When it comes to our public-sector pensions, if it ain’t broke, don’t fix it

I refer to the articles in The Herald on Sunday on January 13, and The Herald on January 14, which reported on proposals to alter the local government pension funds.

These funds have been accrued from deductions from salaries and employer contributions, which are effectively delayed salary, and as such are morally if not legally mutual funds. It stands to reason, then, that any alterations to the funds should be the concern of the members of the scheme rather than politicians and trade union officials.

The proposal to amalgamate the 11 pension funds into one is based on “big being better” and more efficient, which is disproved by the smallest fund, Orkney, having relatively the largest surplus. Also, if there are a number of funds then success of the various fund managers can be compared – with one fund there is no comparison.

Suggestions were made that these funds should only invest in “ethical” investments. The difficulty with this is determining what is ethical to the fund managers. Not investing in oil-related companies may not be thought appropriate in Grampian, nor weapons manufacturer BAE Systems in Glasgow, nor Babcock in Fife. For members who smoke it would be hypocritical to oppose investment in tobacco and those who enjoy a dram are unlikely to object to investments in distillers.

It is suggested that amalgamation of the funds would allow them to provide funds for infrastructure investment in Scotland. I would suggest that it would be simpler to create a Scottish Infrastructure Fund which the local authority pension funds and other collective funds could invest in, subject to the returns being suitable.

Gordon Brown, as Chancellor, effectively closed down the private company defined benefit pension funds by taxing them. A similar situation should not occur with the local authority pension funds. The funds work perfectly well just now and so “if it ain’t broke don’t fix it”. James Miller

Conon Bridge, Dingwall