Our round-up of the latest public sector news and insights
Current Issues in the LGPS - May 2019
02 May 2019
Earlier this year we were appointed by the Scheme Advisory Board (SAB) to facilitate a review of governance structures for the LGPS. This project is about building on the excellent work that already goes on in the LGPS and looking at ways to ensure that all funds have access to the best practice. Which is where you come in. We have launched a national governance survey, with the aim of capturing as many views as possible from those working within the LGPS. The survey will be open until Friday 31 May and the findings will form the basis for a report that will be submitted to the SAB in July. A big thank you to those of you who have already responded. If you haven’t yet responded we’d love to hear your views on this important topic and you can find the survey here.
Hot and Bothered?
Climate change is certainly grabbing the headlines, with protests mounting for action to be taken. We are hosting a ‘learning zone’ on the subject at the PLSA conference on 13 May in the Cotswolds. Please do join us if you are attending the conference, and learn more about how climate change could affect LGPS assets and member’s life expectancies. We’d like to hear your opinion and would be grateful if you could spare 60 seconds to complete a short survey. We’ll provide feedback on the responses at the conference. In the meantime, one of our actuarial trainees has written a blog with his own thoughts on the issue.
Assets in the ascendency
English and Welsh funds will now be well into the valuation process. Equity returns over the 2016/19 valuation cycle have made a positive contribution to funding levels, with UK and global equities returning 9.5% p.a. and 14.9% p.a. respectively. Looking forward, as ever, a number of challenges and opportunities exist in all capital markets. We will discuss these, and other investment-related matters, in our next edition of Investment Perspectives.
AVCs – not small change
Additional voluntary contributions are often viewed as the distant relative to core LGPS benefits. You know, the sort of relative that you know exists, and you actually quite like, but you never quite get around to visiting (this analogy reminds the author to say sorry to Uncle Jim - I promise I will visit you this summer). However, due to the unprecedented changes taking place across AVC providers, we’d encourage you to revisit your fund’s AVC arrangements to ensure they remain appropriate and the governance surrounding any changes to members’ investments is robust.
Hot topics of the 2019 valuation
Last week we held the second instalment of our 2019 valuation webinar series at which we discussed some of the topics that are likely to come up time and again during the next eleven months. A replay of our experts’ thoughts on what recent changes in longevity, ongoing investment market uncertainty and the 'McCloud' judgment may mean for your 2019 valuation is available here.
No need to get the chequebook out?
We know that some auditors have been pressing for quantification, or at least commentary, on the ‘McCloud’ judgement in employers’ 31 March 2019 accounts. ‘McCloud’ is the court ruling that public service pension benefits may need to be amended back to 2014 as a result of age discrimination: see here for comment on that. CIPFA has now announced that there will be a centralised solution, which should minimise or reduce the need for expensive added work for each employer’s accounts. If you are not sure what this means for your organisation, do get in touch with our accounting specialists.
A much-trailed but glacially-moving piece of ‘exit’ legislation
Yes, we’re talking about the £95,000 cap, the proposed maximum cost of someone leaving the public sector (which we commented on in 2015). A consultation has appeared covering most public sector employers in England and Wales. Some LGPS employees, who would receive an immediate early retirement pension, will be surprised to be caught by this cap: changes to LGPS regulations will bring clarity, but unlikely much help. We will update you well ahead of the 3 July closing date, to help with your own response.
When three became one (sort of….)
The new Money and Pensions Service (MAPS) launched on 8 April bringing a new name and brand to the Single Financial Guidance Body. This body brought together the Pensions Advisory Service (TPAS), the Money Advice Service and Pensions Wise at the end of 2018. It has been suggested that scheme documentation which currently refers to TPAS should be updated to reflect MAPS, however, having contacted MAPS and TPAS it seems this may be a bit premature. MAPS has launched its website, but still references the three separate consumer websites already in place. Funds may want to hold off making the necessary changes to documentation until later in the year when we have more clarity.
Don’t forget to keep the ‘scheme specific’ data score
Readers will recall the efforts made last year via the LGA to agree a standard data extract for the ‘scheme specific’ data element of the 2018 TPR scheme return. While agreement on the standard data extract wasn’t agreed in time for that return something still needs to be confirmed for the 2019 return and beyond. We understand that these discussions have just recommenced, with LGA setting up a working group including administrators, software providers and actuaries to agree the ‘core’ scheme specific data requirement for 2019 for testing in the coming months. We will be contributing to this working group, and the expectation is that 2019 will see a consistent approach to data scoring across all funds.