OUR ROUND-UP OF THE LATEST PUBLIC SECTOR NEWS AND INSIGHTS
Current Issues in the LGPS - September 2019
02 Sep 2019 - Estimated reading time: 5 minutes
Following its approval of Hymans’ Good Governance Report, the Scheme Advisory Board (SAB) has asked us to assist with the next stage of this important project. This will involve the establishment of two working groups to look at defining good governance outcomes and options for independent assessment of those outcomes. The working groups will involve a wide range of scheme stakeholders and will be ready to deliver their findings to the SAB in November.
The Equitable Life wind up continues
On 31 July 2019, Equitable started sending out decision packs to policyholders regarding the proposed transfer to Utmost. There are two resolutions to vote on, with the vote taking place on 1 November. If the vote is in favour of the transfer, the High Court will authorise it on 25 November and the transfer would then take place on 1 January 2020. We encourage you to communicate this news to your members. We are aware LGA is contacting funds regarding obtaining legal advice on the transfer process.
The SAB has published a further Briefing Note on the Order by the Competition and Markets Authority and how it affects LGPS funds. This restates the point that CMA remedy 7 – the obligation to set strategic objectives for investment consultants – is intended to apply to the LGPS. As a result, such objectives need to be in place by 10 December 2019. We will discuss this in more detail at our client conference in London on 18 September.
We are running a webinar, specifically for LGPS employers, which is aimed at keeping you up to speed with the latest LGPS developments. We will cover the outlook for the 2019 valuations, some hot topics including McCloud and GMP and some options to consider following the production of your 2019 valuation results. There will be the opportunity to ask questions throughout the webinar and a recording will be circulated afterwards to all registered attendees.
2019, a summer of love(ly valuations)
For those in England & Wales, this summer will be remembered for preparing the valuation data and chasing up outstanding employers. We have now received around 75 per cent of valuation data submissions and, in general, data quality is similar to 2016. Using the feedback from the Data Portal and your Hymans team’s review, the data validation stage offers an opportunity for each fund to carry out a ‘post-match’ in-depth review of data quality and to identify actions to ensure the data going forward is as complete and accurate as possible. Please speak to your usual Hymans Robertson contact for further information on how we can help.
It's all about the communication
Once all the valuation calculations have been completed and the results discussed with Officers and Committee, the next stage is to communicate with employers. As one of the most important stakeholder groups in the valuation, making sure you have a clear plan and strategy to engage with this group is crucial to ensuring a successful valuation. With this in mind, the next webinar in our 2019 valuation series will focus on employer engagement and offer some top tips and best practice from our experts. Further details about the webinar and registration can be found on our website.
The Scottish valuation of a valuation
For those of you in Scotland feeling left out by all the talk of valuations, fear not! We recently heard from the Government Actuary’s Department that we can expect to hear about the results of their 2017 Section 13 valuation in the next couple of months. As a reminder, this is an exercise where GAD assess whether each LGPS fund’s local valuation meets four criteria as specified in the Public Service Pensions Act 2013. We will be in touch with each fund when we hear more.
Urgent surgery needed for the tapered annual allowance?
With high numbers of doctors leaving the NHS as a result of hefty annual allowance tax charges the Government initially diagnosed minor surgery, in the shape of a 50/50 option. Further investigations, however, suggest more drastic treatment is required, with a replacement proposal to allow doctors to set their own pension accrual each year, in a bid to stem the flow. The Government will also review how the tapered annual allowance is impacting delivery across the other public services. The formal consultation is still awaited and we wait to see if it is more than just a sticking plaster.
Late retirement guidance
As reported in Bulletin 183, MHCLG recently undertook a consultation on proposed changes to the late retirement guidance; the consultation closed on 17 April 2019. A number of responses to the consultation raised concerns about the complexity of the methodology and the proposed implementation date (which has now passed). We understand that GAD is currently working on revised guidance that will include a simplified methodology and that MHCLG is working towards an implementation date of 1 September 2019.
75 and out!
The Centre for Social Justice (CSJ) – an influential think tank – has proposed that the state pension age should rise to age 75. The increase would happen in two stages: an increase to age 70 by 2028 and age 75 by 2035. The present state pension age timetable is a rise to age 67 by 2028 and age 68 by 2046. The CARE benefit normal retirement age is obviously linked to a member’s state pension age and so this proposal’s introduction would have a significant impact in due course. However, this type of policy proposal tends to appear every now and then, generate some column inches and then get quickly forgotten.