A combined local authority pension fund would have real clout
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Version 0 of 1. The four biggest pension funds in the world in 2013 were the Japan government pension fund, the Norwegian government pension fund, the Netherlands national civil pension fund and the South Korea national pension fund. Number five on the list was the UK local government combined pension funds, worth almost a third of a trillion dollars. Not quite true. There is no such thing as a UK local government pension fund, merely around 100 individual funds. The Shetland Islands has its own fund, as does West Yorkshire. All of them pay different fees to the fund managers who invest on their behalf, with the size of the fee far from guaranteed to be linked to investment performance. Very little of the money raised from those working in town and county halls ever finds its way back into the local economy. This makes no sense, according to Birmingham city councillor, John Clancy. He has just published a book, The Secret Wealth Garden, in which he calls for three major reforms of the current system. Firstly, he calls for management fees to be capped at an initial 0.02% of the fund's value. This, he says, would still give fund managers a tidy £43m in fees annually. Secondly, he says funds should be de-risked through an amendment to the Local Government Investment Regulations to require a shift away from equities (particularly overseas equiuties) together with a minimum holding in regional and local investment bonds. This, he says, could provide up to £20bn a year for investment in infrastructure and house building. Finally, the local authority funds should amalgamate themselves into one big fund. This makes sense. The fifth biggest pension fund in the world would have real financial clout. It could do wonders for localism, regeneration and rebalancing to boot. |