Public service schemes must improve engagement and risk management – TPR

Public service pension schemes could be doing more to improve their engagement levels and key person risk management, The Pensions Regulator (TPR) has said.

In its study, Governance and administration risks in public service pension schemes: an engagement report, the regulator found that although some scheme managers demonstrated a good knowledge of what it expects regarding key person risk, many funds had a lack of comprehensive documented policies and procedures.

Furthermore, TPR said that public service schemes were over-reliant on controls but in place by the local authority, with little interaction between the scheme manager and local authority.

“This was particularly prevalent in relation to cyber security but this theme overlays several of the risk areas we explored,” the report added.

Pension boards were found to having varying engagement levels, with the regulator having concerns about the frequency some pension boards meet and their ambition to build up their knowledge and understanding.

It stated: “We saw evidence of some pension boards not wanting to review full documents, instead relying on much reduced summaries and leading us to question how they could fulfil their function. Others were well run and engaged.”

The regulator saw evidence of scheme managers “learning from wider events” and taking steps to secure scheme assets.

Despite this, not all scheme managers were found to be as vigilant when protecting scheme members from scams.

It also saw “considerable variance” in the approaches taken to dealing with the risks surrounding employers, including receiving contributions and employer insolvency.

“Generally, this was connected to fund resourcing but also related to different philosophies related to taking security over assets,” the report concluded.

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