05 October 2023
4 min
The deadline for parties to provide responses to the consultation on LGPS investments passed on 2 October. This was an opportunity to provide feedback on the government’s potential future plans for the LGPS, covering important areas such as pooling, levelling up and private equity. Our formal response sets out our views on where we are supportive, where we believe more thought is required and where we disagree with proposals. And for further discussion, please click here to listen to our on-demand webinar.
The first few results are ready: watch our video to hear more. Funding levels are up across Scotland, driven by a combination of good investment returns and changing market conditions reducing liability valuations. Rising inflation is offsetting this slightly, but funding level improvements remain considerable – in excess of 50% for some! Discussions on contributions rates are also underway. Funds are generally passing on contribution rate reductions to employers, but this will of course vary with employer circumstances. Our 60-Second Summary provides further detail, with more to come on this over the busy few months ahead.
As we climb over the mountain of 31 July and 31 August year-end FRS102 reporting, we continue to see net asset positions for many LGPS employers. These positive asset positions are also a focus of auditors beginning to look at 31 March figures. A decision may be required over the extent to which surplus can be disclosed in the employer’s accounts. If you or your auditor have any questions on your year-end figures, please get in touch with our accounting specialists.
On 8 September, the Department of Levelling Up, Housing and Communities (DLUHC) announced the outcome of the consultation on McCloud issues. It also laid before Parliament The Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023, which came into force on 1 October 2023. There are no real surprises - the LGPS Regulations 2013 are amended to include the new definition of the underpin and extend it to those groups who were previously excluded but are now in scope. Statutory guidance is expected shortly, providing funds with more information on how to implement the new underpin including advice on prioritising cases.
The fourth webinar in our LGPS risk management series is available to watch on-demand. Richard Warden is joined by Jill Jamieson, Head of Pensions at Club Vita UK, to explore longevity risk. We discussed whether the LGPS is seeing excess deaths, what it means for your fund and how to manage your longevity risk.
The LGC Investment Seminar Scotland is taking place later this month and the programme is packed full of insightful sessions, specifically relevant for those responsible for delivering the pensions of local authority employees now and in the future. Iain Campbell will be chairing the conference, and Steven Scott is delivering a session on what the valuation data is telling us about the LGPS. You can register your place here.
The LGC Investment & Pensions Summit took place at the New Dock in Leeds in September. The conference was expertly chaired by Dawn Turner and attended by a good mix of LGPS and Pool officers, advisers and investment managers. We've summarised the key points from each session in our conference highlights.
We’re delighted to be continuing our LGPS employer training, with the next sessions taking place in October and November. Attendance will provide your employers with knowledge of important LGPS topics. With the implementation of the McCloud remedy and pensions dashboards on the horizon, and the administrative challenge of updating data, good employer engagement is needed more than ever. Register your interest here, and if you require more information get in touch.
We're delighted to have won two industry awards in September:
After the release of the ‘next steps in investments’ consultation – see above - the LGPS has been considering how to meet potential requirements from Government to contribute towards its Levelling Up agenda. Whilst many investments currently held will achieve this, considerations may also be required for new investments. Social infrastructure could be an obvious solution, but investors must be aware of the risks. Please read our Briefing Note to learn more.
Click here for our review of the economy and markets over the third quarter of 2023. We consider the key developments for growth, inflation, and interest rates and their impact on fixed income, equity, property and commodity markets over the quarter.
What role can investors play in helping to reverse the loss of nature and biodiversity? The Taskforce on Naturerelated Financial Disclosures (TNFD) has laid out some meaningful recommendations and action points to consider. The TNFD is a market-led, science-based initiative. By building on the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations, it enables integrated nature and climate reporting. Our Briefing Note pulls out the key things you need to know, including metrics, targets and disclosures.
The latest ONS figures recorded annual CPI for the year to August 2023 at 6.7%, marginally lower than the 6.8% in the prior month. The next monthly ONS release is due on 18 October and will be used to set the 2024 PI Order for the LGPS (the September 2022 to August 2023 CPI rate is 6.1%).
Two national accounting bodies, CIPFA and the ICAEW, have announced a tie-up and an accelerated route for newly-qualified chartered accountants to obtain dual membership of both bodies. One of the hopes is that the move will widen the candidate pool for public sector finance teams.
The Pensions Regulator has said that it has been increasing its engagement with pension scheme administrators in a bid to tackle the risks of poor administration and drive up standards. It also revealed that it received just seven whistleblowing disclosures in the year to 31 March 2023, mostly about suspected legislative breaches. The low number may be partly explained by a change of policy on how it defines 'whistleblower'.
The DWP has published a report arising from an independent review of TPR. It concludes that the Regulator is 'broadly well-run and well-regarded’ but makes 17 recommendations grouped under three themes: risk and growth; compliance and enforcement; and digital transformation and value for money.
The Pensions (Extension of Automatic Enrolment) (No. 2) Bill, which allows the DWP to eliminate the lower earnings threshold for AE contributions and reduce the minimum age for eligibility, received Royal Assent on 18 September.
A response from the local government minister, Lee Rowley, about climate governance and the meaning of 'proper advice' said that the outcome of DLUHC’s consultation exercise will be published 'in due course'. He also reconfirmed that DLUHC won't be imposing new climate-governance obligations (including TCFD) in 2023/24. And in other climate news, TPR has issued its first fine against a pension scheme for failing to meet new TCFD regulations.
We understand that TPR’s new Code is expected to be published before the end of October.
And finally, a blast from the past as the ABI and PLSA team up to hire the TV presenter, broadcaster and number one hit singer to front their ‘Pay Your Pension Some Attention’ campaign.
If you have any questions about anything covered, please get in touch.
This communication has been compiled by Hymans Robertson LLP® (HR) as a general information summary and is based on its understanding of events as at the date of publication, which may be subject to change. It is not to be relied upon for investment or financial decisions and is not a substitute for professional advice (including for legal, investment or tax advice) on specific circumstances.
HR accepts no liability for errors or omissions or reliance on any statement or opinion. Where we have relied upon data provided by third parties, reasonable care has been taken to assess its accuracy however we provide no guarantee and accept no liability in respect of any errors made by any third party.
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