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(Pic : thezooom.com) |
A significant story broke today - courtesy of ITV Wales and Friends of the Earth Cymru - that the trust that manages pensions for Assembly Members have been investing in what many would consider ethically dubious companies.
UPDATE : 23/09/15 - The director of FoE Cymru, Gareth Clubb, has provided more details on his blog, Naturiaethwr (rough English translation via Google Translate).
This shouldn't come as any shock. After the hoo hah over the pay rise, I suspected this would be the next port of call and had a proverbial deck chair and popcorn ready for it. I'm just surprised it's taken this long and you've got to tip your hat at Friends of the Earth Cymru for their top notch ferreting.
Anyway, according to the UK Government Actuary's Department (pdf), the market value of the pension fund's assets was just under £25.5million in March 2015. Since the rules were changed (pdf), AMs contribute 11% of their salary, while the Assembly Commission – as employer – contributes an equivalent of 16.6% to the fund (it used to be a whopping 23.8%). So for each AM, you're looking at a combined contribution of at least ~£14,900 a year (more for ministers and office holders).
Safe to say that money isn't being invested in Rainbow Wuzzle Dreams Inc and Oochie Snuggle Bums plc.
It's worth, first of all, separating the issue surrounding the investments from the conduct of individual Assembly Members.
Almost all pension funds are managed by trusts or specialists, and members won't have any input into where their money goes unless they want to micromanage it themselves – which can be tricky and bewildering for amateurs, and AMs don't have time (if you were unkind, you could say skills either) to play Gordon Gekko.
AMs wouldn't have had much idea where the fund was investing and they have very strong plausible deniability. I'm sure few AMs would've willingly invested in these companies if the decision were theirs alone.
But – as it typical with these stories - AMs haven't helped themselves.
At some point in the last 16 years, AMs past and present will have spoken out publicly against many of the industries and companies their own pension fund was investing in. Now that doesn't look bad at all, does it? It's at least a 7.4 on the Nathan Gill scale.
It seems none of them thought it would be a good idea to check where their own money was going before making various statements on the public record.
For example, Plaid Cymru are one of the most ardently anti-GM parties in the UK, and the Welsh Government is highly sceptical of the technology, yet it's reported AMs pensions were invested in anti-GM nemesis Monsanto.
Earlier this year, the Assembly voted in favour of a fracking moratorium, but upon retirement from the Assembly, AMs will benefit from investments in companies involved with fracking. Up to £800,000 has been invested in fossil fuel companies generally....from legislators that brought you the Wellbeing of Future Generations Act 2015.
That's not the worst of it either. AMs were pretty strident in their support for Burberry workers when the company closed its Rhondda factory in 2007. Their pension fund has, predictably, invested up to £90,000 in Burberry.
Then there are investments in tobacco companies. This Welsh Government are one of the most vehemently anti-smoking administrations in the UK and are pursuing a clampdown on e-cigarettes – yet it's reported £180,000 has been invested in big tobacco. Meanwhile, an indeterminate sum has been invested in the gambling industry.
Up to £10million of the fund's investments are unattributable. For all we/they know it could've gone towards arms manufacturers, payday loan companies or the big financial service companies many AMs have long criticised since their role in the recession.
Looking at it cold-hearted and rationally, for a pension fund these are sound investments. As the Chair of the Trustees – William Graham AM (Con, South Wales East) - is quoted as saying :
"The Trustees have a legal duty to act in the best (financial) interests of Scheme beneficiaries, while the Pensions Regulator, the Government body, responsible for regulating work-based pension schemes in the UK has stated that trustees have a ‘fiduciary duty to choose investments that are in the best financial interests of the scheme members – for example, you must not let your ethical or political convictions get in the way of achieving the best returns for the scheme.'"
In short, as a pension fund you're obligated to get the best returns for members regardless of where those investments go; it's their retirement income after all.
The tobacco industry makes colossal sums of money every year and massive profits – there'll be more on this from me next month. If you want to make money for a pension fund they'll be amongst the first ports of call. Similarly, natural resources will result in big returns – and are obviously geared towards fossil fuels and mineral extraction.
There's nothing wrong or illegal about any of this, but it's incredibly embarrassing.
As Caebrwyn eloquently covered earlier with regard the Dyfed Pension Fund, the wider issue is whether public sector pension funds have just as much a moral obligation to invest ethically, as they do a financial obligation to ensure its members have a good income upon retirement. That's a very tricky balancing act.
Once you get beyond a certain level, most free market capitalism becomes essentially unethical anyway, and you can probably count the number of massively-successful ethical companies on the fingers of one hand. This isn't what I would call hypocrisy as AMs wouldn't have had much of an idea where the money was going, but no AM can claim to be holier than thou on this. The best they can do is damage limitation or stop digging the hole they're in any deeper.
It's telling that it's only after the destination of investments have been publicly revealed (the first time since the Assembly was established AFAIK) that AMs are scrambling to distance themselves from it or calling for clarity.
It was their money. Where did they, honestly, think it was going?
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