Policy Advisor for LGPS and DB Louise Whatham reports from our recent Local Authority Update event on the key emerging issues for Local Authorities. Louise is not only new to the PLSA but also to the world of pensions. The Local Authority Update provided great insight into the workings of the LGPS.
This was a year like no other. With big changes and challenges arriving for governance, tier three employers, requirements around climate change, the McCloud judgement progression, and not to mention Covid-19 and staff homeworking, this has been an unprecedented period in time for the LGPS, along with the rest of the pensions industry of course. Our two-day Local Authority Update looked at current themes emerging in the last six months following the pandemic and the ensuing economic implications.
I’m sure I’m not the only one who is new to attending conferences 100% online, and although I was apprehensive about how an online event could enhance a traditional face-to-face conference, I found the content really good and it had the added benefit of opening up access to a much wider audience - professionals who wouldn’t have previously been able to take time away from work to attend. I’ve picked out some key topics from the discussions I joined.
The McCloud judgement
There was much discussion around the McCloud consultations. The challenges with implementing the proposal to address the underpin and its resulting discrimination are outlined in detail in the PLSA’s consultation responses. The focus for many funds within the LGPS is the administrative task ahead - not only how to undertake the data collection, and how to find missing information, but the challenge to complete the workload with an already overstretched workforce who are working from home. Many members have given this feedback to MCHLG in the consultation we hope that the enactment of the judgment bears these challenges in mind.
The work of the England and Wales Scheme Advisory Board (SAB) on the good governance project has been delayed by Covid-19 as resources and expertise were directed elsewhere. The SAB were hoping that the project will have moved on when they next meet in February 2021. During the session on governance, the audience were asked to vote on whether work should progress as normal or wait until the impacts of the pandemic were known, and surprisingly, over 50% thought that timelines for work to develop regulations and statutory guidance should wait until 2021/22. Bearing this in mind, the SAB is looking at ways to push forward some of the key proposals, for example, having a person who is solely dedicated to governance within local authorities. Presenters were keen to engage with members on how to get feedback on what rules might look like and how to implement them. Their focus going forward will be how to reinvigorate the working groups.
ESG, Climate Change and the LGPS
In recent years climate change and responsible investment has had a bigger role to play in pensions, and the LGPS has been leading the way on this for a long time before the private sector began working on it. It was good to see a focus on this ESG theme throughout many of the discussions and hear about the continuing work around the guidance in this policy area; it’s also exciting to see new initiatives coming through. For instance, the government will open a consultation on applying the Task Force on Climate-related Financial Disclosures (TCFD) requirements to the LGPS. Further guidance is also meant to be coming through from the England and Wales Scheme Advisory Board on Responsible Investing in the new year.
Regulation and the future of the LGPS
I really enjoyed the session ‘All singing from the same hymn sheet’ on the future of regulation. The Pensions Regulator was on hand to answer any questions. There was an honest discussion from TPR about the realisation that the many existing scores of rules and regulations was in desperate need of an overhaul. TPR is in the process of harmonising a code to consolidate all of the many directives that have been found to overlap in principles and intent. In addition there will be at least one LGPS-specific module to recognise its unique needs. This was great news for everyone, although as one of the panellists observed, some hymns look the same on paper but can be sung to more than one tune, so there are many different versions!
Over the coming months, we will have more of an idea about the longer-term impacts of Covid-19 and normal work streams resume. I am hopeful that the implementation of the McCloud judgement is done in a measured way that takes on board the feedback from our members with their concerns over the administrative task, and I looking forward to seeing the much- awaited project on governance thriving.
Read more about 2020 and the LGPS in our previous blog The LGPS in 2020 - A year in review.