consistently refused to have any beneficiary representation, not even as observers.

“If you have no effective beneficiary representation on schemes, and also a fundamental conflict in fiduciary duty, then no wonder some of them go astray.”

Another London LGPS official, speaking on condition of anonymity, said the report had raised issues that “need to be addressed”.

“[They should] set up a national pensions board for the LGPS that has the ability to get proper data on how the funds are doing individually,” the official added.

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