Local authority pension funds in England and Wales are considering significant governance changes as part of a consultation launched this week.
The changes could see local government pension schemes (LGPS) ring-fenced from their sponsoring local authorities, or council finance roles redefined to remove pension functions from other areas of financing.
Hymans Robertson, a leading adviser to LGPS funds, is co-ordinating the survey of pension managers, councillors and other stakeholders on behalf of the LGPS Advisory Board.
Respondents have been asked to consider four governance models, ranging from improving guidance given to local authorities to what Hymans Robertson described as “significant structural changes”.
These include ring-fencing of responsibilities, staff and budgets; delegating LGPS functions to a “joint committee” of council staff and representatives of other employers; and creating a separate legal entity to run the pension fund.
Hymans Robertson acknowledged that “a one size fits all approach may not be appropriate” given the range of strategies and fund sizes throughout the system.
The online survey is open until 31 May.
Catherine McFadyen, head of LGPS actuarial, benefits and governance at Hymans Robertson, said the LGPS system was “full of strong governance examples”. The survey was “an opportunity for funds across the country to identify and highlight their own good practices”.
“The LGPS is a unique pension arrangement which spans the length and breadth of the country,” she added. “We hope that this survey will allow us to generate a clearer picture on how key factors such budget management, clarity of roles and responsibilities, conflict management and the ultimate governance structure of the fund can impact standards of delivery for employers and members.
“We are confident that this survey will help us to identify a wide range of governance best practice across the network and that any proposals emerging will help to simplify and support what can be a demanding and difficult role.”
LGPS funds in England and Wales are already in the middle of implementing major changes regarding their investments, creating eight regional pools to combine their £275bn (€317bn) in assets to achieve greater scale and cost efficiencies.
Hymans Robertson proposed asset pooling in a report for the UK government in 2013, alongside a recommendation to increase passive investment. While the latter aspect was shelved, the government announced its pooling plans in 2015.