Covid-19 and the LGPS: adapting to the challenges

As we know there are a number of challenges in managing teams remotely and although there is some variation across funds, generally the feeling was that LGPS officers (after some bumpy starts) have been able to maintain productivity and effective operation of the funds. The key focus for most funds is that pensioners are still being paid with payrolls successfully being run remotely. 

IT has presented some issues for some funds. However, from the conversations, larger funds have been able to resolve these issues more quickly and some funds transitioned easily as home working was already in place. There are even incidences of managers delivering IT equipment (to front doors) to get their teams up and running. So, definitely going beyond expectations!

Perhaps, surprisingly, the funds reported lower levels of sickness than normal, which is good news. However, they did express concern that teams are not taking holidays or stressing enough the importance of staff taking regular breaks. 

Looking ahead, many councils were beginning to plan for how some staff would be able to return to the office and how pensions would fit into that. There was a general view that it was likely that an increase in remote working would be possible in the future.

It has been particularly difficult taking on new staff and, in some cases, the decision has been made to spread the workload across existing staff instead — using the old adage that it takes more time to train new staff than to just do it yourself, although recognising that this can lead to problems further on.

This leads on to the training of existing staff. Some have parked this for now, while others are carrying it out online or exploring how to do so. Likewise we have been carrying out online training in this period for clients and our staff and, given its success, will continue to offer this. In addition, there are clearly no shortage of webinars to attend! 

There was a view that there may be a delay in the issue of annual benefit statements. We understand that The Pensions Regulator (TPR) are expected to be sympathetic if the delay is clearly attributable to the Covid-19 situation. This will require any breaches to be rectified within a maximum period of three months and have no negative impact on savers. This easement currently applies until 30 June. 

There was some disappointment that the Good Governance project and some other initiatives seem to be paused, which is ultimately going to affect timescales. However, there is also appreciation for the acknowledgement that more time will be needed to implement any recommendations. We are aware that some work is continuing in the background.

While funds’ annual audits appeared to be moving ahead reasonably easily, there was a range of experience in whether board and committee meetings had continued in an online format. Some funds were now in the process of planning to hold these as their councils were beginning to be in a position to offer the relevant support.

Employers are continuing to engage with funds and, so far, there does not seem to be any drop off in providing data, data quality or employers not paying contributions.

Although there have been some queries, there have been relatively few requests by employers to defer payment of their contributions. This could be due to the fact that they would need to make higher contributions later in the year, so this has limited benefit. However, funds may receive an increased number of requests over the coming months if the crisis continues. 

Some funds have a policy already in place and some have carried out a survey of its staff to see how many employers are making use of the furlough scheme. There was particular concern raised over the future of employers in the education sector and whether we would see a further increase in college mergers. 

As we approach their accounting year end (31 July), it would be good risk management to engage with these employers and understand any financial pressures. 

It may be helpful to provide an updated funding position on the funding basis as at 31 July 2020 to contrast with the accounting balance sheet and demonstrate financial solvency to their board.

Based on those present, funds have not made any short term tactical investment decisions yet, as expected. Investment strategy reviews often happen after the valuation but these have been put on hold in some cases until markets settle down. 

Given the strong performance over the first ten months of the 2019/20 Scheme year, diversification of assets and lower inflation the funding level has not decreased as much as you might think based on market headlines.

There was a range of views in relation to the impact on members as a result of the current crisis.

On the one hand there may be an increase in ill-health retirements due to Covid-19 related symptoms, stress and other illnesses that have not been treated, as well as an increase in mortality,. 

On the other hand, working from home may have led to more exercise and healthier eating habits. We may therefore see an improvement in general health and longevity. It is still too early to say but ill-health experience and longevity are issues that we will be keeping a close eye on.