Northern LGPS has attacked the government’s latest guidance on asset pooling, claiming that it breaches the Cabinet Office’s consultation principles and contradicts existing regulations.
In a letter to local government minister Rishi Sunak, councillors chairing Northern’s three funds argue that the draft guidance, circulated in January, has “completely lost sight of the desired outcomes” of pooling.
It said the guidance “appears to compel authorities to appoint a pool company to manage the vast majority of fund money”, adding that the pool company “would then have the power to select fund managers or manage the assets itself”.
“It is clear to us that what government is attempting to achieve via statutory guidance actually requires a change to the regulations, with the parliamentary scrutiny which that would entail,” the letter said.
It was signed by Paul Doughty (Lab), Northern and Merseyside Pension Fund chair; Brenda Warrington (Lab), Greater Manchester Pension Fund chair, and Andrew Thornton (Lab), West Yorkshire Pension Fund chair.
“We are extremely disappointed that the recent draft guidance appears to have completely lost sight of the desired outcomes and instead seeks to mandate a one-size fits all approach, which given the Northern LGPS’s existing scale and achievements to date is clearly sub-optimal for the Northern LGPS funds and their members, employers and local taxpayers.”
Northern expressed concerns about the removal of the value for money criterion, and assertions that individual funds should be prepared to suffer increased investment costs to benefit their pool or the Local Government Pension Scheme (LGPS), and that elected members owe duties to those other than their funds’ stakeholders.
It also pushed back against requirements for pools to form a company regulated by the Financial Conduct Authority (FCA), which Northern has not done because it believes it is not cost effective.
“We view this as unnecessarily prescriptive and believe the guidance should instead make clear that FCA-regulated activities should not be carried out without either authorisation or an appropriate exemption from authorisation,” the letter said.
A spokesperson from the Ministry of Housing, Communities & Local Government said it would “respond in due course” to the letter.