MORE than six million workers’ pension pots are at risk under Treasury plans to create so-called “megafunds” to siphon off into national infrastructure projects, GMB warned today.

Chancellor Rachel Reeves has said she wants to pool assets from the 86 separate local government pension schemes (LGPS) into eight funds, worth about £50 billion, by 2030.

She is due to announce her plans, which the government claims will be part of the “biggest pension reforms in decades,” in her inaugural Mansion House speech as Chancellor before City leaders tonight.

Alongside these are plans to combine smaller defined-contribution schemes across the country into pools of £25bn to £50bn.

GMB union has raised “strong reservations” over the annoucements, warning megafunds should not be used as “slush funds” for the Treasury.

The LGPS represents one of the world’s largest defined-benefit schemes, with 6.5 million members and some £360bn in assets.

GMB national pensions organiser George Gergiou told the Morning Star: “Our view is the Treasury have seen that and said we want a bit of that to fund some of our great infrastructure projects.

“This is not spare money, this is not a slush fund for people to dip into.”

The government said consultation on the plans will open soon but they echo those made by former Tory governments.

Former prime minister David Cameron’s bid to push local funds into eight larger pools in 2015 has seen only about 39 per cent of LGPS assets being pooled into larger funds so far.

Mr Gergiou said that “it’s putting hope over experience” to believe that larger pools would bring about efficiencies of scale.

He said: “All the evidence points to the opposite, returns are down and asset management costs have doubled in the last accounting period.

“Boris Johnson came for it, Rishi Sunak came for it — we soon told them where to go and we are going to say exactly the same thing to this Chancellor — that this is our members’ money to pay for our pensions.”

He said employment rights minister Justin Madders’s consituency’s LGPS in Oldham was a good example of smaller pension funds focusing on local issues, in this case for housing.

“By having local funds they can concentrate on local issues,” said Mr Georgiou.

“You go into a large national fund your eye will be taken off local issues.”

He also warned that trustees in the existing larger pool arrangements “are not open, they are not transparent, they are anti-trade union in many cases.

“One of them said ‘we will have a trade union rep on this board over my dead body’.”

The GMB expert also rubbished Treasury arguments that pooled assets can be used to invest into a wider range of riskier and long-term assets.

“We are not speculators — we are not going to put it on the 4:30 at Haydock,” he said.

He said Treasury plans to have each administering authority set targets for investment in their local economies was also wrong-headed.

“We invest to get a return, we don't invest in the local economy for the sake of it,” said Mr Georgiou.

Speaking on behalf of the National Pensioners’ Convention (NPC), retired civil servant Clare Wilkins warned against amending existing schemes to the detriment of local government workers.

She added: “Any change needs to be made solely in the best interests of those workers who pay in to the scheme and protect their pension in retirement.”

Unison assistant general secretary Jon Richards also warned that “the devil will be in the detail.”

He said: "It’s crucial the voices of scheme members — including council workers, school support staff, and many others delivering public services — are central to any changes.”

TUC general secretary Paul Nowak said the proposals have the “potential to boost workers’ pensions and encourage the extra investment we need across the country.”

He said that with the “right safeguards this could be a win-win,” adding: “Retirement security must be first and foremost, but working people also benefit when their pension savings help to create jobs and upgrade infrastructure where they live. 

“It’s encouraging that the Chancellor is looking to Australia and Canada, where the best performing pension funds combine scale with strong member oversight from trade union representatives.”