11 March 2020 – as I sat waiting to enter a London Borough Committee meeting, keeping an eye on the Liverpool vs Atletico Madrid score in the Champions League, little did I know that the meeting would be the last face to face Local Government Pension Scheme (LGPS) meeting I would attend for 20 months. It was a strange feeling therefore getting ready to attend the 2021 Pension Managers Conference (PMC) in Torquay having not ventured “out of the office” during that time, not only from the perspective of seeing people in the flesh rather than on a screen, but also from the perspective of working out what I needed to pack and the reality of having a six hour train journey to get through first.
Whilst for some, the past 20 months had seen their working lives disrupted temporarily or even permanently, for those working in the LGPS the challenges have continued throughout against the backdrop of familiar themes and no doubt some sleepless nights. With the 2022 actuarial valuations just around the corner for English and Welsh Funds (a scary thought given the 2019 valuations were signed off in the first weeks of the 2020 lockdown), the 2021 PMC in Torquay would no doubt provide an opportunity for those in the sector to once again share ideas, thoughts and best practice in order to prepare themselves for the challenges ahead. Of course, after a virtual 20 months the opportunity to socialise and network in person would not be missed too.
So whilst England scored for fun against San Marino delegates were sampling the Torquay hospitality and preparing themselves for the conference (despite the hotel bar opting to close early with staff not realising there were a lot of thirsty delegates in town – safe to say that decision didn’t go down too well and a remedy was soon implemented – if only McCloud could be solved this easily…).
With everything going on at the moment in the sector, there was never any danger of there being a lack of agenda items for the conference. Beginning on a positive note, Anthony Arter, the Pensions Ombudsman remarked that despite being one of the biggest pension funds in the world, the number of LGPS cases needing to be considered by the Ombudsman was relatively low, and indeed had halved since 2019, testament to the hard work undertaken by Funds despite testing times both in/out of the office. This praise was echoed by Jeff Houston of the Local Government Association (LGA), delivering his final conference speech before retirement next March, who remarked that he’d been told a number of times that how LGPS Funds coped during the pandemic was impressive.
Jeff’s speech also highlighted how Funds are effectively spinning plates at the moment and the challenges faced would only increase in number in the coming months and years against the backdrop of further regulatory change. The key areas of focus in his speech and for the rest of the conference were:
McCloud – in the absence of Regulations confirming the final remedy, whilst the situation for the LGPS is simpler than that of the unfundeds (some relief at least), the situation still remains complex and the work required significant. Data/ Resource/Processes/Software/ Calculations/Communication to name but a few of the areas Funds will need to consider in the coming months (and years).
Dealing with Employers – With the number of employers in the LGPS now around 19,000 being able to support these employers in fulfilling their obligations to the Fund (e.g. provision of data / outsourcings etc.) is increasingly important. Alongside rebranding its member and practitioner websites, LGA will be developing further the employer section of the website and feedback was provided as part of a conference workshop as to what Funds will want to see / expect to see made available to help employers on their LGPS journey.
The Pension Dashboard – whilst Regulations aren’t yet in place to compel Funds to begin fulfilling their Dashboard requirements, it was agreed that where possible work should be undertaken now in order to consider the risks/dependencies and challenges ahead.
The Pensions Regulator (TPR) Single Code – Whilst Funds will need to ensure they comply with the relevant requirements of the new single code e.g. in relation to IT, cyber controls etc. there will also be opportunities for Funds to develop further their own best practice, processes, review internal controls and also meet any associated requirements emerging from the Good Governance review.
Data and Communication – these were recurring themes discussed time and time again in amongst the above. Incomplete/inconsistent data will have implications on the 2022 valuations, the ability to implement the McCloud remedy, being able to fulfil requirements for the Pensions Dashboard and so data quality needs to remain a high priority for Fund. Being able to successfully communicate outcomes to stakeholders in an ever changing landscape will also be key in order to manage expectations and minimise the extent to which queries will emerge.
Making Pensions Attractive
When you add to the mix the potential consultations relating to the Exit Cap in 2022, the requirements from the Good Governance review moving back up the priority order for consideration and the Department for Levelling Up, Housing and Communities being keen to return to Survivor Benefits, New Fair Deal and 4 Year valuations (not to mention investment related consultations on Task Force on Climate-Related Financial Disclosures (TCFD) and pooling), against a backdrop of a new way of working and administering the Fund, it’s safe to say it won’t be a quiet period. Gone are the days of peaks and troughs, it’s just seems to be peaks and bigger peaks now.
Having sufficient resource to carry out the work needed therefore will be crucial and the discussions from one of the conference workshops highlighted the current issues faced in this area in being able to recruit and retain staff. The brainstorming of ideas from delegates to help address these issues included being able to upgrade the status of roles to be more attractive to potential applicants, provide the right support and training to new staff (perhaps via pooling amongst Funds), and to ensure there’s a pathway towards professional qualifications and career progression.
It was clear from the conference that support from advisors / third party providers, the LGA and other stakeholders will be needed, perhaps more than ever, going forwards to help Funds on their journey in an ever changing world. Just as Funds will need to develop their own services, so will we.
A Room with a View
So as the conference closed and delegates had said their goodbyes and walked off into the sunshine (with a gourmet packed lunch in some cases) to their Planes/Trains and Automobiles, it would be rude to not mention Fawlty Towers given the Torquay setting. Whilst anyone staying at the Imperial Hotel during 15-17 November wouldn’t have seen the Sydney Opera House, The Hanging Gardens of Babylon, Herds of Wildebeest sweeping majestically across the plain from their hotel window, they would have seen LGPS stakeholders doing what they do best - collaborating to ensure the services provided to members, employers and other stakeholders evolve as required in order that the challenges that lie ahead can be met. The opportunity to socialise in person was of course just an added bonus and even if heads were a little sore for some on the final day (can’t even blame the noise from the Karaoke on this occasion) I’m sure they’ll say it was worth it. Hopefully it won’t be another 20 months before I’m “out of the office” again.