Local Government Pension Scheme (LGPS) funds should implement a four-step action plan to ensure they have evidence that demonstrates they are compliant with The Pensions Regulator’s (TPR) General Code of Practice, according to Hymans Robertson.

The consultancy noted that LGPS funds must provide clear evidence and maintain robust internal controls to show they are compliant with the code, while ongoing monitoring will be “vital” as each fund has its own specific actions to show that robust governance processes are in place.

However, Hymans Robertson argued that LGPS funds should not start a compliance assessment straight away and should first implement a four-step action plan.

The first step on this action plan should be training, Hymans Robertson noted, to ensure officers, committees and boards understand the regulator’s expectations.

Fund were urged to then assess their current levels of compliance with the code, prioritising the elements relevant to LGPS funds denoted as a ‘must’ by TPR, followed by the areas highlighted as ‘should’ and ‘best practice’.

Thirdly, funds should identify the steps required to achieve full compliance, such as which new policies or processes will be needed, following the initial assessment.

The final step in the action plan was to set out specific actions and assign them to individuals, with a ‘realistic timescale’ to complete each action and the plan being monitored to ensure progress is made.

Hymans Robertson has developed a TPR General Code of Practice compliance checker to support LGPS funds to self-assess.

The checker seeks to provide funds with an approach to ascertain, track, and then implement any changes they need to make, setting out the specific requirements for LGPS funds and filtering out issues that do not apply.

It also provides progress reporting, including progress-tracking over time, and allows funds to capture all General Code actions with owners assigned to each action.

“The General Code covers such a vast area that funds will need to be very organised in how they achieve compliance,” said Hymans Robertson senior governance and administration consultant, Andrew McKerns.

“Full or nearly full compliance will give them strong evidence that they operate with effective decision making, oversight, processes, and internal controls.

"However, even if there are actions which seem obvious to increase compliance, funds should be careful not to make knee-jerk changes.

“Officers need to establish appropriate processes for their compliance requirements. That way, officers can demonstrate a clear ‘before and after picture’ to their committee and board, and the methodology they used for any changes made.

"Focusing on preparation and planning will put funds in a better position to mitigate any issues, such as reputational damage, penalties or further scrutiny from TPR if non-compliant.

"To be successful in the long-run, funds will need to carry out a fair bit of work. Being thorough and methodical is how they will see the benefits.”

---