Reform UK today said it could cut £350 from annual council tax bills by shaking up local authority pension rules.
Deputy leader Richard Tice used a press conference this morning to unveil plans to improve the performance of pension funds, claiming it is costing taxpayers up to £10billion a year.
He said that Reform’s analysis of 13 councils’ pension funds found they controlled around £66billion, pointing out that this was more than the UK’s defence budget in the same period, which was £53.9billion.
He and the party’s waste chief, Zia Yusuf, argue that environmental, social, and governance (ESG) goals have reduced returns and should be removed.
Under-performing fund managers would also be sacked as schemes are told to prioritise maximising returns and investing in local projects like housing.
The money saved could be used to give taxpayers a bill cut, or to invest in social care locally, the party claims.
Mr Tice told the press conference that money was being poured into climate-related investment funds that were not producing returns, saying: ‘This is a meaningful cause of under-performance – not the only cause but a meaningful one … we are absolutely determined to stop the rip-off.’
Mr Tice said that the 13 councils analysed by Reform were also coughing up for exorbitant fees to manage the pension funds, overpaying by as much as £265m a year.
Extrapolated to pension pots UK-wide the figures run into billions, he argued.
‘The numbers are enormous. Our 13 councils alone, looking to March 2024, which are the last audited numbers, about £66billion,’ he said.
‘What is that? It’s bigger than our annual defence budget, just in 13 councils. Across the whole local government pension scheme it is over £400 billion.’
An analysis of local authority pensions found that nearly 1 in every £4 raised in council tax is spent on them.
An analysis showed that councils contributed nearly £7billionin a year, compared to £1.1billion spent on libraries, culture, heritage and tourism, £2.2billion on emergency housing, and £20billion on adult social care.
Because pensioners are guaranteed a set payment, if the investments fail to perform as well as expected, authorities have to make up the shortfall.
However, the decision to blame green investments was questioned.
James Alexander, chief executive of the UK Sustainable Investment and Finance Association (UKSIF), said: ‘Investors managing capital over decades recognise that global warming is among the greatest threats to financial returns. Sustainable strategies help to address these material risks, safeguarding portfolios and supporting stronger long-term gains.
‘Ill-advised attempts to override this forward-thinking approach could hollow out hard-earned pension pots. Investment decisions should be guided by experts who understand these financial principles, not parties with short-term political agendas.’
