Reform UK calls for end to ‘egregious’ council pension fund fees

Reform UK calls for end to ‘egregious’ council pension fund fees. Reform UK has gone on the offensive again, this time accusing local councils of wasting millions. The party claims that too much of taxpayers’ money is vanishing into the pockets of City fund managers who, more often than not, don’t deliver the returns they promise.

At first, it sounds like one of those dull financial spats that never make it past the business pages. But if Reform is right, the numbers are staggering, and the consequences fall squarely on ordinary people.

“We’re paying through the nose”

Across Britain, councils oversee vast pension funds for their workers, including teachers, refuse collectors, admin staff, and social carers. These funds should be stable and sensible. In other words, they exist to pay out steady pensions after years of public service.

Nevertheless, Reform says the system’s bloated and broken. They claim councils are forking out huge sums to investment firms for “mediocre” performance.

Richard Tice, the party’s leader, didn’t hold back. Indeed, “We’re paying through the nose for failure,” he said. “Taxpayers are being fleeced while the City laughs all the way to the bank.”

The solution, in his view, is painfully obvious: stop chasing “clever” investment strategies and stick with simple, low-cost market trackers. Admittedly, it’s a blunt message, but nonetheless, it’s landing with voters who feel squeezed and tired of waste.

The billion-pound leak

Reform estimates that councils could save more than a billion pounds a year just by switching to cheaper passive funds. Therefore, that’s money, they say, the government could be spend on fixing roads, funding care homes, or cutting council tax.

You don’t need to be an economist to see why that argument hits home. After all, every wasted pound is one that could have gone to local services.

How the system got so costly

Managing pension funds has never been simple. For instance, The Local Government Pension Scheme (LGPS) is one of the biggest of its kind. It holds well over £360 billion in assets; they’re invested in everything from stocks and bonds to housing and energy projects.

To be fair, managing pension funds isn’t simple. As a result, The Local Government Pension Scheme (LGPS) is one of the biggest in the world, holding well over £360 billion in assets. Councils invest in everything from stocks and bonds to housing and energy projects.

Consequently, because it’s complex, most hire private fund managers to do the heavy lifting. In return, those managers charge fees, sometimes percentage-based, sometimes fixed, but always hefty.

Over time, those costs build up. A half-percent here, a “performance bonus” there, and subsequently, this adds up to millions.

Reform calls it in short “a slow bleed the public never sees.”

Where the money goes

If you try to find out how much councils actually spend, good luck. The data’s buried in reports few people can read, written in financial jargon that might as well be a different language.

Reform wants to drag all that into the open. They’ve demanded that every council publish a clear, line-by-line breakdown of its pension fund costs.

“People deserve to know where their money’s going,” said Tice. “If the figures are fair, fine. But let’s see them.”

Transparency, in Reform’s eyes, isn’t optional, it’s the foundation of trust.

Critics say it’s not that simple

Not everyone agrees with Reform’s approach. Some financial analysts say you can’t run pension funds entirely on autopilot.

Active managers, they argue, can help protect pensions during downturns by shifting investments or hedging risk. Without them, councils could be more exposed when markets wobble.

“Passive investing works until it doesn’t,” one analyst told The Guardian. “When things get rough, you want someone at the wheel.”

Reform doesn’t buy it. The party insists most managers still fail to beat the market even after charging high fees. “If you’re not adding value,” Tice said, “you’re dead weight.”

“Common sense, not complication”

That phrase, “common sense”, has in fact become something of a Reform mantra.

Specifically, the party’s three-point plan is simple:

1. Cap management fees at 0.1 percent of assets.
2. Move most funds into low-cost market trackers.
3. Publish every fee and bonus in plain English.

They say it’s about stripping out waste, not reinventing the wheel. “If the private sector can do it for less,” said a Reform campaigner, “why can’t councils?”

However, councils argue that their funds are more complicated than a standard private portfolio. For example, many invest directly in housing and infrastructure, which needs specialist knowledge. Reform acknowledges that, but insists “complex” shouldn’t mean “careless.”

Cracks in the current system

It’s not just Reform raising the alarm. Indeed, a few local auditors have quietly admitted that some council funds lack proper scrutiny. Furthermore, in certain cases, board members making multi-million-pound decisions have little or no financial training.

That worries Reform. Consequently, the party wants pension boards to include qualified professionals and independent watchdogs.

“It’s madness,” one adviser said. “You wouldn’t let someone without a licence drive a bus. Why let untrained people steer a £10 billion fund?”

A political sweet spot

This issue fits neatly into Reform’s broader brand—anti-waste, anti-elitist, pro-taxpayer. Ultimately, it’s the kind of message that cuts across political lines.

Therefore, even those who dislike the party’s style tend to agree that council finances are a mess. The idea that bureaucrats are mismanaging pension billions while basic services crumble? That story writes itself.

And, in a cost-of-living crisis, it lands.

Councils feeling the strain

Local authorities are under enormous pressure. To illustrate, several, such as Birmingham, Nottingham, and Croydon, have effectively gone bankrupt. Rising costs, poor investments, and years of tight budgets have left many teetering.

Reform says the bloated pension system is part of that problem. In other words, when funds underperform or overspend, councils must plug the gap. That money comes from, you guessed it, local taxpayers.

Cut the fat, they say, and you ease the burden.

The push for change

To give credit where it’s due, some councils are already trying. Specifically, they’ve joined “pension pools” to share costs and negotiate better deals. London CIV and Border to Coast are two such examples.

Yet, Reform argues it’s not happening fast enough. “They’re tinkering around the edges,” said Tice. “Meanwhile, the waste continues.”

He’s calling for a national review, a top-down look at every council’s pension spending, with the results made public. “Sunlight,” he said, “is the best disinfectant.”

Real people, real stakes

Crucially, behind the jargon are millions of ordinary workers who depend on these pensions. These are the ones who keep councils running: drivers, carers, teaching assistants, and office staff.

Thus, when their funds lose value, it’s not just a line on a spreadsheet. It’s their future.

Reform plays heavily on that human angle. “We’re not attacking pensions,” Tice said. “We’re protecting them.”

And, that distinction, politically, matters.

The road ahead

Fixing the system won’t be easy. Clearly, contracts run long, regulations are thick, and change rarely comes quickly in local government.

Even so, Reform insists the first step is simply admitting there’s a problem. “Once the waste is out in the open,” said one party adviser, “it’ll be impossible to ignore.”

Ultimately, whether councils like it or not, this issue has entered the national conversation.

Final thoughts

Therefore, in the end, Reform’s argument boils down to trust. Can councils be trusted to handle vast sums responsibly, or is too much of it lost to inefficiency and complacency?

The party’s position is clear: money meant for workers’ pensions should stay there, and not vanish in layers of fees.

Moreover, as more councils face financial collapse, that message will only grow louder.

This is because, as one Reform supporter put it, “You can talk policy all day, but people understand waste. They see it. They live with it. And they’ve had enough.”

Let Regulated Advice match you with a financial advisor for expert advice.