Pension bosses attack Rachel Reeves’ megafund plans over fears of government ‘cash grab’
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Local authorities fear the government is eyeing up their £360bn of wealth to fund its spending plans, but that wealth was hard won. Pension bosses have attacked Reeves’s plan to merge local authority pension funds and get them to invest in projects like housing, fearing the government is trying to grab their cash after years of prudent investing.
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Dozens of local government pension funds, which manage a total of about £360bn for 6.5m local authority workers and pensioners, will be asked to merge their assets in a bid to grow them faster under plans unveiled last month by Chancellor Rachel Reeves.
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The Treasury also wants the 86 authorities to set aside a percentage of their funds for investment in the local economy, suggesting that a 5 per cent target would mean about £20bn of investment for Britain’s communities. Angus Thompson, a councillor and chair of North Yorkshire’s £4.6bn fund for local authority workers, says he is concerned that his fund will be “mortgaged” and used by the government for its own ends.
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“I think it’s all just an excuse on the part of the government to try and get their hands on the money one way or the other,” he said. His fund has grown in size considerably since being underfunded in the wake of the financial crisis, and now boasts a large surplus. It has been allowed to pick its own investments and has £640m, or 16 per cent, more in assets than it needs to ultimately pay its members.
He credits much of the fund’s success to being able to pick active funds, which select companies its executives think will grow quickly and buy shares in them. About a sixth of the capital is in one particular investment fund, which more than doubled in value in the last five years.
