Nearly three-quarters of Local Government Pension Scheme (LGPS) funds do not have enough staff with the right skills to carry out day-to-day operations, according to an Aon poll.
The data points to continued pressure on LGPS teams as they deal with regulatory change and rising expectations from members and employers. The findings were drawn from an Aon webinar attended by representatives from 36 different LGPS funds across the UK.
Nearly three-quarters of respondents said their organisation lacked sufficient staff with the skills needed for day-to-day operations. A further 16% said they had the right staff and skills for now, but not for future demands. The government’s ‘Fit for the Future’ reforms, as well as other changes introduced through the Pension Schemes Act, mean significant changes at funds and pools within the LGPS system.
“LGPS internal teams face specialist skills gaps and capacity restraints, while also having to deal with increasing regulatory and reporting demands.”
Craig Payne, Aon
Craig Payne, Aon’s LGPS talent solutions lead in the UK, said that despite improved funding levels and reduced employer contributions, administering authorities remained subject to wider pressures.
He said: “Their internal teams face specialist skills gaps and capacity restraints, while also having to deal with increasing regulatory and reporting demands.
“These people and capacity pressures create real operational risks. Those range from delays in processing member cases and responding to employers, through to challenges in implementing regulatory change and managing complex projects such as McCloud, pensions dashboards, and implementing the updated and backdating of survivors’ benefits.
“Any shortcomings in these areas can result in a worse member experience.”
Change brings ‘opportunity to strengthen’
Remuneration further compounds the challenge, Aon’s survey showed. The poll found that 60% of respondents saw pay as a barrier to attracting and retaining staff, either on its own or as part of the wider reward package available to staff.
The findings follow repeated warnings about resourcing in the LGPS. Last year, LGPS Advisory Board chair Roger Phillips urged councils not to cut pension team budgets, warning that poor resourcing could affect service delivery and create compliance risks.
“Success can only come through investing in people and processes, ensuring teams have the skills to make their fund ‘fit for the future’.”
Laura Caudwell, Aon
However, Laura Caudwell, director of public sector pensions in the UK for Aon, said LGPS regulatory and pooling changes also created an opportunity to strengthen operational resilience when managed correctly.
She said: “There is the chance to take stock and ensure stronger operational resilience, starting with appointing the LGPS senior officer. But this success can only come through investing in people and processes, ensuring teams have the skills to make their fund ‘fit for the future’ – and making certain that the member experience keeps pace with rising expectations.”
Under the government’s ‘Fit for the Future’ changes, LGPS funds are required to appoint a “senior officer” responsible for a range of operational and governance functions. Last week, the Worcestershire Pension Fund appointed Mandy Kaur-Sadler from professional trustee firm Dalriada Trustees to its senior officer position.
