“This survey represents a big step for the Regulator towards developing a register of public service scheme information. This will serve as the basis for developing a risk based strategy to assist those schemes, or individual LGPS funds, that are not complying with the required governance standards.
“As we would expect there are a good number of LGPS funds that have reported that they are able to demonstrate compliance with good governance. However, this is far from universal and from the results of this survey it appears there are still some funds who will need to increase their focus on governance if they are going to be able to satisfy the Regulator in future.
“The Regulator has confirmed it intends to look at every scheme over the coming year, to ensure a basic level of compliance is reached, as well as focussing on areas they consider to be of greatest risk.”
Commenting on the results around knowledge and understanding, Ian Colvin, said:
“The survey reveals that 85% of all public service pension schemes have policies designed to ensure their pension board members have the necessary knowledge and understanding. These are largely focussed around training plans and training logs, but only 35% of respondents have individual training needs assessments.
“This means there are still many funds without proper policies in place to make sure it’s run by people with the right skills.
Ensuring that the proper knowledge and skills are in place is a fundamental requirement of running a fund well and we would urge all funds to ensure proper training policies exist.”
Discussing the findings on conflicts of interest, he added:
“LGPS funds fare pretty well in terms of ensuring that conflict of interest polices exist - 87% have policies in place. Their effectiveness depends on how well they are communicated and adhered to. Funds need to ensure that declarations of interest form a regular part of pension Board and Committee meetings and that all members understand what they need to do should a potential conflict arise. Managing conflicts effectively is essential to ensure Scheme members and employers have confidence that those managing the LGPS are acting for the right reasons.”
Commenting on scheme record keeping, he added:
“This is clearly one of the Regulator’s primary focusses. In the LGPS over 77% carried out some sort of data review but only 38% had measured data against the requirements of the Public Service Pensions (Record Keeping & Miscellaneous Amendments) Regulations 2014.
“This is surprising. Good data is essential and with the increasing complexities of the Scheme, the issues raised by Scheme reconciliation, the impact of the CARE arrangements and with a valuation upcoming, funds need to make data a priority. We have recently seen how poor or late data has prevented many funds from meeting their statutory obligations to issue annual benefit statements on time.
“Just over half of all public service schemes report that their employers provide timely, accurate and complete data more than 90% of the time. Given the particular challenges faced by LGPS funds by the ever expanding number of employers, compliance by LGPS employers in this area is likely to be below this figure. It has never been more important for funds to work with their employers in order to help them understand their statutory obligations.”
Discussing reporting breaches, he concluded:
“A curious findings is that while nearly 70% of LGPS funds claim to provide training on the reporting of breaches, barely 50% of funds report having a policy. There seems to be a strange disconnect and we wonder whether the timing of the survey has skewed the results slightly. With many funds not able to issue annual benefit statements by the end of September, the issue of assessing and reporting breaches is one which recently gained a lot of publicity within the LGPS.
“Given the significance of this issue, we would expect all LGPS funds to have in place a policy on reporting breaches and to provide training to members of their pension boards, committees and officers. Without this there is a danger of inefficiencies and delays as everyone assumes that reporting breaches is someone else’s job, and opportunities to put things right will be missed.
At the other extreme breaches may be reported which actually don’t need to be as there is insufficient understanding of the proper requirements for reporting.
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