Agenda item

The purpose of this report is to update the committee on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund

Ravinder Jassar (Deputy Director of Finance, Brent Council) introduced the report providing an update on recent developments within the Local Government Pension Scheme (LGPS) regulatory environment and any recent consultations issued which would have a significant impact on the Fund.

In considering the report the Board noted the following updates:

• In October 2022, the Department for Levelling Up, Housing and Communities (DLUHC) had published the LGPS statistics for 2021/22. Highlights were as follows:

Ø  Total expenditure was £14.4 billion, an increase of 6.6% cent on 2020/21. This was driven in part by an increase in lump-sum retirement payments.

Ø  Total income was £15.9 billion, a decrease of 8.1% on 2020/21.

Ø  Employer contributions decreased by 24.3 per cent on 2020/21 to £7.8 billion. This decrease in total income and employer contributions was common in the final year of the three-year valuation cycle due to employers making early payment of contributions in the previous two years.

Ø  The market value of LGPS funds on 31 March 2022 was £364 billion, an increase of 8%.

Ø  There were 6.3 million scheme members as of 31 March 2022, comprising of 2 million active members, 1.9 million pensioners and 2.3 million deferred members.

• The announcement in relation to the 2023/24 employee contribution bands, which would be effective from 1 April 2023. These were calculated by increasing the 2022/23 employee contribution bands by the September CPI figure of 10.1%. As the employee contribution bands were being uplifted by a higher rate than the average pay award, there was likely to be more members of staff dropping into a lower band than in previous years. This would reduce the contributions payable to the Fund by members. The Board were advised that this would have a small negative impact on the cashflow position of the Fund in the short term, however, higher inflation expectations had been factored into the 2022 valuation therefore it was not a cause for concern in the longer term.

• Ravinder Jassar explained that DLUHC had issued a consultation on changing the in scheme revaluation date from 1 to 6 April, with effect from 1 April 2023 and thereafter on each 6 April. The proposed change would remove the impact of high inflation on the annual allowance (AA) and reduced the number of members incurring a tax charge. The consultation had run for two weeks and closed on 24 February 2023. The board were informed that the Fund’s actuarial advisors had produced a briefing note on this subject which was attached in Appendix 6 of the report.

• Lee Rowley MP, Minister for Local Government, had responded to a letter written to him in August 2022 by the Scheme Advisory Board regarding the separation of main authority accounts and pension fund accounts. Currently the two accounts were tied together which had caused delays in signing off pension fund accounts when authority accounts were awaiting audit sign off. Officials within central government had been asked to consider the scope for developing this further, although the separation of the accounts was not foreseen to occur any time soon.

As no further issues were raised the Board RESOLVED to note the recent developments in the LGPS, as detailed within the report.