Councillor appeals for broader LGPS fund post-merger oversight

In May, the Lothian fund and the £3.2bn Falkirk Council Pension Fund — both participants in the Local Government Pension Scheme — announced they were exploring a merger.

First reported by the East Lothian Courier, the motion from McIntosh, a councillor for Musselburgh Ward, will be considered at a meeting of the East Lothian Council on August 23.

Should the merger proceed, both committees would lose oversight over the new fund and be replaced by a body. In the motion, McIntosh expressed her concern that this body would not have the same level of elected member, trade union and employer representation.

If passed, the motion would instruct the leader of the council to write to the Lothian Pension Fund and to the leaders of the Edinburgh and Falkirk councils, expressing concern “at the possibility of any loss of democratic oversight over the local government pension fund for our area, if elected members were to be omitted from the new board”.

It also calls on the council and fund leaders to “strengthen democratic oversight, by ensuring that any new board has broad representation from trade unions and employers, and also contains elected members drawn proportionately from all participating local authorities areas”.

McIntosh told Pensions Expert that she was “not against the merger per se” and had worded the motion so that it did not express a view on the merger itself either way.

“The issue is that the proposed new board to replace the pensions committee vastly reduces the elected member representation, even from its current form,” she said.

“Its current form is problematic because no councillors from East, West or Midlothian have a seat at the table.

“East Lothian spent £19mn of public money on contributions into the fund last year alone, but we have no ability to provide direction or even comment on its management or investment strategy,” she continued.

“The point of the motion is to say that, rather than reduce the elected representatives, we’d like to see that number expanded and to include fair representation from all the councils who are part of the scheme (as well as trade union and other employer representation)”.

A Lothian Pension Fund spokesperson said: “We welcome East Lothian Council’s interests in the proposals, as we do all comments and questions from members, employers, and other stakeholders.

"A key feature of the merger proposals is a governance model that is more closely aligned to best practice in occupational pension schemes. This includes a more representative governance body to better reflect the multiple employers, both local authority and non-local authority employers, and increased representation from scheme members themselves. The proposals retain local democratic oversight.

“Further details of the structure and composition of the governance body and the statutory Pensions Board will be shared in due course.”