UK roundup: LPFA, LGPS, TPR, Baker Tilly, NAPF, Barnett Waddingham

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UK - The London Pensions Fund Authority (LPFA) has warned that proposals to raise public-sector workers' pension contributions by 3% over the next three years could trigger a "mass opt-out".

The LPFA even went so far as to say the Treasury's proposals could destroy the Local Government Pension Scheme (LGPS).

Mike Taylor, chief executive at the LPFA, said: "A top civil servant's pension contributions could rise from 1.5% of pay to 4.5%, a social worker's could increase from 6.5% to 11%. Is that fair? Such increases will doubtless lead to large numbers opting-out of the scheme - 40% according to GMB.

"This would have the effect of breaking the scheme before Lord Hutton gets the chance to fix it. And yet the Treasury has estimated that take up will be reduced by a mere 1%."

The government's requirement in the October Public Service Review to raise an extra 3% from public-sector pension scheme members would equate to an increase in contributions of £900m from the LGPS, according to the LPFA.

Taylor argued that, if significant numbers opted out, not only would the government not get its £900m, but funds would face increasing deficits.

"Employers could well end up having to put more money in than they do today, resulting in a net loss to the public purse," he added.

Meanwhile, Baker Tilly has urged that the Pensions Regulator (TPR) apply guidance on good scheme administration fairly, taking into account the limitations many smaller funds in the country face.

Speaking about TPR's call to inspire confidence in saving by placing an unwavering focus on standards, Ian Bell, partner at the company, said: "I hope this new guidance will be both practical and proportionate as trustees of small schemes may not have the governance or financial budget to mirror what the larger schemes are doing."

Joanne Segars, chief executive of the National Association of Pension Funds, agreed, saying: "The regulator needs to maintain a proportionate approach to this campaign. Schemes should not feel pressured to spend money on new admin systems if members would gain more by seeing the cash spent elsewhere."

However, she conceded that, due to the long-term nature of pensions, with members often enrolled for several decades, good record-keeping is essential.

Bell added that the regulator's statement again highlighted the accountability of trustees in maintaining accurate records of members.

Julian Mainwood, associate at Barnett Waddingham, also believed that the burden was on trustees to ensure good record-keeping and praised the statement for addressing a further area of concern, namely the speed with which schemes can currently be wound up.

"It has long been known that the key to a streamlined wind-up process often lies with how quickly you can get GMP records agreed with National Insurance Service to the Pension Industry (NSPI)," he said.