The next minister responsible for the Local Government Pension Scheme (LGPS) must focus on helping funds manage their deficits sensibly, the National Association of Pension Funds says.
Speaking at the NAPF’s local authority conference this morning, chief executive Joanne Segars said that dealing with the LGPS’s £47bn deficit will be the “defining issue” for the scheme over the next few years.
Ms Segars, who is also the chair of the LGPS Advisory Board, said: “We need a clear and consistent way to measure deficits and we need to be innovative in developing solutions for managing them.”
Brandon Lewis, then-parliamentary undersecretary of state at DCLG, came under fire from the local government sector during 2013-14 for a series of cost-saving proposals for the £180bn pension scheme, which officers branded as “bizarre” and poorly-researched.
Several commentators have said that the Department for Communities & Local Government should have focused on helping funds create a standardised and suitable way to manage their deficits rather than looking to cut investment costs.
A poll of NAPF local authority members, revealed at the conference, said that 35% think the next minister responsible for the LGPS, who is yet to be revealed, should primarily focus on tackling deficits.
The government has yet to make its final recommendations for LGPS reform.
Following a call for evidence on cost saving in 2013, the government formally consulted on the issue in May 2014, proposing greater use of collective investment vehicles, better deficit management and possibly forcing funds to use mainly passive investments.
The proposals were met with derision from the local government sector. The government said it would publish its final proposals in the autumn, but in December, Kris Hopkins, who had taken on responsibility for the LGPS following a reshuffle, said these would be delayed until 2015. It has not made any further announcements since.