Reform UK leader Nigel Farage (right) listens as Reform UK deputy leader Richard Tice MP speaks during a press conference. Photo Jacob King/PA WireMartin Shipton
Pensions Minister and Swansea West Labour MP Torsten Bell has accused Reform UK of planning to downgrade the pensions of council workers in Wales.
Mr Bell was reacting to an announcement made by Reform’s deputy leader Richard Tice MP that new council employees would no longer have defined benefit pensions.
When such changes have been introduced in private sector companies, they have often been followed by the total closure of defined benefit schemes, and their replacement by inferior defined contribution schemes.
Under Reform’s proposals, the party would also consolidate almost 100 council pension schemes into a single £500bn British Sovereign Wealth Fund.
According to Reform, the new fund would be required to allocate at least 25% of its investments to British companies and products and would generate £100bn of investments.
But Jon Richards, assistant general secretary of the public service union Unison, told the BBC: “Forcing council staff on to inferior pensions would leave retired workers poorer and worsen an already severe recruitment crisis for local government.”
Labour said Reform’s policy would have a disproportionate and devastating impact in Wales with one in every nine employees affected. Around 140,000 people work for local councils in Wales, delivering vital services like schools, social care and refuse collections.
As well as scrapping the current pensions of council workers, Mr Tice also outlined plans to abolish Wales biggest ever pension fund that is crucial to driving local investment from Aberystwyth to Wrexham.
Reform propose to merge the Welsh Pension Partnership and its £25bn of assets into a UK wide fund that would not be focused on Wales. The partnership is already supporting thousands of jobs and projects across the Wales, including in housing and energy.
‘Dangerous’
Mr Bell said: “Reform have let the cat out of the bag, setting out dangerous plans to scrap the pensions of one in every nine Welsh workers.
“These are plans that haven’t been thought through and where Wales hasn’t been considered for even a second. They would bring chaos to the pensions of over 100,000 workers.
“Reform’s plans aren’t just bad news for the 140,000 workers delivering vital public services. Their plan to abolish the biggest pension fund in Welsh history, recently created by the UK Labour Government, would undermine local investment across all our communities.”
The pension industry body Pensions UK said Reform had made claims about the Local Government Pension Scheme that it did not recognise.
‘Financial resilience’
Zoe Alexander, Director of Policy at Pensions UK, said: “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% in 2024 with average funding level of 108%. 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.”
Plaid Cymru finance spokesperson, Heledd Fychan MS said: “This is typical Reform – an announcement in and for England with consequences for Wales that Reform have neither considered nor care about.
“Farage’s team of ex Tories are clearly happy to see yet more wealth flow out of Wales – their plans would abolish an exclusively Welsh fund which would inevitably mean less reinvestment in Wales.
“Welsh pension funds can and should do more to invest locally and ethically in Wales, but Reform UK’s plan would remove this option – asset stripping Wales to invest in its own misplaced priorities.
“In stark contrast to Reform’s indifference towards Wales, Plaid Cymru will work with the Wales Pensions Partnership on more sustainable investment decisions, so that more of Wales’ wealth to is retained and reinvested in our communities.
“Reform UK have once again shown that the best interests of Wales are simply not on their agenda.”
Support our Nation today
For the price of a cup of coffee a month you can help us create an
independent, not-for-profit, national news service for the people of Wales, by
the people of Wales.