Current Issues in the LGPS - June 2018
04 Jun 2018 - Estimated reading time: 5 minutes
Welcome to our June 2018 edition of current issues in the LGPS:
Calling all Committee and Board members – just how confident are you?
We recently announced our intention to conduct the first ever LGPS National Confidence Assessment for all Committee and Local Pension Board members. This will be opened on the 26th June and will assess how confident members feel on eight topics. After the assessment closes, each participating fund will receive a free results report which will give a good indication of any training requirements for your Committee and Board.
What’s in your report card?
Investment reporting is an area that funds need to focus on as they move their assets into pools. While pools are developing their reporting capabilities, it’s important that funds look beyond just performance reporting and focus on what pools are aiming to deliver. Every fund should understand what responsibilities still lie with them, and what now sit with their pool, and then design their reporting accordingly to assess how well the pool is performing these responsibilities.
Staying out of 'out of bounds'
At our recent webinar we discussed the improvements many funds have seen in funding levels since their last valuation and what actions they might take as a result. We believe funds should review their objectives e.g. is there some kind of “steady state” position in terms of funding levels, contribution rates and investment risk. Once there are clear objectives in place, funds should review that the right investment and funding tools are in place to keep these within affordable and sustainable bounds.
Could do better
The Regulator’s annual survey of public service scheme governance and administration identified significant improvements overall in performance across most areas covered by the survey although some levels of performance are still too low. However, it noted that process improvements have ‘stalled’ in some LGPS funds. LGPS funds were also the least likely to respond to the survey which is a concern to the Regulator. We can expect the Regulator to focus their resources on the LGPS space in the coming year. Please read our 60 Second Summary for more detail.
A valuation of a valuation!?
GAD recently completed the 2016 statutory “like-for-like” valuation required under Section 13 of the 2013 Act. This valuation involves GAD applying data and funding plans agreed at the 2016 valuations in England and Wales to benchmark funds against a series of metrics. It’s all a bit confusing and GAD’s report won’t be published until this summer so we’ll have to wait to see if there are any meaningful conclusions. In the meantime, GAD is hosting a series of workshops in June. We have been asked to speak at the Wolverhampton event on 11 June and hope to see some of you there.
The Scottish results are in
To celebrate the successful completion of the 2017 valuations in Scotland, we recently held the final webinar in our valuation series. This webinar summarised the valuation results and key outcomes across Scotland whilst looking at what recent market movements may mean to your future investment strategy. We will soon publish a Summary considering the funding position of the LGPS in Scotland.
Ill-health: stop it being contagious
When a member takes ill-health early retirement, their employer catches an expensive bill. We all make sure we keep ourselves and our employees as safe and well as possible, so it makes sense that we do the same for fund employers’ finances. Our recent Summary takes a closer look at the treatments available.
The Environmental Audit Committee (EAC) published the responses received from the UK’s 25 largest funds to questions posed on how climate risks are being addressed. The findings show that the five LGPS funds that were surveyed are viewed as being “More engaged”, i.e. taking steps to assess and minimise their exposure to the physical and transition risks posed by climate change. The EAC’s findings highlight that LGPS funds have placed greater importance in recognising and addressing ESG matters than many other pension funds.
PLSA conference, Cotswolds – a diverse range of topics were covered, including the latest views from the new Local Government Minister, TPR and SAB. Our Conference Highlights summarise the event.
LGPS (Scotland) Regulations 2018 - these regulations came into force on 1 June 2018. SPPA are planning to issue the associated consultation response shortly.