Agenda item

This paper provides updates on several developments relating to the Local Government Pension Scheme (LGPS). The issues covered are:

·         Awaited LGPS investment related consultations

·         Age Discrimination in the LGPS (commonly referred to as “McCloud”)

·         The Pensions Regulators (TPR) Consultation on the new Code of Practice

·         Increase in the Normal Minimum Pension Age from 6 April 2028

The Head of Pensions and Treasury introduced the item which provided an update on several developments relating to the Local Government Pension Scheme (LGPS). It was noted that a number of consultations relating to the LGPS were awaited. This included a consultation on the implementation of a strengthened framework for LGPS investment and pooling. It was explained that there were eight asset pools across the country, which were quite different in their structures and approaches, and it was expected that the government would be consulting on a more defined framework to streamline the asset pools.

It was reported that a consultation on TCFD (Task Force on Climate-related Financial Disclosures) reporting was expected in October 2021. It was noted that Regulations had been issued by the Department for Work and Pensions (DWP) for private sector pension schemes and that, although these did not apply to the LGPS, the Ministry of Housing, Communities, and Local Government (MHCLG) was looking to similarly amend the LGPS Regulations. The Head of Pensions and Treasury explained that it was aimed to include any relevant considerations in the forward plan, provide training, and put an action plan in place to ensure that the Pension Fund could meet the requirements for TCFD reporting and explore any potential investment opportunities related to the implementation of TCFD.

In relation to age discrimination in the LGPS, commonly referred to as McCloud, it was explained that the LGPS Regulations had changed the scheme in 2014 from a final salary to a career average scheme and those who had been within 10 years of retiring raised claims of age discrimination against the government. The claims of age discrimination were upheld by the Supreme Court and it had been confirmed that a Bill would be introduced to rectify any issues. The Head of Pensions and Treasury noted that the impact on the Haringey Pension Fund was currently unknown but work was underway to ascertain this and it would continue to be considered by the Pensions Committee and Board.

The Committee noted that the McCloud case had been ongoing for several years and it was enquired why the liabilities for the Pension Fund had not been ascertained. The Assistant Director of Finance explained that the decision would be more significant in terms of the administrative work required than the monetary impact. It was noted that the Bill would set out the requirements for Pension Funds in more detail. The Interim Pensions Manager commented that the legislation would aim to ensure that the issue was rectified by 2024. It was added that the Haringey Pension Fund had commissioned a pensions administration supplier to start collecting data for the affected individuals and that this work would start imminently. It was explained that, when the scheme had become a career average scheme in 2014, the Pension Fund was no longer required to collect certain data but that the McCloud ruling would require the retroactivecollection of data which would be challenging with a number of ceased employers and previous contractors.

The Head of Pensions and Treasury explained that The Pensions Regulator (TPR) currently had 15 codes of practice but they were proposing to reduce this, combining some of the codes. It was highlighted that only one of the codes of practice was relevant to the LGPS and that Haringey had not responded to the consultation on this issue in May 2021. It was added that there were no material implications for the Pension Fund and that this update was provided for information.

It was noted that there would be an increase in the Normal Minimum Pension Age, the minimum age when members of most pension schemes could usually access their pension benefits, from 55 to 57 from 2028. It was commented that the government had previously announced that the state retirement age, the age where members were entitled to their full pension benefits, would increase to 67 from March 2028. It was explained that the Pension Fund now had six years to decide how best to communicate the changes to members.

The Committee understood that the government was aiming to increase the pension age incrementally over the next 10 years and asked whether there was any further detail on this. The Head of Pensions and Treasury stated that he was not aware of any proposed increases but that this would not be surprising as the most recent actuarial assumptions suggested that people were now living and working longer. It was noted that any changes would require a significant amount of notice following the McCloud case.

RESOLVED

To note the Independent Advisors LGPS Update paper, appended as Appendix 1 to the report.