With £178 billion under management, the local government pension scheme is one of the largest funded pension schemes in Europe. As I am sure everyone can appreciate the cost of using external fund managers is considerable and the Government believes that cost of investment could be made more efficient. By using collective investment vehicles and using passive management for bonds and equities, up to £660 million could be saved a year.
Allowing the Secretary of State to intervene will ensure that councils are following best practice and gaining maximum return from their investments. I do not believe that these regulations will prevent councils from practising ethical investments, but I would like to be clear that I do not want to see councils pursuing their own foreign policies. Foreign policy is rightly reserved to national Government. Councils should prioritise securing long-term returns from their investment rather than dividing communities and making political statements.
Local boycotts can damage integration and community cohesion within the UK, hinder Britain’s export trade, and harm foreign relations to the detriment of Britain’s economic and international security.
I am confident that these measures will bring about better returns for local government pension members and make investments more cost effective for councils.