Supreme Court to rule tomorrow on government guidance on LGPS and disinvestment

The Supreme Court will rule tomorrow (29 April) on whether parts of government guidance on the investment of Local Government Pensions Schemes – specifically requiring those administering the pension scheme not to pursue policies that are contrary to UK foreign policy or UK defence policy – were for an unauthorised purpose.

The challenge in R (on the application of Palestine Solidarity Campaign Limited and another) (Appellants) v Secretary of State for Housing, Communities and Local Government (Respondent) – UKSC 2018/0133 relates to the ‘Local Government Pension Scheme: Guidance on Preparing and Maintaining an Investment Strategy Statement’ published on 15 September 2016.

The guidance included a provision that those administering the pension scheme should not pursue policies that are contrary to UK foreign policy or UK defence policy.

The appellants are an organisation campaigning for disinvestment that would be contrary to the guidance, and Jacqueline Lewis, an LGPS member and the first appellant.

Their judicial review of the guidance succeeded at the first instance, on the basis that the Secretary of State, in publishing the challenged part of the guidance, was acting outside the statutory purposes authorised by the Public Services Pensions Act 2013 and the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016.

In Palestine Solidarity Campaign Ltd & Anor, R (on the application of) v Secretary of State for Communities and Local Government [2018] EWCA Civ 1284 the Court of Appeal allowed the appeal of the High Court’s judgment, concluding that the Secretary of State was acting within the remit of the statutory purpose.

The appellants also argued that the challenged parts of the guidance were inconsistent with Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision (‘the IORP Directive’).

The High Court dismissed this ground and the Court of Appeal agreed with that decision. That issue is now before the Supreme Court.

The case was heard on 20 November 2019 by a panel comprising Lady Hale, Lord Wilson, Lord Carnwath, Lady Arden and Lord Sales.