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The biggest issues impacting on your pension pot

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Highlights of LGC’s quarterly report on the Local Government Pension Scheme

The Local Government Pension Scheme is a key benefit for council staff – particularly at a time when pay is squeezed.

So section 151 officers and pension scheme members can perhaps breathe a little easier in the knowledge that the scheme is better funded now than at the end of its previous valuation cycle.

LGC’s exclusive analysis of the triennial valuations of 88 of the 89 funds, published in this quarter’s LGC investment supplement, reveals that almost across the board, funding rose to a healthier level. The even the worst-funded pots within the scheme were better off, on the whole, by March 2016 than they had been in March 2013, when the last triennial valuation was undertaken.

A number of other issues, however, are weighing in on the LGPS. Several schemes are becoming concerned about the risk posed to their portfolios of the widespread overconsumption of sugar and other unhealthy foods. The reputational risk of investing in food manufacturers that pack their produce with sugar, salt and fat, coupled with the long-term investment risk of a public increasingly shunning these foods for fear of obesity, heart disease, cancer and diabetes, presents a challenge. As engaged investors, LGPS funds must consider their responsibilities as shareholders in ‘Big Food’.

Data is another challenge coming down the line at LGPS funds. The General Data Protection Regulations, an EU initiative, is set to come into force in April 2018, and LGPS funds, with their wealth of personal data on scheme members, face a vast project to prepare for the new rules.

Also included in this quarter’s investment report are interviews with Sir Merrick Cockell, chair of the London Pension Fund Authority, who revealed his plans to expand the LPFA and the Greater Manchester Pension Fund’s infrastructure vehicle, and Martin Gilbert, chief executive of Aberdeen Asset Management, on the implications of his firm’s merger with Standard Life for pension fund clients.

All of LGC’s investment content is available on our dedicated investment channel.

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