The word pension is never far from the thoughts of the average local government employee, says David Blackman, LGC’s acting editor.
And this week we reveal that the local government pension scheme could be taking a new and radical turn with the news that East Sussex County Council is exploring how it could use the county’s retirement fund as the building block for setting up a bank.
Of course, those affected are entitled to feel a few jitters about the fate of their nest eggs.
East Sussex has deliberately started small, proposing to earmark a sliver of its overall fund for the ‘Bank of Lewes’.
As an ex-City man, leader Peter Jones won’t need lectures on the importance of ensuring the funds are not invested in crowd-pleasing job creation schemes.
But longer term, East Sussex’s initiative offers a tantalising prospect — potentially mobilising the hundreds of billions of pounds held in the local government pension scheme for grassroots economic development.
It could help to keep money circulating in local economies, safeguarding communities’ future prospects.
East Sussex’s move could be neat politics too.
Public sector pensions are firmly in the sights of the next likely occupant of Number 11 Downing Street, as we explore in this week’s Finance Special feature on pensions.
In this context, direct investment by local government pension funds in hard-pressed local small and medium sized enterprises (SMEs) looks like a smart political move.
Being able to point to the SMEs saved thanks to the actions of the local council bank would be a useful rejoinder the next time the TaxPayers Alliance pipes up about local government pensions.
And why stop there? Investing pension funds in local infrastructure could be an equally sound investment.
East Sussex’s initiative shows how, even in these tough times, local government innovation can help communities overcome the downturn.