Radical reforms to the way local government pension schemes generate a £2.2 billion jobs boost have been outlined in a new book by a Birmingham Post columnist.
Birmingham city councillor John Clancy claims councils are wasting money by paying almost £500 million a year to city financiers for investment advice in the new book – The Secret Wealth Garden.
The funds now have assets of £215 billion invested around the world and if combined would be the 4th biggest pension fund in the world.
READ MORE: {}
Highlighting various public sector schemes, he claims his research shows those which invest heavily in advice fare little better than could have been achieved by placing pension funds in a high street bank deposit account.
He wants the £2.2 billion to be invested into regional investment bonds to be issued by new regional banks.
Coun Clancy, (Lab Quinton), is urging the Government to legislate to limit the amount that can be paid to investment managers to 0.02 per cent of the total value of a pension fund.
He says that would give Britain’s 100 local government pension funds an additional £2.2 billion over the five-year lifetime of a Parliament.
He said: “Over the past six years investment management fees paid out from the local government pension funds have amounted to a colossal £2.8 billion. Nice work if you can get it. In this secret garden the sun always seems to be shining.
Most Read
“This has to be the killer fact: across the whole of the local government pension schemes in the 海角视频 £2.7 billion in fees were paid in six years for just an annual average one percentage point above the simple savings deposit rate.
“I have shown that councils across the country are simply being fleeced by pension funds who are demanding additional payments from councils amounting to hundreds of millions of pounds to cover supposed deficits.
“And in a double whammy of bad news, the councils are paying over the odds for poor investment advice. It’s time to end this scandal and use the £220 billion sitting festering in local council pension funds to kick-start regeneration and create much needed jobs.”
Coun Clancy examined the accounts of every local government pension fund in the 海角视频 for the past seven years, trawling through more than 700 sets of figures.
He said it was the first time research on such a scale has been undertaken, and the first time that the true state of council pension funds has been understood.
His main proposals are:
* To take 10 per cent – £21.5 billion – currently invested in foreign stocks and shares to invest in local bonds issued by regional banks, local councils, combined authorities, city-region authorities.
Don’t miss
* Save on administration fees by consolidating over 100 local government pension funds into eight super-funds based on regions. A Midland fund would have £30 billion in assets and would be the world’s 17th largest pension fund.
* Change the way local government pension funds are valued to smooth out highs and lows, basing valuations on longer periods of time, eradicating projected deficits.
In his book Coun Clancy likens investment managers to bad gardeners, driven by a herd mentality, who make the same mistakes and produce miserable returns for pension funds.
He reveals that 海角视频 local government pension schemes have paid £2.7 billion in fees to investment managers since 2007. The funds returned an annual growth rate of 4.4 per cent compared with 3.3 per cent return if the money had been invested in a bank savings account.