Agenda item

The purpose of this report is to update the Local Pension Board on the latest position concerning the Local Government Pension Scheme [LGPS] and any proposed regulatory matters that could affect scheme administration.

The Pensions Manager introduced this report to the Board and highlighted the following areas.

Stronger Nudge

With effect from 1 June 2022, the Occupational and Personal Pension Schemes (Disclosure of Information) (Requirements to Refer Members to Guidance etc) (Amendment) Regulations 2022 (SI 2022/30) will be introduced – known as the “Nudge Regulations”.

The regulations introduce additional requirements on administering authorities to assist members making decisions in relation to their Defined Contribution investments i.e. AVCs in the LGPS.

Alongside updating processes and procedures in relation to increased requirements for administering authorities on transfer values, the administration team is also considering the required changes in relation to the Stronger Nudge requirements relating to members with AVCs.

The extra requirements (alongside those already effective in relation to transfers) will increase time taken by the administration team to process AVC cases and hence there may be implications on KPIs and resource needed for other projects, which will need to be monitored going forwards.

The Chair commented that it was important to make sure that any members with AVCs were not inappropriately advised and that officers were not undermined in the advice given to members.

The Pensions Manager said that officers could possibly face a challenge from financial advisors, but that it was their role to encourage members to seek independent advice and to record that they had done so.

Annual Allowance

In March 2022, the LGA issued its response to the HMRC consultation on the Registered Pension Schemes (Miscellaneous Amendments) Regulations 2022, which coupled with changes emerging from the Finance Act 2022 mean there are now additional requirements on administering authorities (and members) in relation to dealing with retrospective changes to pension input amounts for past pension input periods.

In line with guidance issued by the LGA, the administration team will need to ensure that polices and processes are updated in order that retrospective cases can be dealt with in the right manner and within the necessary timescales.

Depending on the number of cases to emerge, these requirements may be an additional burden on the administration team alongside the work associated with issuing 2022 Pension Saving Statements in the autumn.

The Chair said that this presented officers with an onerous task that could see them going back a number of years for the information required.

The Pensions Manager replied that he felt that around 60 – 80 cases of this nature a year were dealt with by officers currently and that this issue would put more reliance upon them to provide members with appropriate guidance.

Ukraine - (Responsible Investment and administration)

In light of events in Ukraine and the sanctions being imposed on Russia by the UK government, LGPS Funds were advised by SAB to consider the implications for their investment portfolios.

The conflict has also required the administration team to consider payment of benefits to overseas members. The impact on funding strategy will be considered further as part of the 2022 actuarial valuation.

In relation to administration, the Fund has undertaken a series of overseas indicator reports to ascertain that there aren’t any pensioner or dependant members with accounts in Russia.

Any further implications of the conflict (impacting investment, funding, covenant and administration) will be considered as and when they arise by the relevant teams.

The Board RESOLVED to note the current position regarding the developments that could affect the administration of the fund.