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Hymans questions UK government's notion of pension board 'expertise'

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Regulation proposing UK local authority pension board members possess the requisite experience for the role could prove problematic, Hymans Robertson has warned.

The consultancy said proposals for new board members of local government pension schemes (LGPS) to have the “capacity and expertise” for the role was proving “unpopular in some quarters”.

While arguing that it would view both requirements as welcome when considering appointments, it raised concerns about the lack of definition as to what would make an appointee experienced.

“Clearly, some experience of pension schemes would be useful for a pension board member, but if the expectation is set too high, it will make it impossible to fulfil,” the response to the Department for Communities and Local Government (DCLG) said.

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It also raised concerns that many of those deemed to have sufficient experience could be excluded by virtue of being elected members, who would not be allowed as scheme member or employer representatives.

“Whether through guidance or the regulations,” the response continued, “we would like to see the definition of experience and capacity worded in such a way so as to strike the balance between ensuring people of suitable ability are appointed without setting so onerous a threshold such that administering authorities are unable to populate their boards.”

However, a second response warned that time was of the essence in clarifying all required details, as the proposed LGPS (Amendment) Regulations 2014 are set to come into effect from 1 October.

Lauren Jackson, associate at law firm Sackers, said clarity from the DCLG would be required soon.

She said that while the draft regulations said pension funds would be able to convert the existing pensions committees into the new boards, all such conversions would require approval from the secretary of state for communities, Eric Pickles.

“We do not currently know what this is going to mean in practice, and also how easy it will be to get agreement,” Jackson said.

“It may be that this issue will be addressed in more detailed guidance, but, until it is, it will be difficult for administering authorities to make decisions.

“Given the potential challenges of getting arrangements in place before 1 April 2015, time is running out.”

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