By Susanna Rust
“Recently published guidance for the UK’s local government pension schemes (LGPS) has revived concerns about the potential power of the government to direct investment.
Last Friday, 16 September, the Department for Communities and Local Government (DCLG) released guidance that gave the LGPS and associated industry a first glimpse of what will be required under new, keenly anticipated investment regulations…
These were met with some surprise and consternation when the draft regulations were published, and and the UK Sustainable Investment and Finance Association (UKSIF) was critical of them in its response to the government guidance.
Chief executive Simon Howard said the association was “very concerned with the power of direction, whereby the secretary of state can direct a fund to make changes to its investment strategy, force it to invest in specific assets and transfer the investment functions of the administering authority to the secretary of state or a nominated person”.
He added: “Once again, we call on the secretary of state to clarify that this power will only ever be used where an authority has breached its fiduciary duty.””