The regulatory framework around local government pension schemes should work in a more ‘joined-up and coherent way’, new report says.
A study by the Pensions and Lifetime Savings Association (PLSA) has looked into the financial resilience and operational stability of the Local Government Pension Scheme (LGPS).
Noting how complex the regulatory environment has become, the paper urges the sector to consider a more centralised approach, which could involve creating a new regulatory body, or giving an existing body greater powers.
The PLSA also called for additional work to explore and share best practice in both assessing and proactively communicating employer risk and employer responsibilities early on. It said this would help maintain a positive relationship between funds and employers.
The independent body also recommends obtaining a robust and granular understanding of the LGPS membership profiles, and for LGPS savers’ voices to be represented at a more macro level on regulatory, policy and political discussions relating to pensions.
It also calls for a review of its 2018 Talent Management Guide and sharing best practice in people management.
Rachel Brothwood, chair of the PLSA’s Local Authority Committee, said: ‘The Local Government Pension Scheme has been a real success story over a challenging decade of unpredictable change and reform. To help safeguard the delivery of future retirement benefits to public sector workers, many of whom work in essential services; and to support our employers in navigating the Scheme, it is right that, through this report, we have taken a critical look at the role those tasked with delivering the LGPS can play in ensuring it is well placed to continue to rise to the challenge over the long term.’
Tiffany Tsang, head of DB, LGPS and Investment at the PLSA, said: ‘Having access to enough resources to secure the right systems and people in place is only part of the answer. Long-term sustainability of the LGPS will also require a significant push to ensure the existing regulatory framework operates in a more joined-up and coherent way, and the underlying operational challenges identified by this report are effectively managed.’
