LGPS funds urged to publish 'enhanced' governance compliance statements

Hymans Robertson has recommended that Local Government Pension Schemes (LGPS) publish an enhanced governance compliance statement each year, which sets out how each fund complies with its governance responsibilities.

As part of its Phase II report to the LGPS Scheme Advisory Board (SAB) on good governance in the LGPS, the consultancy has recommended that statutory guidance is introduced to set out the standards that LGPS funds are expected to meet.

Under the guidance, which has the support of The Pensions Regulator, funds would be required to produce the enhanced governance compliance statement on annual basis.

According to Hymans Robertson, this would allow each fund the flexibility to work within their local environment to improve transparency as the enhanced compliance statement would be a far more comprehensive disclosure than it is in its current form.

The report recommends that oversight is produced in the form of a biennial independent governance review for every scheme.

This, it said, will provide an expert arms-length assessment of a fund’s governance arrangements and improve accountability. It also contains proposals to introduce the LGA peer review programme to the LGPS to further facilitate sharing of best practise.

Additional recommendations include that each administering authority has a single named officer who is responsible for the delivery of all LGPS-related activity for a fund, and that each fund produces and publishes a conflicts of interest policy.

This would include details of how actual potential and perceived conflicts are addressed by the fund.

On top of that, the report recommends the every LGPS fund puts together a policy on the representation of scheme members and non-administering authority employers on its committees, which explains its approach to representation and voting rights for each party.

Hymans Robertson head of LGPS actuarial, benefits and governance, Catherine McFadyen, said: “The SAB is continuing to progress the work to improve governance in the LGPS and the working groups established to achieve this aim to capture the existing best practise across the funds and set that as the standard for everyone to achieve.

Good Governance Phase II builds on the project’s earlier proposals to strengthen the governance and administration of the LGPS.”

Hymans Roberston said that Phase III of the project will see the SAB secretariat, in conjunction with scheme stakeholders, continue to work to develop the draft statutory guidance and the governance compliance statement necessary to further strengthen LGPS governance.

Hymans Robertson was appointed by the LGPS SAB to facilitate a review of governance structures for the LGPS earlier this year.

The SAB commissioned this report to examine the effectiveness of current LGPS governance models and to consider alternatives or enhancements to existing models which can strengthen LGPS governance.

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