Current Issues in the LGPS
02 Oct 2018 - Estimated reading time: 5 minutes
No lack of confidence
Our National Confidence Assessment ended on the 10 August. More than 50 funds participated in the Assessment and over 250 committee and board members completed the survey. This in itself shows strong engagement with the Scheme. Overall, the results were clear in affirming that committee and board members do feel largely confident in their knowledge and understanding on all the topics assessed. We will soon be releasing our national report which will detail our findings and analysis of the results. In the meantime, register for our webinar on Thursday 4 October where experts from our Actuarial, Investment and Governance teams will share their thoughts on the main findings.
Make it or take it?
Investment pooling continues to make strong progress, with sub-funds being launched and assets being transitioned. We encourage funds to be heavily involved in the process of designing their Pools’ sub-funds and policies. This will help ensure that they reflect funds’ objectives and beliefs e.g. preferred style of active equity management. Although (potentially) taking more time initially, being involved in the design stage will ensure funds’ needs are met and simplify the approach of transitioning into the pool.
The waiting is over
The 2016 valuations may seem a long distant memory, but Ministry of Housing, Communities and Local Government (MHCLG) finally released the Section 13 report carried out by the GAD which reviews all the 2016 local funding valuations against four criteria. We will be in touch shortly with our views on this report. In the meantime, if you have any specific queries please get in touch with your usual Hymans contact.
Cost caps to the 4
As a result of the recent HM Treasury announcement, this month saw a lot of speculative comment doing the rounds regarding the possibility of the 2019 English & Welsh valuations being put back due to aligning cost cap exercises across the public service pension schemes. We’ve set out our thoughts in this brief summary. From very recent discussions, we fully expect the 2019 valuations to go ahead so funds should continue to prepare accordingly. We’re currently speaking to the Local Government Association (LGA) and MHCLG to determine what this all means for future valuation dates.
Revision time for English schools’ non-teaching staff …
The GAD has issued a paper on academies, summarising its analysis of the LGPS funding of these employers. There is little in here which we did not know already, but it is always good to see independent verification of previously stated facts. For instance, academies pay a lower average contribution than councils, the variation in academies’ funding positions is largely a result of similar variation among their ceding councils, and different funds have different funding approaches. We await word of what (if anything) the Department for Education (DfE) will do with this analysis.
… and for English & Welsh teachers
LGA has recently issued a note advising that the current Teachers Pension Scheme employer contribution rate of 16.48% will be increasing to an estimated 23.6%, for the period 1 September 2019 until 31 March 2023. This is mainly due to a change in discount rate used by the Government. There will be funding from the DfE for the financial year 2019/20 to help maintained schools and academies (but not colleges or universities?) meet the additional costs, and a consultation process will take place to determine final funding arrangements. Funding for 2020/21 onwards will be discussed as part of the next Spending Review round.
Going our separate ways?
We recently held a seminar on the subject of greater separation of funds from their host authorities. We set out a number of possible separation models that would help avert potential conflict between the objectives of councils and their funds. The models ranged from the status quo with some ‘beefed-up’ SAB guidance, through to complete separation at the other end of the spectrum with non-local authority entities set up to manage funds, similar to private sector schemes. In between, we looked at ring fencing fund functions or delegating functions to a Joint Committee. All have their pros and cons.
Our colleagues from Club Vita have commented on the impact the latest longevity data from the ONS will have on defined benefit pension schemes and the outlook for future longevity improvements. Please contact us if you would like to talk about the implications for your fund.