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.

Sawan Shah introduced a report that provided 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:

• On 30 March 2023, the Department of Work and Pensions (DWP) published its 2023 review of the State Pension age. The State Pension age was currently age 66 and was planned to rise to age 67 between 2026 and 2028, before rising again to age 68 between 2044 and 2046.

• On 29 March 2023, the Scheme Advisory Board (SAB) published a report on the gender pensions gap in the LGPS from the Government’s Actuary department. The report provided an initial overview of the gender pensions gap in the LGPS, based on data from the 2020 scheme valuation. The report showed that the difference between men and women as to their accrued benefits in the Local Government Pension Scheme was 34.7% for benefits in the reformed CARE scheme and 46.4% for benefits in the legacy final salary scheme (in favour of men). However, the Board noted that the findings needed to be interpreted with caution and further work would be undertaken to understand the data and investigate causes, in addition to considering possible next steps.

• The Department for Levelling Up, Housing and Communities (DLUHC) published its consultation on proposals relating to the investments of the LGPS on 11 July 2023. This consultation sought views on the areas of asset pooling, levelling up, opportunities in private equity, investment consultancy services and the definition of investments. The Board were informed that a summary of the proposals was included in Appendix 1 of the report and the consultation would close on 2 October 2023.

Following the update, members were invited to raise any comments or questions, with questions and responses summarised below:

• The Board requested that a report regarding the consultation on the proposals relating to investments be presented at the next Board meeting on 8 November.

• Regarding the impact that the increase of the state pension age would have on the Fund, members were informed that the Pension Scheme was linked to the state pension age, meaning that an increase in the state pension age increased the date on which members were entitled to an unreduced pension.

• In response to a request to annually update the Board on the gender pension gap, the Board were informed that officers could explore the obtainability of the data and if accessible then updates could be provided. If the data could not be obtained, members would be updated when possible, using data from the Scheme Advisory Board.

• In light of the Government proposal to require a 10% allocation in UK private equity, the Board heard that the Fund were currently running down their allocations in private equity and no new allocations had been made in recent years. If the proposals were to be enacted, the Fund would have to re-evaluate its investment strategy. Moreover, it was explained that the consultation showed that the Government wanted UK investments to drive domestic growth, which could pose a challenge to the Fund as UK investments would need to be identified that met the Fund’s risk/return levels.

In thanking Sawan Shah for the update, the Board RESOLVED to note the recent developments in the LGPS, as detailed within the report.