Pen­sions used wisely can of­fer op­por­tun­ties

The Herald - - OPINION -

AS WITH many a clever plan, the idea of in­vest­ing pub­lic sec­tor pen­sion funds in re­for­esta­tion will make many peo­ple won­der: why didn’t we think of this be­fore? That re­ac­tion might be even more pro­nounced when con­sid­er­ing the idea of merg­ing Scot­land’s 11 lo­cal gov­ern­ment pen­sion funds into one, with po­ten­tial for trans­form­ing the way pub­lic in­fra­struc­ture projects are funded.

In­evitably, ques­tions arise. As re­gards the first idea, fund con­trib­u­tors will want to know about lev­els of risk and yield. Some might also dis­cern a some­what art­ful way of meet­ing the Scot­tish Gov­ern­ment’s tree-plant­ing tar­get, which has been fall­ing short.

But oth­ers might sup­port in­vest­ing in the en­vi­ron­ment and as­so­ci­ated jobs. Ethics and in­vestors’ re­turns rarely make the best soul­mates and when, in re­cent times, Scot­tish coun­cil pen­sion funds have been de­cried for in­vest­ing in the likes of to­bacco, frack­ing, fos­sil fu­els, weapons, and pri­vate fi­nance ini­tia­tives linked to off­shore tax havens, they have ad­duced a le­gal obli­ga­tion to max­imise re­tire­ment in­come.

Com­ing with the im­pli­ca­tion that the source of profit is im­ma­te­rial, cam­paign­ers have called this un­con­scionable and a dere­lic­tion of re­spon­si­bil­ity, not least when in­vest­ments run counter to stated pub­lic poli­cies.

Re­gard­ing the sec­ond idea, as with any move to­wards cen­tral­i­sa­tion, ques­tions arise about lo­cal ac­count­abil­ity and los­ing the cur­rent sys­tem of demo­cratic gover­nance. How­ever, there are pos­si­ble ben­e­fits that make the idea tempt­ing. As trade union Uni­son points out, the mul­ti­plic­ity of pri­vate fees would be cut, al­low­ing greater in­vest­ment in job-cre­at­ing projects. The move could also im­prove scru­tiny of in­vest­ment de­ci­sions, and re­fo­cus­ing these could ben­e­fit, for ex­am­ple, af­ford­able hous­ing pro­grammes, which cam­paign­ers say would bring solid re­turns, as well as again cre­at­ing jobs.

Few ar­eas of fi­nance come with greater re­spon­si­bil­ity than pen­sion funds. They are em­phat­i­cally not to be tri­fled with. But it’s con­ceiv­able that they could be used re­spon­si­bly to ben­e­fit the econ­omy and the en­vi­ron­ment.

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