Bedfordshire Pension Fund has decided to offer academies “observer” status on its pension committee, with the schools representing a growing and increasingly scrutinised proportion of local authority scheme membership.
Academies are schools that can be funded by a business, faith or voluntary organisation and receive money directly from the government rather than the local council.
Bedfordshire's active membership
Unitary authorities: 11,168 (down 639)
Academy schools: 2,286 (up 588)
Other: 3,968 (up 229)
Total: 17,422 (up 178)
The scheme’s active membership working at academies increased by 588 to 2,286 in the year to March 2013 (see box). This is compared with a fall in 639 of members working at unitary councils, due to opt-outs, redundancies and the growth of these independent schools.
Geoff Reader, head of pensions and treasury management at Bedfordshire Pension Fund, said: “Because this group of schools has grown quite a lot in Bedfordshire, perhaps more than other areas, we just thought the best way to interact with them was to make them more involved in how we operate.”
A review of the pension fund’s governance policy statement, presented at a committee meeting last month, recommended academies be given “observer” status, similar to that of trade unions. This would mean the academies could nominate a representative on the committee.
“You can turn up to the meeting, you can access all the papers, but you can’t vote,” said Reader. “[But] the chairman would probably let you express an opinion.”
The amount of academy schools across the UK has “absolutely mushroomed”, said Barry Mack, head of governance at consultancy Hymans Robertson. “Quite rightly they are looking for some kind of representation.”
There are three broad ways schemes could offer this to academy schools or other comparable groups:
Full representation. Giving academies the ability to vote on the relevant pensions committee, as some schemes have for smaller employers.
Observer status. Academies are allowed to participate in the discussion and access to relevant documents, but are not part of the decision-making (or at least the voting) process.
Basic attendance. Some committee meetings are open to the public to attend so academy representatives can take part here, but certain scheme business will be decided in private.
The government intervened this week to guarantee academies’ pension liabilities, after some Local Government Pension Scheme authorities had viewed these organisations as higher-risk, requiring them to pay accelerated employer contributions.
“There is a feeling that academies are not as secure companies,” said Mack. “Academies could go bust and no one quite knows what would happen.”
Following such concerns being raised, the government confirmed earlier this month that it would provide a guarantee to meet any pension liabilities upon the closure of academies.
In a written ministerial statement, education secretary Michael Gove said this was in response to LGPS administering authorities’ view of academies as “higher risk, as they no longer have the financial backing of the local authority”.
“We now expect all administering authorities to review academy risk assessments and to treat academies equitably when setting employer contribution rates,” he added.
The statement also announced a consultation into proposals to amend LGPS regulations “requiring administering authorities to pool academies should they wish to do so”.
