Public sector pension funds are under pressure to compile their pension boards ahead of the August 1 deadline, but some report being “stretched” by the wait for guidance on the reform.
The Public Service Pensions Act 2013 required all such schemes to establish a pension board by April 1 2015 and hold their first meeting by August 1. The boards are intended to help the administering authority manage the scheme.
Peter Wallach, head of Merseyside Pension Fund, said: “With the [Local Government Pension Scheme] coming under the Pensions Regulator from April, we see the board having an important role in ensuring MPF is compliant with the code,” adding it would also provide additional reporting for the scheme manager.
However, schemes have said meeting the deadlines have proved challenging. Wallach said final regulations and guidance from the Department for Communities and Local Government were issued shortly before the deadline.
“With so much else going on in the LGPS, our limited resources are stretched by the additional requirements of a pension board,” he said.
Rachel Howe, head of governance at West Midlands Pension Fund, agreed. She said it had been challenging for the scheme “to appoint pension board representatives in a timely manner without clarity on their role and responsibilities”.
With so much else going on in the LGPS, our limited resources are stretched by the additional requirements of a pension board
Peter Wallach, Merseyside Pension Fund
Barry Mack, head of governance at consultancy Hymans Robertson, said boards may well perform functions beyond assisting the scheme manager, but the scope of its role would “depend on your terms of reference.”
These are down to each scheme to formulate, but the LGPS released a draft document earlier this month for local authorities to use.
Mack added: “[The board is] there to assist the administering authority. There’s nothing to stop the terms of reference going further than that.”
Philip Latham, pension fund manager for Clywd Pension Fund, said it would be up to the members of the board to drive any role it would take on beyond simply supporting the scheme manager.
“That will drive the impact as much as anything else,” he said.
Board structure
Merseyside has nine members on its board – four member representatives, four employer representatives and an independent chair.
Regulation requires that schemes have an equal number of representatives from each side, with at least two member representatives and two employer representatives.
Schemes have the option of appointing an independent chair, or other representatives can serve as chair on a rotating and equal basis, but Wallach said Merseyside had appointed one to “uphold and promote the purpose of the board and coordinate its activities”.
By comparison, West Midlands Pension Fund board consists of five employer and five member representatives with two elected councillors, one as an employer rep and one as member rep.
Mack said many schemes would appoint an independent chair while the board was in its infancy “in order to get them off to a good start”.
