William Eichler 17 February 2016

Pension scheme reforms to help drive down costs

Pension scheme reforms to help drive down costs image

Government proposals to reform the Local Government Pension Scheme (LGPS) will help drive down costs, achieve better investment outcomes and stimulate new infrastructure investment, says a new report from BNY Mellon.

The investment management and services company has submitted a report, entitled LGPS Pooling: The Collective Good?, as part of the Government consultation on reforming the LGPS, which has been described in the past as a ‘national embarrassment’.

The report is broadly supportive of the Government’s reform proposals--which could see the LGPS save up to £660m a year--but it highlights a number of potential problems.

BNY Mellon raises concerns over the way LGPSs’ assets are pooled. Individual local authorities, they say, may place the entirety of their investments in a single pool in order to achieve economies of scale.

But they should be free to use sub-funds from other pools for different parts of their portfolio if their investment strategy demands it.

The report also points out the significant risks of a mass switch from active to passive management.

Paul Traynor, international head of Pensions and Insurance Segments at BNY Mellon, warned: ‘LGPSs shouldn't move into passives and hope for the best.’

He continued: ‘For long-term investments such as pension funds, active managers aim to lessen the impact in a market downturn and beat the index in a rising market to obtain more long-term value than those who simply seek to track the index.’

The report also recommended a robust governance structure relating to the decision-making process for infrastructure projects.

At the same time, according to BNY Mellon, the expertise of existing LGPSs should be harnessed.

Some individuals within local authorities with expertise in the management of pensions should be allowed to transfer employment to become employees of the pools, where they will be able to develop their skills through specialisation, facilitated by working on larger asset pools.

Overcoming the barriers to Commercial Card use image

Overcoming the barriers to Commercial Card use

Want to reap the benefits of Commercial Cards but coming up against some challenges? James Sykes, Head of Commercial Cards, Lloyds Bank and David Legg, Head of Corporate Card Products, Lloyds Bank, discuss how the payments industry is helping organisations unlock their true value.
SIGN UP
For your free daily news bulletin
Highways jobs

Programme Manager - Capital Programme

Cumbria County Council
£48,984 - £51,055
We are looking for candidates to lead the development and delivery of significant projects and programmes which... Cumbria
Recuriter: Cumbria County Council

Highways Team Leader

Cumbria County Council
£25,481 - £25,991
Are you a hard-working and experienced Highways operative, looking for the next step in your career? Cumbria
Recuriter: Cumbria County Council

Project Lead - Programme Control

Cumbria County Council
£39,880 - £40,876
Cumbria County Councils Capital programme is valued at £100-120Million/ annum. Cumbria
Recuriter: Cumbria County Council

Senior Occupational Therapist

Cumbria County Council
£35,745 - £36,922
This role requires an enhanced DBS check with an Adults Barred List check. Cumbria
Recuriter: Cumbria County Council

Performance Assistants FN038e

Cumbria County Council
£27,741.00 to £28,672.00
This is an exciting opportunity to work in a fast-paced strategic team Cumbria
Recuriter: Cumbria County Council

Public Property

Latest issue - Public Property News

This issue of Public Property examines how how flexible workspaces can lead the way in regeneration for local authorities, Why local authority intervention is key to successful urban regeneration schemes and if the Government’s challenge of embracing beauty is an opportunity for communities.

The March issue also takes a closer look at Blackburn with Darwen Council's first digital health hub to help people gain control over health and care services.

Register for your free digital issue