By Vivienne Russell | 10 September 2013
The Pensions Regulator has promised ‘to take action if necessary’ to ensure public sector pension schemes are run to high standards following government reforms that will see it assuming oversight of the public sector.
Andrew Warwick-Thompson, the regulator’s executive director with responsibility for regulating the governance and administration of public service schemes, said the watchdog would prioritise ‘education and enablement’ of members across schemes.
However, he also warned that the sheer number of public service pension scheme members would make maintaining high-quality data a challenge.
Following passage of the 2013 Public Service Pensions Act, the regulator will set standards of governance and administration for public sector schemes from April 2015. This is intended to bring administration practices broadly in line with those operating in the private sector, such as member and employer representatives sitting on boards and more regular and consistent publication of information.
On September 6, the Pensions Regulator published a report summarising current practice in the eight categories of public sector schemes: local government; the civil service; NHS; teachers; armed forces; police; firefighters; and judicial workers. Between them, these schemes represent about 12.6 million members and more than 22,000 employers.
‘Our role is to make clear the governance and standards that schemes are expected to meet in order to adhere to legislation, Warwick-Thompson said.
‘The size and number of memberships of public service schemes means they can face challenges in, for example, maintaining high-quality data and records.
‘Although they are run slightly differently to private sector schemes, we will take a similar approach – prioritising education and enablement but taking action if necessary to make sure schemes are run to a high standards. We plan to monitor and report on the progress of public service schemes each year.’
The survey of current public sector schemes found room for improvement, but also highlighted areas of good practice that could be emulated more widely.
It noted that the Local Government Pension Scheme had been aware of governance and administration issues for some years. Almost all (98%) of LGPS schemes reported they had a governance board, and two-thirds of these boards have a training plan and policy on knowledge and understanding. However, the LGPS scored less well for addressing learning gaps and working together as an effective unit.
Lauren Vose, a solicitor at Sackers, said the research made for interesting reading as it gave ‘some clues as to what [the watchdog] is likely to focus on when it comes to its new regulatory oversight of public service pensions schemes’.
