The Pensions and Lifetime Savings Association (PLSA) has shared a new best practice guide for employers in the Local Government Pension Scheme (LGPS), and a regulatory map to help LGPS professionals understand the sector’s complexity.

Launched at the PLSA Local Authority Conference 2023, the research builds on the PLSA’s 2022 report, The LGPS: Today’s Challenges, Tomorrow’s Opportunities, which identified areas where existing good practice can be strengthened.

The employer guidance is designed to help LGPS employers understand and fulfil the significant financial commitments, administrative responsibilities and regulatory requirements associated with the scheme.

In particular, the guide includes chapters dedicated to engaging with administering authorities, how to manage data, as well as practical information about actuarial valuations, risk management, internal dispute resolution procedures (IDRPs) and automatic enrolment.

The regulatory map, meanwhile, aims to help members and stakeholders understand and navigate the complexities in which the LGPS operates, with the PLSA emphasising that there is currently no regulatory entity with responsibility for the whole of the LGPS, and many arms of government and regulatory bodies have a say in how the LGPS is run.

Indeed, a recent PLSA survey of LGPS professionals revealed that two-thirds (66 per cent) believe the main legislative or regulatory requirements that govern their work are overlapping between different organisations/regulators, with a similar proportion saying this causes them confusion (63 per cent).

The map is divided into three sections, according to the geographic distribution of the LGPS – England and Wales, Scotland and Northern Ireland – and also contains a heat map of some of the most pertinent issues funds are facing, matching these topics with the entities responsible for these areas,

The regulatory map also aims to help ensure that the LGPS voice is represented and weighted properly in central government decisions, which affects the sustainability of the LGPS and its day-to-day running.

Commenting at the conference, PLSA chair, Emma Douglas, emphasised that carrying out the recommendations from the 2022 report will be a "long-term project to help secure the long-term future of the LGPS", emphasising that, over the past year, progress has been made in tackling some of the most pressing issues.

She stated: "The LGPS operates within a complex landscape where many different bodies have a stake and bring different perspectives and competing interests.

"This doesn't necessarily mean the outcomes are negative, but it does obscure an overall view of the scheme and creates conflicting or ambiguous guidance, priorities and power structures.

"Last year we said we should carry out a regulatory mapping exercise to help show just how complex the LGPS is and showcase the need for a more coherent framework and an examination of whether a more centralized approach would be better.

"Today we will be publishing the results of that exercise, which we will use to help ensure that the LGPS's voice is heard when central government makes decisions that affect it."

Commenting on the employer guide, Douglas also emphasised the need to evidence the benefits of being in the LGPS, given recent suggestions that employers should be looking at the question of whether they should remain in the scheme, in light of high funding levels and retirement of members.

Douglas also noted that while 85 per cent of local authorities say that their fund has a good relationship with their employers, 45 per cent say they have had tier three employers, those with no taxpayer backing or guarantees from the taxpayer backed body, express a desire to leave.

"Although compared to the last time we asked the question, fewer this year say that they've had tier two employers, otherwise known as the academies, saying that they wish to leave, at only 5 per cent compared to 16 per cent in 2021," she continued.

"This is important context to show this how important it is to stay engaged with employers as they join and remain in the LGPS.

"Exit processes need to be clear. But the benefits of being in the LGPS as an employer must be even clearer. We're pleased to do just that with the new version of the guide."

Adding to this, PLSA head of DB, Investment and the LGPS, Tiffay Tsang, stated: “For more than a decade, the LGPS has undergone continuous, rapid change.

"Against a backdrop of the economic uncertainty, austerity and pay freezes for local authorities – and, more recently, the global pandemic – it has had to contend with a rolling series of reforms that add to its administrative burden.

“The LGPS is well funded and one of the largest pension provisions of its type in the world. The guide we are publishing today will help LGPS employers establish best practice and to better understand the value their employees get from being a member.

“The regulatory map is designed to help external stakeholders understand the complexity of the overlapping bodies that have influence in the LGPS universe, and hopefully start a conversation on how entities could work together in a more joined up way.”

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