LPFA: Now is the time to remove barriers to collaboration
With the new parliament underway, it is worth taking a moment to reflect on the UK public pension’s landscape as it currently stands.
As became increasingly clear over the course of 2014 and early this year, the consultation into the future shape of the Local Government Pension Scheme had been kicked into the long grass as attention turned towards the ballot box.
The new government does, however, face huge challenges in the pension’s arena.
It is clear that having a disparate group of some 89 LGPS Funds, each separately administered and managed, is not an optimal way in which to marshal our members’ money
Across the LGPS as a whole, we currently sit on a deficit of £47bn, at last count.
It is clear that having a disparate group of some 89 LGPS Funds, each separately administered and managed, is not an optimal way in which to marshal our members’ money.
And with rising longevity and an ageing population, the issue of deficits will only become more acute.
Now is the time for clear thinking and a willingness to embrace change. There is a great deal of work to be done but unfortunately no easy answers.
It is because of the complexities of these challenges and the importance of solving them, that I was so pleased to see Ros Altmann appointed as the new pensions minister. She is one of the most informed and insightful authorities on pensions globally.
As we look to the future and the new government works on an emergency Budget for next month, I would urge them to take the radical steps necessary to ensure the UK’s public pension funds are given the right structure to allow them to provide for our pensioners over the coming decades.
Our planned partnership with Lancashire County Pension Fund and joint investment vehicle with Greater Manchester Pension Fund has shown, collaboration is the way forward. We are also not alone.
The London Councils have formed a collective investment vehicle, and outside the LGPS the Railways Pension Scheme has recently announced it is seeking to partner with other funds in order to be a stronger competitor in the illiquid assets market.
Pension funds are keen to tap into the benefits of collaboration and of scale. However, without the political will and determination, it is likely that these benefits will only be realised by a small minority of LGPS funds.
We look forward to working with the new Conservative government during what we hope will be an interesting and defining five years for public pensions in the UK.
Susan Martin is chief executive of the LPFA