LGPS seeking clarity on levelling up agenda and pension pooling
0
Greater clarity is needed on a range of areas affecting the Local Government Pension Scheme – including the levelling up agenda and pension pooling – according to the incoming secretary of the Scheme Advisory Board for England and Wales.
Joanne Donnelly, who becomes secretary on 1 April, told Room151 the Department for Levelling up, Housing and Communities had been forced to prioritise work on the McCloud judgement on age discrimination. This left LGPS administering authorities, funds and pools with unanswered questions in other areas, including the levelling up white paper.
“We are expecting a big package of work from the department in the summer – consultation on climate change and reporting requirements, further information on the levelling up agenda and a bit more flesh on the bone of the 5% ambition from the white paper,” Donnelly said.
The white paper, published in February, called for LGPS funds to allocate 5% of assets to projects that support their local area to unlock £16bn of new investment.
“What we don’t yet know from the department is their view on what kind of investment projects count as levelling up. We would assume that infrastructure projects count, and impact projects count, but until the department gives some more detail, we don’t know for sure,” she added.
“It’s tricky for funds at the moment to look at what they are doing and be certain as to where they are in relation to the 5%. We think that a fair few of them are already around that amount or more, but it does depend how you classify it.”
If your fund has an ambitious net-zero goal but your pool doesn’t share that, what does that mean about where the fund feels comfortable and how it is going to achieve its net-zero goals?
Room151’s LGPS Quarterly Webcast
26 May 2022
Online
Public sector delegates – register here
Pension pool progress
Donnelly said that guidance had also been expected from the department for more than a year on the next steps for the eight LGPS pension pools. This would include a review of progress to date and a consideration of whether they were achieving the government’s aims and policy objectives.
One question to be addressed is whether an LGPS fund could be a member of different pools for different purposes. This has particular implications for funds with ambitious net-zero targets.
“The administering authorities have net-zero goals, as do the pension funds and the pools, but there are areas where these don’t align. If your fund has an ambitious net-zero goal but your pool doesn’t share that, what does that mean about where the fund feels comfortable and how it is going to achieve its net-zero goals?”
A more immediate concern, Donnelly suggested, was the result of the LGPS triennial valuation as at 31 March 2022. Expectations had been relatively positive until the outbreak of war in Ukraine, which has brought economic uncertainty along with a humanitarian crisis.
The outcome of the valuations “may not be as good as we had hoped” she said. But added: “I don’t think we are in for that significant a hit, so I very much doubt that it is going to be worse than the last valuation.”
—————
FREE weekly newsletters
Subscribe to Room151 Newsletters
Room151 LinkedIn Community
Join here
Monthly Online Treasury Briefing
Sign up here with a .gov.uk email address
Room151 Webinars
Visit the Room151 channel
