Review of CIPFA guidance on Local Pension Boards
CIPFA has recently published their Guidance for public sector pension fund Local Pension Boards. It reads more like an essay rather than traditional guidance, but there are plenty of ideas and examples to provoke thought.
In particular, we agree with the suggestions that boards should:
- Meet before rather than after the main Committee (or equivalent) meeting.
- Have access to the exempt papers on a timely basis, which is not the case for every Board.
- Review items such as the risk register and COP14 compliance on a rolling basis.
- Focus on where functions are outsourced – we would add that this includes pools.
- Collaborate when reviewing the activities of pools.
We particularly like the reminder that Boards “shall have the power to do anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of its functions” under 106(8) of the 2013 LGPS Regulations. It is a reminder that it is not the case that Boards, like Beatrix Potter's Mr Jackson, ‘have no teeth, no teeth, Mrs Tittlemouse’.
We would argue that more could and should have been made of how Boards add value. This is primarily in their role representing employers and members, but also where, as in many cases, they can bring specific expertise to bear.
The Guidance notes that the Scheme Advisory Board’s Guidance to the effect that Boards’ role may include “assisting with the assurance of transparent reporting from pools and ensuring the effective implementation of strategies by pools. Such involvement should include the consideration of provision of direct representation on oversight structures”.
It is the last sentence that causes us concern. It seems to us that Boards should focus on assisting their Scheme Manager on the governance structures around pools and not get involved in direct oversight of the pools. We note that the CIPFA Guidance’s governance diagram does not include any line between the Local Pension Boards and the pools, and in our view that is how it should be. We do not see how direct representation will help and we believe it will lead to reduced governance clarity.
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