Latest news with #LGPS
Yahoo
20 hours ago
- Business
- Yahoo
London council to spend £100m from gold-plated pensions on homelessness
A London council is facing criticism over plans to use its gold-plated pension scheme to fund accommodation for homeless people. The Royal Borough of Kensington and Chelsea will invest £100m from its pension fund to buy 250 homes in an effort to save taxpayer money. It comes amid mounting scrutiny of councils' gold-plated pensions after The Telegraph revealed some authorities were spending more than half of taxpayers' money on staff schemes. But experts questioned whether it was appropriate for Kensington and Chelsea to use its pension fund to 'indulge political objectives'. Neil Record, a former Bank of England economist, said: 'Local Government Pension Funds benefit from a de facto government guarantee which allows local councils to indulge their political objectives at the expense of prudent investment management. This is a particularly egregious example.' The Conservative-led council's pension scheme is worth £2bn, twice the amount needed to fully meet obligations to its members, meaning it is in rude health financially. The vast savings pot has become a target for councillors seeking to raise money for more spending without significantly increasing council tax bills. In February it was announced payments into Kensington and Chelsea's defined benefit scheme would be halted temporarily to save £9m earmarked for survivors of the 2017 Grenfell Tower fire. This went against the advice of the fund's actuaries who said it would be 'inappropriate' to lower contributions before next spring but agreed the move would 'not have a detrimental effect' on the council's ability to pay out pension benefits. Michael Hayles, of law firm Burges Salmon, said: 'The Kensington and Chelsea fund has a well-publicised strong funding level. 'However, as things stand, this investment will still need to stand up as an appropriate investment, with appropriate returns, bearing in mind the fiduciary duties of the pension fund when making investment decisions, notwithstanding the funding surplus.' There is no blanket legal guarantee that would compel the Government to meet the costs of all funds within the LGPS or make good their deficits. More than a quarter of schemes within the LGPS were in deficit in 2022, according to an official review published last year. Cllr Emma Will, who oversees property at the town hall, said more local authorities could follow Kensington and Chelsea's example, as many struggle to fund the costs of meeting their statutory obligations. She added: 'We are fortunate to have an extremely well-managed pension fund, it's been the best performing for 30 years [and] it's very over-funded, which is terrific.' Ms Will said that the unusual move was 'completely above board' and should not be discredited simply because 'it hasn't been done before'. She said that investing £100m was 'very low risk' because the council plans to pay its pension fund for use of the new properties with government grants it receives to tackle homelessness. 'It is innovative and we are quite excited. If we get this right it's like the holy grail. We believe it does work, and it's nil cost to the council and it's low risk and win-win for everyone.' Last year bills in Kensington and Chelsea for the average Band D property were £1,569.46 a year, up from £1,508.98 the previous year. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Daily Mirror
4 days ago
- Business
- Daily Mirror
DWP launches major pension shake-up to make 20million Brits £1,000 better off
The Department for Work and Pensions (DWP) will merge all smaller pension pots holding less than £1,000 together. This will help increase the returns on them and give Brits more money in retirement A major Department for Work and Pensions (DWP) was introduced this week and its set to boost the retirement savings by over £1,000 for over 20million Brits. Labour launched its new Pension Schemes Bill yesterday which it hopes will make pensions simpler to understand and manage. The goal of the bill is to "drive better value over the long term" to give people more money when they come to retire. The most significant part of the bill is the DWP's plan to merge smaller pension pots together. The benefits and pensions department says having multiple small pots often leads to a small return for savers. This is because they have to pay multiple flat rate charges. However, by consolidating the smaller pots into larger ones, the returns will increase. Labour says it could potentially boost retirement savings by around £1,000. The bill will merge all pension pots holding less than £1,000 together into one pot for each individual. Currently, there are around 13million pension pots which have less than a grand in them. The Bill also introduces a new system to show how well pension schemes are performing. This will cover "Defined Contribution" (DC) schemes, which are a type of private pension that you contribute to on a regular basis. The DWP says this will help savers understand whether their scheme is giving them good value. If it's not, Brits will be able to move their savings somewhere. The Bill will also require schemes to offer "clear default" options to grow pension pots for those approaching retirement. This means people will have "clearer, more secure routes to decide how they use their pension money over time." Other measures part of the bill include: Implementing new rules creating multi-employer DC scheme 'megafunds' of at least £25billion, so that "bigger and better pension schemes can drive down costs and invest in a wider range of assets" Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160billion, to support employers' investment plans and to benefit scheme members Major players within the pension sector, including Phoenix Group, NEST, Now Pensions, and Royal London, have supported the new bill. The Pensions Regulator and the Pension Protection Fund (PPF) have also welcomed the bill. Work and Pensions Secretary Liz Kendall said: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners. Join Money Saving Club's specialist topics For all you savvy savers and bargain hunters out there, there's a golden opportunity to stretch your pounds further. The Money Saving Club newsletter, a favourite among thousands who thrive on catching the best deals, is stepping up its game. Simply follow the link and select one or more of the following topics to get all the latest deals and advice on: Travel; Property; Pets, family and home; Personal finance; Shopping and discounts; Utilities. 'The Bill is about securing better value for savers' pensions and driving long-term investment in British businesses to boost economic growth in our country. 'As part of our Plan for Change we're helping people find work, stay in work, and ensuring that work pays them back to give them the secure income in retirement they deserve.' Chancellor of the Exchequer Rachel Reeves said: "The Bill is a game changer, delivering bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people's pockets through the Plan for Change.' Minister for Pensions Torsten Bell added: "We are ramping up the pace of pensions reform. Workers deserve to get better bang for each buck saved, and these sweeping reforms will make sure they do. 'Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement.'
