Reform UK MP for Boston and Skegness Richard Tice has criticised the performance and management of the Local Government Pension Scheme (LGPS), accusing councils of “overcharging and underperformance” and calling for urgent reform.
Speaking at a Reform UK conference, Tice said the scale of the LGPS was “enormous,” with more than £400 billion under management across the UK. The 13 councils examined by Reform UK alone control £66 billion, “bigger than our annual defence budget,” he noted.
He highlighted that the total annual expenditure across these councils is £19 billion, of which just under £2 billion is employer contributions to pension schemes. These 13 councils represent roughly 15 per cent of the overall LGPS.
He argued that the way these funds are invested has a direct impact on council budgets. He said: “Performance of these funds really matters. If the performance is better, councils can contribute less. If the performance is worse, councils have to contribute more.”
He criticised the level of illiquid investments, which are often locked up in 5-, 7-, or 10-year funds. He warned that high fees and performance-based incentives can make poor results even worse.
He said: “All of these councils, with one exception, have invested between 20 and 40 per cent of their funds in these illiquid investments. That is simply negligent. At a maximum it should be 10 per cent. This is financially incompetent at best, gross negligence at worst.”
Tice said Reform UK was “absolutely determined to stop this rip-off and this complacency,” accusing local authority pension committees of failing to act because “it’s not glamorous, because people don’t understand it.”
He pledged action in Westminster, saying: “We’re going to urge all our council pension committees to urgently change course, this cannot go on, it is simply unacceptable. Today we’re launching an urgent question to the Speaker to raise this in the House of Commons on the first day back after the holidays.”
Tice warned that resisting reform would expose councils as siding with “the rich City investment managers” over local residents. He said: “We at Reform are on the side of the elderly, vulnerable residents in our council areas who need better social care.”
He also floated the idea of a new pension pool manager adding: “We need to look at a new reform pool manager because, bluntly, we think we can do this better.”
In response, Pensions UK said the LGPS is “one of the most successful in the world” and is already on a reform journey projected to save millions and further strengthen the scheme.
It added: “Any policy proposing changes to the structure or approach of one of the largest pension funds in the world should be supported by evidence and detailed plans. The duty of the LGPS is to look after members’ interests and that is where it is fully focused.”
Pensions UK director of policy Zoe Alexander says: “The Local Government Pension Scheme is one of the world’s most successful pension schemes, delivering pension payments to millions of workers across the country. It has consistently demonstrated financial resilience and operational stability throughout regular periods of rapid change, capitalising on economies of scale and a collaborative culture.
“It provides pensions on behalf of 15,000 employers and close to 7 million workers in Local Government. Those pensions are not generally large: the average sum received is around £5,000 per annum.
“The latest valuation figures show that the LGPS delivered an aggregate return of 8.9 per cent in 2024 with average funding level of 108 per cent. The next valuation is expected to show this position even further improved. Significant improvements in funding over this valuation cycle are already expected to result in reduced employer contributions. Any savings could be passed onto taxpayers via reductions in their council tax but these decisions are for individual councils.
“The policy of consolidation, pursued by both the last and current government, has led to considerable savings, estimated at over £1 billion. These savings are expected to accelerate as the pooling reforms proceed rapidly.
“The vast majority of LGPS investments are now carried out via FCA-authorised Pools, and from spring next year it is expected that all investments in England & Wales will be managed by these large, sophisticated vehicles.
“Like all significant UK pension schemes, the LGPS takes responsible investment seriously and integrates climate considerations into overall risk management.
“The LGPS also has a strong record of investing in Local areas – and we anticipate that the latest Government reforms, and the devolution Bill, to strengthen this further. It has the highest proportion of investments in domestic assets in the UK pension sector.
“Any policy proposing changes to the structure or approach of one of the largest pension funds in the world should be supported by evidence, and detailed plans. The duty of LGPS is to look after members’ interests.”
