Campaigners fear Welsh pension fund billions will be controlled from England
Martin Shipton
Campaigners have raised concerns about plans announced by Chancellor Rachel Reeves that could see billions of pounds worth of Welsh pension fund money controlled from England.
Hywel Davies of the organisation Divest Cymru told Nation.Cymru: “I belong to a group that has long campaigned against local government pension funds’ investment in fossil fuels. The group has had some success in lobbying funds to divest from oil and gas, though always in the teeth of opposition from fund managers.
“We have had dialogue with pension trustees, the Wales Pension Partnership [which manages pension investments on behalf of thousands of public sector workers] and elected councillors across Wales. We have questioned the failure of pension funds to follow the mandate set for them by elected councillors and Senedd members.
Rachel Reeves
He added: “Recently we have had a speech from Rachel Reeves at the Mansion House that makes it clear that big changes will be happening to local government pension funds. By 2030 she intends to create eight mega funds. These will have assets of £50bn each on average. No details of the geographical areas covered by these mega funds nor their governance have been discussed, but the proposals have been put out for consultation. Discussion of the issue in the press has been very low key.
“The total amount of Welsh Pension Partnership assets, pooled and non pooled, is £22.5bn, so Wales has less than half the necessary funding. It seems clear therefore that unless some special dispensation is made for our nation status, perhaps alongside funds for Scotland and Northern Ireland, we are at risk of being amalgamated into a combined region.
“I would suggest that now is the time to draw attention to the political and financial consequences for Wales if it does not retain a say over its own pension assets. The benefits to sustainable investment projects could be significant – in the order of £1,5bin at 5% of the total sum.
“We have not been told whether there would be a role for the Senedd in overseeing any Welsh pension, or whether all decisions will be handed to fund managers and the UK Treasury. Will we have the space to assert our own, distinct democratic priorities?
“Could we for example decide that our pensions will no longer be used to invest in oil or gas? I would argue that this issue is a significant test of this government`s respect for the devolution settlement and our ability to manage our own affairs. It is part of a narrative that includes HS2, Levelling Up, the Crown Estate. the Barnett formula etc.
“When asked about it in the Senedd Mark Drakeford`s reply suggested that he was very relaxed about this not being a devolved matter.”
Sensitive
In October Fiance Minister Mark Drakeford told the Senedd in response to comments made by Plaid Cymru MS Heledd Fychan: “To advance the cause of Wales, it is not enough simply to think that a soapbox and a megaphone will always be the right answer. You have to be sensitive to the context you’re in and advance the case where it has the greatest sense of success.
“Nor do I share a nationalist approach to pension funds. I want pension funds to work for the people who contribute to them, and that means there is a very direct interest for Welsh people whose money is in those pension funds to see that money being used for long-term investment here in Wales.
“Does that mean that I wouldn’t be willing for money invested in an English pension fund to be spent here in Wales? Of course it doesn’t. I want that money to be used to the best possible use and if that means that we will co-operate with pension funds on the other side of the border, because it is to Wales’ advantage to do so, then I’ve no difficulty with that at all.”
‘Not devolved’
A Welsh Government spokesperson said: “Workplace pensions are not devolved. Local government pensions authorities in Wales have worked hard to create the Wales pension partnership and the UK Government’s consultation will offer the opportunity for local government pensions authorities to give their views.”
The spokesperson pointed out that the UK Government consultation proposes changes to the existing local government pension scheme asset pools by mandating certain minimum standards deemed necessary for an optimal and consistent model in line with international best practice. This does not require the combination of these existing pools into larger ones.
It also suggests boosting local government pension scheme investment in their localities and regions in the UK as well as strengthening the governance of both local government pension scheme administering authorities and local government pension scheme pools.
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The Cymry are not allowed to “control” anything.
Assimilation is as much a part of Labour’s agenda as it was under the Tories. Beware.
Still under special measures then, better together Mark !
She’s already eyeing up private pension funds so those juicy public sector pots won’t be far behind. Don’t forget that Rachel’s freshly-updated CV is not quite as impressive as the old, made-up one:
Claimed, Economist, Bank of Scotland – December 2006 to December 2009
Actual, Retail Banking, Halifax – December 2006 to December 2009
Claimed, She worked at the Bank of England for the ‘best part of a decade’
Actual, She worked there for six years including a two-year Embassy stint
Public sector pension pots are probably more accessible to a central government hell bent on controlling everything. Eventually they will have to reduce the “pension promise” from these funds because they will have made a right old mess of investing the loot. Nothing new here. Governments labour and Tory have been remarkably useless at making any thing generate a decent return whether to fund pensions or the next wave of projects.
Reeves in particular is looking like a challenger to Truss’ title as queen of blunders and she may get there sooner rather than later.
I agree, and if Mad Miliband has anything to say about it they’ll force investment in the already doomed Net Zero markets. This lot will quite possibly bankrupt this country within 24 months.
Yes, beware of investing through derivatives.
Derivatives are contracts for differences, and are basically loaning for asset purchasing. Bad investments can leave funds in debt.
Most Net Zero contracts are derivatives.
It is better to invest in real assets such as wind farms, solar power etc. There are Investment trusts available now.
The people who should ultimately be consulted is the Thousands of Local Govt pensioners and existing workers, many who are low paid such as school cleaners, dinner staff and such, who are contributing to these funds, it is not all Chief Executives and Senior Managers. It is their future that Reeves is gambling with, Thames Water an example of failure, where a Canadian Pension Fund has walked away effectively taking a loss for those future pensioners. The Bank of England is against mandating investment in infrastructure in UK, which is what Reeves ultimate aim is, it should be on its… Read more »
How are dinner staff or any government worker supposed to know the best way to invest their money to ensure their pensions are eventually paid? They surely only care that their pensions are eventually paid. It’s a full time job in itself to understand how pension funds operate. And why shouldn’t this money be invested in this country’s future? Relying on overseas investment to grow public sector pension funds is to say that this country has no future and no hope. Private pension funds are different but should certainly be encouraged to back domestic infrastructure projects. If nothing else pensioners… Read more »
Pensions are increasingly going to be difficult to maintain – public or private – as populations get older and grow, if at all (China is dropping by 2.5 million per year at present) largely by legal migration. The UK has a birth rate below replacement level since the late 1970s. In addition the natural world is in severe degradation, climate disaters worldwide are increasingly causing major problems and energy is reaching a major tipping point as the oil shale basins in the USA reach peak and production to drop in the near future.. The question is whether a central control… Read more »
The main issue here is we in Wales do not have our own financial centre here in Wales, unlike London, Paris, Frankfurt, Amsterdam, Zurich, Oslo and New York, etc. We do not even have control of company registration, company law, even civil law and justice or even ownership of our own coastline. Welsh Labour is to blame as they have not obtained these powers from the UK. The Tories are a UK colonial party and Labour’s action has put our future effectively in the hands of England. Labour has shown itself to be as useless as the Conservatives and their… Read more »