Chris’s blog is an excellent rearguard action by the conservative wing of the LGPS. I suspect that the majority of service providers to and officers of the LGPS would agree with him.
But careful scrutiny of the title of my blog will detect a small difference “good luck”. I had written “good riddance” but that would be wrong. The LGPS is a much better scheme than it was 20 years ago when it was overwhelmed by the vested self interest of the financial services industry. But it needs to evolve to meet the challenge of the future.
If you asked me whether I wanted my job , my home, my family , my friends to be “as known today” in five years time (let alone 20) , I’d say no! I’d like “them” , “it”, “us” -to move on! I’m 62 – I want to move on too!
Chris’ premise is that the Local in LGPS is there for a reason, and that reason is to serve the local needs of public servants engaged in Local Government. These people do not have special needs, they are very much like everyone else, needing a wage in later age and whether that is delivered by LGPS or an unfunded public sector scheme means nothing to them.
The participating employers in the LGPS are in a postcode lottery where the amount they pay into the scheme for equivalent benefits, may vary enormously from fund to fund. This does not make it easy for employers to plan; volatility in funding rates is fine if the direction of travel is down, but what goes down tends under mean reversion to go up again. The postcode lottery will only end when all funds pool assets and liabilities and we have universal rates (as other sections of the public service pensions do).
Nor do I buy the cute but crazy world of levelling up , where local pension money funds local business. The dream of levelling up through micro-finance is quaint but the long term future of LGPS is, as Chris Buss points out to deliver more for less. Micro – allocations to local projects are simply not aligned with the bigger aim. The national lottery fund does it better.
Local Government can and should work with Local Government Pensions to originate finance for local businesses and infrastructure projects , feeding through to central pools that can prioritise and allocate money at scale. Both Authorities and LGPS have important roles as originators but even the pools recognise that they are not yet at scale to directly invest as many of their overseas counterparts do.
Consolidation will lead to more local investment not less, more allocation to the projects that really need capital rather than to pet projects that tend to be under researched and over-risky.
There is a natural tendency to stick rather than twist and the LGPS , successful as it currently is, is excused for wanting to stay the way it is. But for those outside the tent, and I am most definitely one of those, the LGPS looks a long way from fulfilling its potential.
Necessarily, it will need to centralise and reduce overhead. It will need to consolidate investment and ultimately it will need to be not just one pool of assets but one pool of liabilities too. This may not please the consultancies, lawyers, auditors and asset managers but it will please those who sign off the bills when paying their council tax bills.
The long term target of the LGPS is to deliver more for less and in the process enhance the environment in which Government workers work and pensioners relax. The LGPS is not an end in itself, merely a means of serving Local Government staff and those who pay their wages and pensions.
