Alarm bells rang when I read Stephanie Hawthorne’s report on the reaction of some Pension Schemes to the challenges of the current pandemic ‘Lockdown spikes fears of democratic deficit in LGPS’
A survey of 83 local authorities conducted on behalf of the Local Government Pension Scheme Advisory Board and the Local Government Pensions Committee of the Local Government Association showed that some councils are sluggish to adapt to the new normal, with 61 per cent of respondents not going beyond mere planning of virtual meetings.
The research, conducted in the first two weeks of May, also showed that other local authorities were delegating decisions to senior officers such as the section 151 officer, the chair and the vice-chair of the pension committee. One council delegated decision-making to the chief executive with appropriate advice from officers, while another had a Covid-19 special committee.
The concern at this comes from within LGPS and specifically from the uber-proactive Jeff Houston, LGPS head of pensions.
Comments from the various advisers interviewed by Hawthorne in late May , do not reflect much pro activity. They seem to accept pension torpor in the face of the crisis.
“Meetings tend to be planned on a quarterly cycle, and this (survey) was less than two months into the lockdown.”
“the main local government regulations about how to manage matters with Covid-19 in terms of virtual meetings, and enabling access to the public, were only issued by the government on April 4”
Anyone charged with managing a UK business through the COVID-19 pandemic will recognize such behavior as a voluntary furlough. Three monthly meetings in a time of crisis? Two months to digest instructions on virtual meetings?
These committees are there to protect the public from the pension risks created by the pandemic. These include the probability of many participating employers going bust and ceasing contributions, many members losing pension rights and the scheme losing its primary source of funding.
There is genuine distress within many participating employers and that distress will extend to staff when the furlough ends. Council tax-payers should be demanding more.
If ever we needed the pension committees of local authorities to raise their game, now is that time.
Has time stood still?
Third party providers to the LGPS are clearly comfortable to maintain the status quo. Hawthorne quotes a spokesperson from JP Morgan
“No doubt there will be some permanent change that will come from the current experience. Some companies will not survive while others will thrive, as we emerge into a post-Covid-19 world. But, overall, we do not believe long-term growth prospects have been fundamentally changed.”
So should Local Authorities be taking asset manager’s word for it?
Any council tax payer in the land is going to blanch at the assertion that “long-term growth prospects”, haven’t “fundamentally changed”. Perhaps this remark refers to the asset management industry , for whom the furloughing of 61% of pension committees could mean business as usual.
And are local authorities right in thinking pension administration is business as usual through the pandemic.
very few authorities appeared to be revising administration budgets to deal with the current situation, with 87 per cent not making any changes.
My experience as a small company dealing with my local authority is that it is virtually impossible to get any answer on any matter. Small employers with very real pension issues may find that the “spike in the democratic deficit” means they have, like me- no one to talk to. I find myself agreeing with Stephen Scholefield