The Government needs a ‘more intelligent’ approach to the reform of the Local Government Pension Scheme, according to the National Association of Pension Funds (NAPF).
In response to the consultation on pension reforms, NAPF said the Government is focusing too narrowly on oversimplified cost savings rather than on how pension funds can secure liabilities and reduce deficits.
While NAPF welcomed the move towards passive investment strategies and collective investment vehicles (CIVs), the association said the savings achieved would only represent a tiny proportion of the LGPS’s £47bn deficit.
Joanne Segars, chief executive of NAPF, said: ‘The NAPF supports the Government in its wish to secure a LGPS that delivers good outcomes for its employers, local taxpayers and scheme members. But the Government is mistaken in thinking the LGPS can be treated as a homogenous whole when it is comprised of 89 different funds, some of which already perform extremely well.
‘A subtler and more intelligent approach than that outlined by the Government is required if we are to ensure funds with good performance are not hamstrung to help those that perform poorly.’
It is calling on the Government to identify good and bad performance within the LGPS, with a view to bringing poorly-performing funds up to standard through targeted regulatory interventions. It also says the use of passive investment or investment in one type of CIV should not be mandatory.