South Wales Argus
5 days ago
- Business
- South Wales Argus
New pension changes for 20m people in Pension Schemes Bill
The Government's new Pension Schemes Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term. Keeping track of pensions is notoriously challenging, with the average worker accumulating 11 different pension pots over their lifetime. This has resulted in £26.6 billion in lost pensions across the UK, according to the Pensions Policy Institute and the Association of British Insurers. One of its biggest benefits is the merging of small pension pots. The bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings. For those approaching retirement, the changes will mean clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time. The full changes are listed in detail here. Work and Pensions Secretary Liz Kendall says: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners." Chancellor of the Exchequer Rachel Reeves describes the bill as "a game changer", giving "bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people's pockets." Government launches plans to automatically combine small pension pots, here's what it's likely to mean for you... — Martin Lewis (@MartinSLewis) April 24, 2025 What do these pension changes mean for workers? The bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including: Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes. Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement. Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding. New rules creating multi-employer DC scheme 'megafunds' of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets. Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy. Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers' investment plans and to benefit scheme members. What is the difference between a Defined Benefit (DB) scheme and a Defined Contribution (DC) pension? There are two different ways pension schemes work. With a Defined Benefit (DB) pension scheme, also referred to as final salary pension schemes, the amount you get is usually based on your salary and how long you've been part of the pension scheme. For a Defined Contribution (DC) pension, the figure you get is based on how much you and your employer invest in the pension and how your investments perform. Recommended reading: What's the expert view on the new pension changes? Nausicaa Delfas, chief executive of The Pensions Regulator (TPR) says: "The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. "Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future. "We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation." Andy Briggs, CEO, Phoenix Group says: "The bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money. "People across the country will feel the impact of these changes with plans to consolidate small pots, ensure the dashboard delivers and provide default retirement income options at the point of retirement. Patrick Heath-Lay, Chief Executive, People's Partnership adds: "This is a pivotal moment in pension reform. The bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system."
Powys County Times
5 days ago
- Business
- Powys County Times
New pension changes for 20m people in Pension Schemes Bill
Pension changes introduced today could make managing accounts easier for millions of workers planning their retirement across the UK. The Government's new Pension Schemes Bill is designed to support working people plan for their retirement by making pensions simpler to understand, easier to manage, and drive better value over the long term. Keeping track of pensions is notoriously challenging, with the average worker accumulating 11 different pension pots over their lifetime. This has resulted in £26.6 billion in lost pensions across the UK, according to the Pensions Policy Institute and the Association of British Insurers. One of its biggest benefits is the merging of small pension pots. The bill also introduces a new system to show how well pension schemes are performing, this will help savers understand whether their scheme is giving them good value and protect them from getting stuck in underperforming schemes for years on end, to help working people feel more secure about their retirement savings. For those approaching retirement, the changes will mean clear default options for turning savings into a retirement income. This means people will have clearer, more secure routes to decide how they use their pension money over time. The full changes are listed in detail here. Work and Pensions Secretary Liz Kendall says: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners." Chancellor of the Exchequer Rachel Reeves describes the bill as "a game changer", giving "bigger pension pots for savers and driving £50 billion of investment directly into the UK economy– putting more money into people's pockets." Government launches plans to automatically combine small pension pots, here's what it's likely to mean for you... — Martin Lewis (@MartinSLewis) April 24, 2025 What do these pension changes mean for workers? The bill will transform the £2 trillion pensions landscape to ensure savers get good returns for each pound they save, and drive investment into the economy, through a suite of measures, including: Requiring DC schemes to prove they are value for money, to protect savers from getting stuck in underperforming schemes. Simplifying retirement choices, with all pension schemes offering default routes to an income in retirement. Bringing together small pension pots worth £1,000 or less into one pension scheme that is certified as delivering good value to savers, making pension saving less hassle and more rewarding. New rules creating multi-employer DC scheme 'megafunds' of at least £25 billion, so that bigger and better pension schemes can drive down costs and invest in a wider range of assets. Consolidating and professionalising the Local Government Pension Scheme (LGPS), with assets held in six pools that can invest in local areas infrastructure, housing and clean energy. Increased flexibility for Defined Benefit (DB) pension schemes to safely release surplus worth collectively £160 billion, to support employers' investment plans and to benefit scheme members. What is the difference between a Defined Benefit (DB) scheme and a Defined Contribution (DC) pension? There are two different ways pension schemes work. With a Defined Benefit (DB) pension scheme, also referred to as final salary pension schemes, the amount you get is usually based on your salary and how long you've been part of the pension scheme. For a Defined Contribution (DC) pension, the figure you get is based on how much you and your employer invest in the pension and how your investments perform. Recommended reading: What's the expert view on the new pension changes? Nausicaa Delfas, chief executive of The Pensions Regulator (TPR) says: "The Pension Schemes Bill is a once in a generation opportunity to address unfinished business in the UK pension system. "Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future. "We have long advocated for fewer, larger well-run schemes with the size and skill to deliver better outcomes for savers. As such we are also pleased to see the proposed legislative framework for DB superfunds, providing options and choice in defined benefit consolidation." Andy Briggs, CEO, Phoenix Group says: "The bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money. "People across the country will feel the impact of these changes with plans to consolidate small pots, ensure the dashboard delivers and provide default retirement income options at the point of retirement. Patrick Heath-Lay, Chief Executive, People's Partnership adds: "This is a pivotal moment in pension reform. The bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system."
