The Local Government Pension Scheme (LGPS) already fulfils many of the functions of a sovereign wealth fund, according to the pensions minister, amid political pressure from some parties to further overhaul public sector pensions.
Speaking at the Pensions UK Annual Conference in Liverpool on 15 October, Torsten Bell praised the “really impressive progress” made by the LGPS on reforms, but declined to be drawn into a debate on changes proposed by Reform UK.
In February this year, Richard Tice, Reform UK’s deputy leader, said the party planned to scrap defined benefit pensions for new LGPS workers and instead switch them to defined contribution arrangements.
He also said the party intended to merge all LGPS funds into one single entity to be invested as a “British sovereign wealth fund”.
The party has recently reiterated its intentions in this regard.
Speaking this week, Torsten Bell said: “I don’t want to get into what other parties are talking about because I’ve tried to understand and not always been able to work it out.
“When I hear people say they want a sovereign wealth fund, lots of what I think they want the LGPS is already doing. The LGPS has made really impressive progress over the course of the past two years.
“There’s still lots to do. We are in the foothills of what the pools can achieve as they become some of the biggest pension [investors] in our country, and in Europe. I think we will continue to see innovation in that space.”
The government caused controversy in some areas of the LGPS when it pushed through changes to pooling that forced the closure of the Brunel and ACCESS pools. In addition to this major restructuring, the Pension Schemes Act has brought substantial governance changes for pools and funds within the LGPS system.
Asked what success would look like as these changes bed in, Bell emphasised quality of service, strong investment returns, and diverse investment options – including local investment.
The minister told journalists at the Pensions UK Annual Conference: “Different pools are at different stages of their evolution. I want to celebrate all the work they are doing.
“Every time I meet a business or people who are trying to set up a business, they talk to me about knowing that somewhere in their capital stream is their local government pension scheme. That’s a really good thing, and it’s one concrete thing that success looks like.”
