TPR urged to reconsider separate LGPS Code of Practice

The Pensions Regulator (TPR) should reconsider creating a separate Code of Practice for the Local Government Pension Scheme (LGPS) due to its scale and different governance structures, Norfolk City Council project and development manager, Jo Quarterman, has argued.

Speaking at the Pensions and Lifetime Savings Association Local Authority Conference, Quarterman called for a framework that properly understands the LGPS and its language, such as the distinction between pensions committees and boards.

“I don't think anyone would disagree that the LGPS deserves a regulatory framework that meets its needs. I know it isn't easy, but we should ask ourselves the question, who should be doing the heavy lifting here," she said.

"Should it be each of us in every fund across the country trying to interpret and apply the code or guidance in the context of the LGPS, or should we be asking more of the regulator?"

In light of these concerns, she urged TPR to reflect again on the feedback received from the LGPS to date, as well as encouraging the industry to respond to the ongoing consultation to make its needs known, "because ultimately hammering square pegs into round holes is neither effective nor efficient.”

Quarterman acknowledged that given the scale and assets within the LGPS, it "quite clearly" needs strong and comprehensive governance structures and safeguards in place to ensure it can meet its responsibilities and strive towards best practice.

“But given our responsibilities and given our scale, the LGPS surely deserves a regulatory framework and support that helps us to do this, that helps us to be more efficient and effective, and doesn't hinder us," she added.

"TPR may be rationalising the plates they are spinning with all the very best intentions for consistency across the industry, but as a result, they risk making our life, once again, a little more complicated and thereby jeopardizing us each meeting that shared goal."

And whilst Quarterman noted that there is much in common across the pensions industry, she stressed that there is also a lot that the industry does not have in common.

She continued: "We cannot and must not ignore this if we are to work together successfully to achieve our shared goals. If we ignore these or try to work around them, we risk not making things better, but potentially making little harder, which none of us wants."

Highlighting one specific concern around language, for instance, Quarterman warned that the new term introduced by the code, governing body, could cause further confusion.

"Now I suspect I’m not the only one thinking that the introduction of the new fairly general governance term isn't really what we're hoping for in the complicated LGPS right now," she stated, querying, for example, where local pension boards would fit in this definition.

"Our governance framework with its layers of delegation means the answer isn't always
straightforward for us," she said.

TPR's consultation document on the proposed combined code of practice previously acknowledged that it had received requests for a specific LGPS version of the code, but argued that this would not be practical.

“We have examined this request but, due to the various management structures that exist across the funds and their associated authorities it would be impractical to do so. Governing bodies of LGPS funds should consider their own governance arrangements and where responsibilities ultimately sit within them,” it stated.

Commenting on this explanation, however, Quarterman added: "If we've argued for a separate code for the LGPS it isn't because we think we're special, it's because we recognise that our governance and regulatory framework is different and enduring this isn't helpful to any of us.

"For me, the bottom line is that we need things that make our lives easier, not harder. We need codes of practice and guidance that help introduce clarity and consistency, rather than risking ambiguity, confusion and perceived scope creep.”

Commenting in response, a TPR spokesperson, stated: “We are working to clarify our existing codes into one single new code of practice, which will determine how scheme governance and administration should be approached in the future and harmonise expectations across all schemes we regulate.

“It is intended to provide one clear, up-to-date and consistent source of information on scheme governance and more consistent expectations across different types of scheme set at a level we consider appropriate for any well-run scheme.

“We launched a 10-week consultation on the new code in mid-March and welcome feedback before 26 May.”

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