Business Mayor
19-05-2025
- Business
- Business Mayor
Gauging Reform UK's pension power
Unlock the Editor's Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. One of FTAV's greatest assets is its indefatigable readership. Not satisfied with a couple of thousand words on Reform UK's incipient membership of local authority pension committees, and what this might mean for what Richard Tice — its deputy leader — labels 'woke investments', some of you wanted even more detail about the extent of this newfound influence. Our answers were all buried deep in the original piece's dataviz. But, admittedly, extracting those answers involved a fair bit of mouse-hovering and having a spreadsheet to hand. So let's take another tilt at it. Reform won control of ten councils on 1st May. But as we wrote on Tuesday: Controlling some councils pretty much translates into control of their pension funds, while others give maybe a single seat on the pensions committee — if that. As anyone who has sat on a decision-making committee knows, there's significant power in a single seat. A majorly dissenting voice can be enough to change a group's dynamic, especially if held by someone who might air any disagreements with the rest of the committee in public. By framing reservations around decisions using just the right language it's not hard for someone to craft themselves the equivalent of a look-back option. But will Reform now have just a single seat on ten pensions committees? No. We reckon their electoral gains translate into some representation on the pension committees of 18 different Local Government Pension Scheme administering authorities, collectively overseeing more than £100bn. Furthermore, we estimate that they will have majority control of the pensions committees in four administering authorities, overseeing £29.2bn. And it looks like they will have a controlling plurality on a further five administering authorities overseeing £25.4bn. Here's how our estimates break down across councils that held elections this month. (NB, we've grouped together West Northamptonshire and North Northamptonshire into a single Northamptonshire column): To arrive at these estimates, we took a look at the Governance Compliance Statements of LGPS fund associated with each council. These set out how many seats on the pensions committee go to elected councillors, how many seats each council gets for multi-council funds, who gets to vote, etc. For example, despite Reform UK winning a stonking two-thirds of the seats and overall control of Doncaster Council, Doncaster is just one of the four councils that club together into the £11bn South Yorkshire Pension Authority. Doncaster gets three seats on its pensions committee. Barnsley and Rotherham get two seats apiece, while Sheffield gets five seats. So, having won two-thirds of Doncaster's council seats, Reform UK will be asked to provide two elected councillors to South Yorkshire's twelve-strong pensions committee. No direct control, but a voice at the table. Lincolnshire County Council, which flipped from Conservative to Reform UK, is a different kettle of fish. Lincolnshire Pension Fund had just over £3.4bn of assets as of March 2024. Its administering authority is Lincolnshire County Council. And the council's constitution gives it eight seats on a pensions committee of twelve. Reform UK will take five of these, in accordance with the Local Government and Housing Act of 1989 that requires political balance across committees to reflect electoral balance. Here's how they show the split in the fund's annual report: Why doesn't the council have all twelve seats? Partly, it's because Lincolnshire County Council is not the only employer in the Lincolnshire Pension Fund. At the risk of triggering PTSD among survivors of our long read earlier this year — which culminated in an examination of the funding position of the 787 different employers in the West Midlands Pension Fund — LGPS funds are multi-employer funds. The council is probably always the largest employer, but not the only one. In the case of Lincolnshire, the council made less than a third of the fund's contributions last year — a decent proxy for their claims on the fund. Who are the others? Further education colleges, academy schools, housing associations, private-sector contractors — all sorts. The chart below shows the degree to which electoral success translates into pensions committee representation. The size of each bubble denotes the size of assets overseen by each administering authority associated with each council: It shows that even Reform UK's modest electoral positions in places like Wiltshire and Cambridgeshire have won them representation at the pensions table. Let's bring this altogether in simple line chart: Did we say simple? It's probably still worth explaining. The line shows total LGPS assets influenced by a given level of Reform UK pensions committee representation. So, if you want to know how many assets are overseen by LGPS funds with pension committees whose voting members consist of at least 50 per cent Reform UK councillors, you can go to the 50 per cent mark on the x-axis and find the answer: £29.2bn. Each step is a different LGPS fund and you can hover your mouse over it to see what it is, how large it is, etc. We won't know what this will all mean in practical terms for some time. But we'll be keeping an eye out for any activity.
