The Inside Track Newsletter
Welcome to The Inside Track
We find when working with admitted bodies in LGPS, there is a desire for targeted information that highlights the issues that they are likely to be facing, and gives practical suggestions on how those situations might be addressed.
That is what we hope to deliver through this regular bulletin.
We hope that you’d like to participate by asking any questions or suggesting any topics that you might want us to cover in future editions. Please let us know by emailing firstname.lastname@example.org.
Ask the Expert – Email David Davison.
Issue 18 – March 2018
The Security Obsession
In an earlier bulletin entitled ‘The Cessation Plot thickens’ I highlighted something of an anomaly in LGPS practice around security which I’d like to explore a bit further.
Issue 17 – February 2018
Your chance to have your say – but do it quickly!!
The LGPS Scheme Advisory Board (SAB) is seeking the input of charities at a meeting in Birmingham on 28th February 2018.
Issue 16 – February 2018
Would you like a better balance sheet?
It’s coming up to that time of year when participants in LGPS will be preparing for their year end accounting disclosures under FRS 102. The norm is that the Fund advisers provide an indicative set of assumptions, these receive a cursory glance, you await the results of your report at some time around May and then have this incorporated in your accounts.
Issue 15 – Late January 2018
Hope springs eternal
In past bulletins I have highlighted the lunacy of organisations in LGPS Funds being forced to continue to build pension liabilities beyond the point where they are affordable. Organisations are stuck, continuing to build more and more benefits for their staff, focussing contributions on new benefits rather than looking to pay down the legacy liabilities they’ve already built up.
Issue 14 – January 2018
I was reading through an LGPS annual report for 2017 this week (I know, I get all the fun jobs I hear you cry!) and was struck by a comment about the scheme membership continuing to grow and linking that to the health of the scheme and it’s relative attractiveness. This ‘positive spin’ wasn’t wholly in line with my experience so I decided to do a bit of digging to see if the statements actually held water.
Issue 13 – November 2017
An Unwelcome Inheritance
Mostly when people are told they have an inheritance it’s good news. A long lost relative or friend has bequeathed some money to you which opens up the opportunity to do all (or at least some) of those expensive items on the bucket list.
Issue 12 – Mid October 2017
What’s Good for the Goose
In April this year the DWP launched the snappily titled public consultation ‘The draft Occupational Pension Schemes (Employer Debt) (Amendment) Regulations 2017’.
A Landmark Judgement
The objective of bringing LGPS funds more in line with all other UK pension schemes and forcing them to invest in the best interests of members came a little closer after the government suffered a major defeat in the High Court at the end of June.
Issue 11 – October 2017
New ICAS Report makes recommendations for LGPS Reform
There is now a greater acceptance of the issues charities face through their participation in local government pension schemes however it has been difficult to identify the quantum of the problem and from there arrive at logical and implementable proposals for change…until now!
Issue 10 – August 2017
The Cessation Plot Thickens
In an earlier bulletin, I looked at why the current basis of cessation for admitted bodies in LGPS was causing problems and how the inconsistency of approaches taken by Funds meant that organisations struggled to understand their obligations, and what steps were open to them to address the issues they face.
Issue 9 – July 2017
Mind the Gap – The Hidden Cost of Outsourcing
I’m often asked to explain why contractors have finished up with a substantial bill payable to an LGPS at the end of an out-sourced contract. I’ve therefore compiled this very simplistic worked example to highlight the issues contractors face. The figures are for representative purposes only and are not intended to be either detailed or LGPS liability specific.
Issue 8 – May 2017
An Alternative Approach to Cessation
In my last bulletin I outlined the issues that charities are likely to face should they look to exit an LGPS. The cessation debt is calculated by the Fund Actuary in most cases using a least risk approach based on Gilts. For many employers in LGPS the dramatic reduction in gilt yields over the last 10 years has resulted in very significant increases in applicable cessation debts.
Issue 7 – April 2017
An Amicable Divorce
The question I’m asked about most often is about the cost of exiting a LGPS, as for most charities the costs can come as a bit of a surprise.
Two Excellent Guides for Charities Launched This Week
We are delighted at Spence to be able to support a further two publications launched over the last week.
Issue 6 – March 2017
Playing the Blame Game
Many charities participating in local government pension schemes (‘LGPS’) have been increasingly frustrated by the lack of recognition of the issues they face by the schemes they participate in and, indeed, from Department of Communities and Local Government (‘DCLG’) who oversee them. The issues are not new but there remains an element of denial and finger pointing, and it’s very easy to see how charities could be understandably frustrated.
Issue 5 – November 2016
Playing the Waiting Game
In our fast paced society no one really likes waiting for anything, however for those financial directors of charities participating in local government pension schemes in England & Wales I’m sure they wouldn’t mind waiting a bit longer for their valuation results given everything else going on around them.
Issue 4 – November 2016
Assessing and Monitoring a Charity’s Covenant
As charities which are members of LGPS in England await the results of the 2016 actuarial valuations, they could be doing so with some trepidation given the changes in market conditions since the last valuation round in 2013.
Issue 3 – September 2016
An issue often over-looked by employers participating in a Local Government Pension Schemes is that each admitted body is required to have a Discretions Policy in place. This Policy must be published, kept under regular review, and a copy must be sent to the administering authority.
Taking the Strain
When faced with cost constraints, considering a reduction in staff is an obvious early consideration. However, for those employers with staff in LGPS great care needs to be taken as ‘strain costs’ imposed by the Fund could result in very significant payments, often well in excess of any salary savings made. So what do you need to look out for?
Issue 2 – August 2016
Have Your Say – Consultation on LGPS Regulations
For those organisations who participate in LGPS as a result of engaging with out-sourced contracts with local authorities there is a chance to make your views heard to the Department for Communities and Local Government (DCLG).
Issue 1 – July 2016
Helpful Guides for Charities in LGPS
It’s often difficult for charities to access up to date technical information. Local Government Pension Schemes provide a myriad of information but it tends not to be focussed on charities. Over the last couple of weeks there have been some really helpful information published which could be of benefit to charities struggling with the management of their LGPS Pension.
Higher national insurance contributions – how did that happen?
As a participant in LGPS you will have been contracted out of the state second tier pension scheme. This means that you as an employer and those members participating will be paying lower rate national insurance contributions.