LGPS deficits ‘should be top priority’, NAPF poll finds

19 May 15

Tackling local government pension scheme deficits should be the main focus for newly appointed local government secretary Greg Clark, according to a survey out today.

The poll, conducted by the National Association of Pension Funds, asked 46 LGPS members what Clark’s priority regarding the schemes should be.

The most popular response was tackling deficits, chosen by 35% of respondents. The second most popular response was doing nothing on the LGPS, mentioned by 30% of respondents. Governance and fund mergers were picked by 9% and 4%, respectively.

Commenting on the findings, NAPF chief executive Joanne Segars said dealing with the £47bn funding deficit would be the ‘defining issue’ for the LGPS over the next couple of years.

‘So we need to cut a good and sensible path through the noise,’ she said, revealing the findings at the NAPF’s local authority conference.

‘And it is why we need a clear and consistent way to measure deficits – and why we need to be innovative in developing solutions for managing them.’

She said that the LGPS was a great scheme, but acknowledged that there was room for improvement.

‘It’s important the LGPS community comes together to focus on making the right changes and deliver a scheme that’s sustainable and affordable in the long term.’

Today’s research, also highlighted that almost all local pension boards– established last year to ensure that LGPS are well managed at local level – had been set up as a single board. Only 4% of respondents had set up joint boards.

Now that the boards have been established, two key challenges emerged from the poll, the NAPF said.

More than four in ten (43%) of respondents said there was uncertainty about what the board’s role would be, while around a third (35%) said ensuring board members have sufficient training to meet the knowledge and skills requirements would be a challenge.

On valuations, the poll found that three quarters (72%) of LGPS fund members thought their funding position would improve, or stay the same, compared to 2013, while around a quarter (22%) thought their overall funding would worsen.

If funding levels worsened, 39% of respondents would look to increase deficit contributions for participating employers and 22% would do so across all employers.

Segars warned that: ‘This will put even greater pressure on employers at a time when austerity will be already presenting problems for councils and participating employers. Asking for extra money at a time when there isn’t any won’t be an easy, or welcome, ask.’

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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