LGPS engagement and knowledge rise but investment scores fall
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by Stephanie Baxter
There are high levels of engagement and good levels of knowledge in the Local Government Pension Scheme, according to Hymans Robertson’s National Knowledge Assessment 2022.
The NKA, which helps funds to benchmark the knowledge and understanding of their pension committee and board members, found those that lead many of the discussions and decision-making processes have a strong level of knowledge and skill.
Chairperson knowledge levels remain high with an average score of 68% in comparison with the average participant score of 53%.
Participants scored the best in governance with an average score of 68%. They also did well in actuarial methods, standards, and practices (63%), financial markets and product knowledge (60%), administration, as well as committee role and pensions legislation (55%).
There was an increased level of knowledge in administration, governance and actuarial methods, standards and practice from the 2020 assessment.
However, levels of understanding of topics that have traditionally been the focus of committees, such as investment, have fallen in the same period.
The score for investment performance and risk management fell by 20 percentage points since 2020. Average scores in financial markets fell by 23 percentage points while accounting and audit standards fell by 30 percentage points.
Andrew McKerns, senior LGPS governance, administration & projects consultant at Hymans Robertson, said it was encouraging to see such high levels of knowledge demonstrated by funds of all sizes, especially at the chairperson level. But he said there is still room for it to increase even higher through continued training.
“Participating in the assessment helps funds gauge whether training is successful, particularly as many continue to promote their newly developed hybrid training programs, which have been developed to suit a post-pandemic way of working.”
This year’s NKA is the first post-pandemic national assessment to take place in the LGPS and reflects the huge changes that have taken place in pensions, and the wider world.
It comes as the LGPS sector has had to grapple with The Pensions Regulator’s upcoming single Code of Practice and the England and Wales Scheme Advisory Board’s good governance recommendations.
There was a marked increase in engagement with the NKA. Nearly three-quarters (73%) of eligible participants completed the assessment compared with 61% in 2020.
“As we’d hoped, the results of this assessment clearly highlight that an engaged committee and board are more likely to keep up to date with developments and key issues within the LGPS,” said McKerns.
“Our response rates have significantly increased in less than two years, and we would encourage funds to take advantage of this increase, through the promotion and provision of different training methods to meet the variety of needs and styles of their members,” he added.
