The latest LGPS National Knowledge Assessment (NKA) 2022 conducted by Hymans Robertson, has shown high levels of engagement and good levels of knowledge amongst participating funds, particularly following the COVID-19 pandemic.
Andrew McKerns, senior LGPS governance, administration and projects consultant at Hymans, said: “This year’s NKA is the first post-pandemic national assessment to take place in the LGPS and reflects the fundamental changes that have taken place in both the pensions, and wider world, at large.
”The pandemic has led to new ways of working, not least a huge growth in online tools, with training adapted to reflect a hybrid way of working. Our assessment shows that the strides made during this exceptional time have had a positive impact with training more interactive and tailored than ever before.”
The consultancy‘s national assessment helps pension funds benchmark the knowledge and understanding of their pension committee and board members. Encouragingly, nearly three-quarters (73%) of eligible participants completed the assessment (compared with 61% in 2020).
The results of the assessment showed that chairperson knowledge levels remain high with an average score of 68% in comparison with the average participant score of 53%. This highlights that those that lead many of the discussions, and decision-making processes at pension funds, have a strong level of knowledge and skill.
It also found an increased level of knowledge in areas, such as administration, governance and actuarial methods, standards and practice, when compared with the 2020 assessment.
Levels of understanding of topics that have traditionally been the focus of committees – such as investment – have reduced in the same period.
“This marked increase in engagement with the NKA indicates an appetite for understanding current knowledge levels at [Local Government Pension Scheme] LGPS funds and demonstrates a continued commitment to learning,” said McKerns.
He added that engagement is a key component for informed decision making. “Maintaining knowledge from all members is also a vital aspect of funds governance requirements,” he said.
“As part of our analysis, we are able to provide funds with an overview of the levels of engagement from both their committee and pension board. Ultimately, knowledge without the engagement would not provide the full picture,” McKerns explained.
“It’s really encouraging to see such high levels of knowledge demonstrated by funds of all sizes, especially at chair level. Yet, there is still room for it to increase even higher through continued training. Participating in the assessment helps funds gauge whether training is successful, particularly as many continue to promote their newly developed hybrid training programs, which have been developed to suit a post-pandemic way of working,” he said.
McKerns noted that the past two years have brought many new members to pension committees, stating that it it’s important for those new members to fully understand their role and to be engaged with the responsibility they have to scrutinise LGPS requirements.
Since the previous NKA the LGPS, just like the wider pension industry, has been going through a period of significant change. This year’s assessment was undertaken against a backdrop of The Pensions Regulator’s (TPR) upcoming single Code of Practice, the England and Wales Scheme Advisory Board’s (SAB) Good Governance recommendations, and increased expectations as the LGPS landscape continues to transform at pace.
“The broadening of the topics that pension committee and board members have had to address inevitably leads to increased pressure on funds,” McKerns said.