Local Government Pension Scheme (LGPS) funds must provide clear evidence and maintain robust internal controls to demonstrate compliance with The Pension Regulator’s (TPR) General Code of Practice, according to Hymans Robertson.
With each UK LGPS fund having its own specific actions to show that robust governance processes are in place, ongoing monitoring will be vital, said the consultancy.
Funds should not, however, start a compliance assessment straight away.
Instead, Hymans Robertson said the funds should implement a four-step action plan that starts with training to ensure officers, committees and boards understand the regulator’s expectations.
This includes training officers, committees and boards on the expectations specifically for LGPS funds set out by TPR within the code; and assessing current levels of compliance with the code, prioritising the elements relevant to LGPS funds denoted as a “must” by the regulator, followed as those highlighted as “should” and “best practice”.
Funds should also identify the steps required following the initial assessment as well as set out specific actions and assign these to individuals, with a realistic timescale to complete each action.
Hymans Robertson said this plan should be monitored to ensure progress is made.
It also developed a TPR General Code of Practice compliance checker to support LGPS funds to self-assess.
The checker provides funds with an approach to ascertain, track, and then implement any changes they need to make. It sets out the specific requirements for LGPS funds, filtering out those issues which do not apply.
The checker also provides easy progress reporting, including progress-tracking over time, and allows funds to capture all General Code actions with owners assigned to each action.
Andrew McKerns, senior governance and administration consultant at Hymans Robertson, pointed out that the code covers such a “vast area” that funds will need to be very organised in how they achieve compliance.
He added that full or nearly full compliance will give the funds strong evidence that they operate with effective decision making, oversight, processes, and internal controls.
However, he pointed out that if there are actions that seem obvious to increase compliance, funds should be careful not to make “knee-jerk changes”.
He said: “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.”
McKerns added that 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,” he noted.
Read the digital edition of IPE’s latest magazine
No comments yet