LGPS governance regulations consultation 2014 – an NAPF response
The NAPF welcomes the consultation on new governance regulations for the Local Government Pension Scheme. Governance standards have been improving across the LGPS as funds look to manage increasing financial pressures and regulatory change. However, there is a wide variety of practice in the management of LGPS funds across the UK. There are many well-managed LGPS funds, where pension committees have reviewed and improved how they work to strengthen governance arrangements and to achieve a more sustainable fund. However, there are funds where there is scope for significant improvement. Even small improvements in governance standards, with the resulting uplift in investment performance and greater cost-efficiency could make a real impact on funds’ funding positions. The NAPF supports the Shadow Scheme Advisory Board’s work to develop a matrix of measures of what a ‘good’ fund looks like. This will enable the sharing of good practice and give local pension boards a framework for assessing their pension committees.
The NAPF recognises that there is a delicate balance to be struck between ensuring consistent governance standards are met, whilst allowing a degree of flexibility to take account of local circumstances. On the whole we believe the draft regulations strike the right balance. However, in a number of areas the regulations do need strengthening, for example the constitution of the Scheme Advisory Board. Elsewhere, for example the establishment of local pension boards, detailed guidance will be required to ensure consistency of application across the LGPS.
The NAPF response can be downloaded below. We expect the final version of these governance regulations to be published in the autumn.