Calls from campaigners that the UK’s 101 local government pension funds should stop investing in fossil fuels are admirable, but over-simplify the huge task that disinvestment would mean, says UNISON today (Friday).
UNISON would like to see Local Government Pension Scheme (LGPS) funds no longer investing in firms with big carbon footprints and instead opting for greener investments. But the union says the reality is not so simple.
Commenting on research published by global climate campaigners 350.org, UNISON General Secretary Dave Prentis said: “We all want to live in a greener, cleaner world, but pulling local government pensions fund investments from firms with big carbon footprints, and putting them into environmentally-friendly investments instead, is no mean feat.
“Relocating the funds containing the pensions of millions of current and retired workers would take many years, and incur the funds considerable expense.
“The first duty of the LGPS is to pay the staff their pension benefits when they retire. This includes anyone who works, or once worked, in town halls, schools, colleges, charities and private companies running public sector contracts.
“Divesting of carbon assets without having found adequate alternative renewable investment returns would create huge economic uncertainty. This would be at a time when austerity is already wreaking havoc and causing financial difficulties for local government pension funds and their cash flows. It’s these cash flows that pay public sector workers their pensions.
“The opportunities to invest in low-carbon infrastructure remain limited in the UK. Where such funds exist, they are small scale, and investing in them means high fees and huge transaction costs.
“Public sector workers have already taken a huge hit in their pensions, thanks to changes introduced under the coalition government. It would be irresponsible to begin any programme of disinvestment in fossil fuels that threatened in any way the ability of the funds to pay people’s pensions. We hope the campaigners will meet with us soon to discuss the issues involved.”