By Suzanne Cumberbatch Accountability for local government pensions schemes (LGPSs) worth £90bn must be improved to provide reassurance to taxpayers and members, according to the Audit Commission. In order to bring a ‘sharper focus’ on each fund’s financial management and performance, one of the commission’s key recommendations is that ‘pension funds, normally attached to individual councils, should be made self-standing bodies with separate accounts’. In a letter to local government secretary, Ruth Kelly, acting chairman of the Audit Commission, Sir Michael Lyons, said it was unsurprising, due to the asset values of the 81 pension funds that they had been a high focus of attention. Industrial action over plans to scrap the 85-year rule further thrust the LGPS into the limelight. Unison has lodged a request for a judicial review in September of the Government’s decision to change the LGPS. The consultation period for the new-look scheme is due to close soon after. ‘The sheer scale of the LGPS underlines the need for high standards of financial management and accountability,’ Sir Michael states in the letter. ‘In our view, pensions funds should be required to produce an annual report for those organisations which are part of the relevant pension scheme.’ The letter points out that only one-third of those administering pension funds prepare a separate annual report as a statement of their accountability for managing the fund, and many of those provide mixed information. Auditing arrangements also have to change, Sir Michael adds. ‘The auditor's report does not currently include an option on whether contributions to the scheme have been paid in accordance with the payment schedule.’ The news came as it emerged LGPS have started to invest billions of pounds in foreign exchange and hedge funds in an effort to maximise returns. s.cumberbatch@hgluk.com
