Iain Campbell, Senior Investment Consultant, Hymans Robertson says: “It is positive to gain further information from today’s Spring Statement on the Government’s desired future path for LGPS pooling. Great strides have already been made with regards to the transferring of assets to pools, however this new potential deadline to pool all “listed” assets by March 2025 is a step-up in expectations from Government. We welcome further detail on this in the forthcoming consultation, such as what is classed as “listed”, as well as how passive assets will be considered.
“The potential move to a smaller number of larger pools is also an important development in Government’s plans for pooling. Again, we look forward to seeing considerably more detail from the Government on areas such as timescales, how they foresee this taking place, as well as their expectations for cost savings given the potential further costs of this exercise.
“Finally, the potential requirement for funds to invest in illiquid assets, such as venture and growth capital, in order to provide support to the UK economy, as mentioned in the Edinburgh Reforms, is something that funds will need to provide clear feedback to Government on. Whilst these are asset classes that many LGPS funds invest in already, careful consideration will need to be given as to how funds might invest whilst ensuring they can still expect to earn their required rate of return, for an acceptable level of risk. This balancing of fiduciary duty and support for the UK economy will be a challenge, but it is one we are working on with many clients already. We again look forward to seeing further detail on this from Government in due course, including how this ties in with their previous statements and objectives on “levelling up”, what types of investment would fulfil their requirement and whether any new requirement would be in addition to any investments already made.”
Catherine Pearce, associate partner Aon: ‘’We’re surprised to see that the lifetime allowance has been completely abolished, but this will help achieve the Government’s aim to keep talented people in the public sector workforce as they will no longer retire early simply to avoid a tax charge on pension benefits.
“The increase in the annual allowance to £60,000 is long overdue and will be welcomed by public sector schemes. It’s been nine years since it was originally reduced from £50,000 to £40,000 and, due to the way the calculation works for defined benefit schemes, we’ve seen more and more Local Government Pension Scheme (LGPS) members being affected by an annual allowance breach even after a relatively modest pay rise. With the combination of the increase in the annual allowance and the recent change to the date revaluation is applied in the LGPS, we now expect far fewer LGPS members to breach the annual allowance. Not only will scheme members be pleased but LGPS administrators will also welcome the reduction in the number of members needing to be issued with a Pensions Savings Statement. That will allow them to focus on other developments such as the McCloud remedy and dashboards.”
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