Government guidance issued in September 2016 to force Local Government Pension Scheme (LGPS) investments to meet government policies, especially foreign and defence (weapons sales) policies, has been thrown out by the High Court.
A case brought by the Palestine Solidarity Campaign, as part of its boycott, disinvestment and sanctions strategy against pension funding of Israeli or associated military investments has achieved a judicial review of the government’s guidelines. The government was deemed to have “acted for an unauthorised purpose and therefore unlawfully”.
The Palestine Solidarity Campaign has been fighting to ensure that pension funds are invested for ethical purposes and in the best interests of the pension fund beneficiaries. Many public institutions – local authorities, universities etc – have declined to invest in unethical activities by the Israeli government or in the arms trade which bolsters such regimes.
Mobilisation of pension funds for ethical investment, especially the LGPS scheme which has a high level of trade union participation, is a strategy copied from the US trade unions, which make up for their relatively weak workplace effectiveness by utilising massive pension funds built up over decades.
The guidance was a cynical political attack to try to curb local democracy as reflected in local government and its pensioners, seeking to prevent the LGPS from investing in the best interests of its pensioners.
It is a significant defeat for the government. The LGPS was the only pension scheme to which the government applied these regulations, a double standard whereby private pension schemes could do what they liked but public schemes were muzzled.