The oversight board of the Local Government Pension Scheme (LGPS) is launching a consultation to assess how the interests of different employers within the scheme are taken account of, with a view to issuing further guidance.
The scheme advisory board has commissioned pensions consultancy Hymans Robertson to examine how scheme functions can be carried out to ensure that conflicts of interest “are addressed and managed appropriately”, noting the need for democratic accountability.
Jeff Houston, secretary to the board, said that although the current system works well, the consultation would examine how the interests of different employers within the scheme, such as local authorities and school academies, are represented.
“There are potentially different strains within a scheme as to what the investment strategy should be,” he said, explaining that different employers might take different views on the affordability of pension contributions, for instance.
According to Mr Houston, one potential outcome is that further guidance will be issued.
The other possible outcome is that the South Yorkshire Pension Fund, which is run by a joint committee of local authorities rather than by a lead local authority, will be examined as a potential model for others to learn from.
There is at this point no suggestion that non-authority employers would be given a bigger role in directly administering LGPS funds.
Mr Houston said that the consultation was a narrower successor to the previous scheme advisory board ‘separation project’, which looked at reducing conflicts of interest within the LGPS by more clearly separating LGPS funds from their associated authorities.
This project was shelved after the government instructed the LGPS to set up pools in 2015, which Mr Houston believes has diminished the likelihood of another overhaul. “I think people’s appetite for radical change after pooling would be very small,” he said.
Work on the consultation will start immediately, with reports being sent to the scheme advisory board in April and July.
Catherine McFadyen, partner at Hymans Robertson, said: “We look forward to working closely with stakeholders from across the LGPS as we facilitate the consultation process and help the scheme advisory board in its objective of identifying the real issues and the best possible options for change.”