A recent Aon poll found that nearly three-quarters of Local Government Pension Scheme (LGPS) funds lack sufficient staff with the right skills to carry out day-to-day operations. The data highlights continued pressure on LGPS teams as they deal with regulatory change and rising expectations from members and employers.
The findings were drawn from an Aon webinar attended by representatives from 36 different LGPS funds across the UK. Nearly three-quarters of respondents said their organisation lacked sufficient staff with the skills needed for day-to-day operations. A further 16% said they had the right staff and skills for now, but not for future demands.
Regulatory changes, such as the government’s ‘Fit for the Future’ reforms and the Pension Schemes Act, mean significant changes at funds and pools within the LGPS system. Craig Payne, Aon’s LGPS talent solutions lead in the UK, noted that despite improved funding levels and reduced employer contributions, administering authorities remained subject to wider pressures.
He said: “Their internal teams face specialist skills gaps and capacity restraints, while also having to deal with increasing regulatory and reporting demands. These people and capacity pressures create real operational risks. Those range from delays in processing member cases and responding to employers, through to challenges in implementing regulatory change and managing complex projects such as McCloud, pensions dashboards, and implementing the updated and backdating of survivors’ benefits.
Regulatory Changes Ahead
Any shortcomings in these areas can result in a worse member experience.” The challenges faced by LGPS funds are likely to continue, given the ongoing regulatory changes and the need for specialist skills to address these changes. Remuneration and staff attraction are also concerns for LGPS funds.
Remuneration further compounds the challenge, Aon’s survey showed. The poll found that 60% of respondents saw pay as a barrier to attracting and retaining staff, either on its own or as part of the wider reward package available to staff. This highlights the need for LGPS funds to review their remuneration packages to ensure they can attract and retain the necessary talent.
The findings follow repeated warnings about resourcing in the LGPS. Last year, LGPS Advisory Board chair Roger Phillips urged councils not to cut pension team budgets, warning that poor resourcing could affect service delivery and create compliance risks. It is likely that the current pressures on LGPS funds will continue, making it essential for them to invest in their teams and processes.
Related Post: Pension Regulator Issues Annual Funding Statement
Laura Caudwell, director of public sector pensions in the UK for Aon, said LGPS regulatory and pooling changes also created an opportunity to strengthen operational resilience when managed correctly. She said: “There is the chance to take stock and ensure stronger operational resilience, starting with appointing the LGPS senior officer. But this success can only come through investing in people and processes, ensuring teams have the skills to make their fund ‘fit for the future’ – and making certain that the member experience keeps pace with rising expectations.”
Strengthening Operational Resilience
Under the government’s ‘Fit for the Future’ changes, LGPS funds are required to appoint a “senior officer” responsible for a range of operational and governance functions. Last week, the Worcestershire Pension Fund appointed Mandy Kaur-Sadler from professional trustee firm Dalriada Trustees to its senior officer position. This appointment is a step towards strengthening operational resilience, and other LGPS funds may follow suit in the coming months.
Caudwell’s statement emphasizes the importance of investing in people and processes. They must have the skills to make their fund ‘fit for the future’. The member experience must keep pace with rising expectations.
LGPS funds face significant challenges. They must address regulatory changes, staff attraction, and remuneration. The government’s reforms and the Pension Schemes Act have introduced significant changes. These changes require LGPS funds to adapt and strengthen their operational resilience.
The appointment of a senior officer is a key step. It is a step towards strengthening operational resilience. The Worcestershire Pension Fund has already appointed Mandy Kaur-Sadler to its senior officer position. Other LGPS funds may follow suit in the coming months.
Investing in Teams and Processes
LGPS funds must invest in their teams and processes. They must ensure that their teams have the necessary skills. The member experience must be a priority. LGPS funds must keep pace with rising expectations.
The future of LGPS funds depends on their ability to adapt. They must address the challenges they face. The government’s reforms and the Pension Schemes Act have introduced significant changes. LGPS funds must strengthen their operational resilience.
Leave a Reply