PLSA LA Conference: PLSA outlines recommendations to ‘future-proof’ LGPS

The Pensions and Lifetime Savings Association (PLSA) has produced an independent research report on the Local Government Pension Scheme (LGPS) that includes recommendations to ‘future-proof’ the scheme.

The association noted that the LGPS has had to contend with several challenges in recent times, such as the financial crisis, Covid-19 and a rolling series of reforms, including transitioning to investment pooling and preparing for the implementation of McCloud.

Despite these challenges, the PLSA stated that the LGPS remains in a “strong position” as the largest defined benefit (DB) scheme in the UK, with assets totalling more than £332bn and 6.9 million members.

The report outlines 14 ‘underlying challenges’ and 24 recommendations across four themes.

Challenges ranged from the difficulty in navigating intricate regulation to issues related to systems and people, such as staff retention and competition for talent.

Under the theme of LGPS regulatory and operating environment, the PLSA stated that there should be a ‘significant push’ to ensure that the existing regulatory framework works in a more coherent fashion, noting that a more centralised approach, which could involve creating a new regulatory body or giving an existing body extended powers, should be examined.

One of the other themes identified in the report was LGPS employers, with the PLSA calling for additional work to explore and share best practice in assessing and communicating employer risk and responsibilities early on.

On the theme of LGPS and scheme members, the association recommended obtaining a robust and granular understanding of the LGPS membership profiles, and for LGPS members’ voices to be represented at a more macro level on regulatory, policy and political discussions relating to pensions.

The fourth and final theme outlined in the report was operational sustainability: systems and people.

The PLSA stated that amid cost constraints on local authorities, competition for talent was “fierce”, and recommended that a review of the LGPS’ 2018 Talent Management Guide should be undertaken and best practice in people management should be shared.

“The LGPS has been a real success story over a challenging decade of unpredictable change and reform,” commented PLSA Local Authority Committee chair, Rachel Brothwood.

“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.”

PLSA head of DB, LGPS and investment, Tiffany Tsang, added: “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.”

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