Friday, July 24, 2015

"Alternative Financing Proposals for the Newham Pension Fund"

(This sounds pretty teckie and boring but I have serious concerns about this proposal which you can find here and was agreed yesterday at Newham Cabinet. I circulated this email to all Cllrs with a copy of my submission to the overview and scrunity committee meeting on "Pensions for Members" Call in).

"Dear Colleagues

I hope to attend at least part of the Cabinet meeting tonight but due to work commitments I cannot be certain. Please see attached document on "Pensions for members" item that I submitted to the Overview & Scrutiny “Call in” yesterday evening.  

I also have concerns about the proposal in item 6 “Alternative Financing Proposals for the Newham Pension Fund”. These concerns are :-

1.       The Government announced in the budget that if the 101 different local authority pension funds do not pool their funds they will be forced to do so by the Government. It would be unwise and a waste of public money to set up an Alternative  Financing proposal if the Government is about to force funds to merge. It may provoke legal action by the Government as well.

2.       When funds are merged we can expect huge cost savings and improvement in return which will be far more that any projected savings from the alternative proposed vehicle (even if it works).

3.       I understand that the proposal will cost £500,000 to set up and it is a significant cost at a time of savage cuts.

4.       I do not understand why this proposal has not been before the Investment and Accounts Committee (and the Pension board) for consultation and initial approval? The committee may decide that the proposal is not suitable for the fund and again, public money will be wasted?

5.       Finally, I understand that such complex alternative vehicles are high risk and eye watering expensive.  After our dreadful experience with LOBO loans we should be extra careful not in invest in such complex products without the highest level of scrutiny.

         I therefore hope that the Mayor will withdraw this proposal and send it for consideration by Investment and Accounts Committee (and Pension Board)

Regards

John Gray (Councillor)

(All Newham Cllrs have been asked to suggest ways to save money and cut costs. I will be publishing posts such as this on possible savings that can be achieved without harm to residents. So far this amounts to £1.1 million. £500k for not going ahead with this alternative proposal and £600k for not giving some Cllrs pensions).

Update: Professional Pensions (and a leading financial figure) have taken up this issue. See here
Post a Comment