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  • Melanie Durrant

    Melanie Durrant

    Partner and Public Sector Consulting Actuary

  • Louise Lau

    Louise Lau

    Associate and Actuary

  • We were delighted to see so many friendly faces at the LGPS Pension Managers’ Conference in Torquay on 16-17 November 2021. Despite the lack of karaoke, it felt like things were on their way back to “normal”.


    During the event, BW held two workshops titled The Administration Challenge.

    With so much happening in the LGPS at the moment, it was hard to know where to start but we chose to focus on three key topics:

    1. Data preparation for the 2022 actuarial valuations;
    2. Administering the McCloud remedy; and
    3. Administration resourcing and training.

    After an introduction to the topics, we split into three groups to discuss them, before returning to share the outcomes. One of the benefits of attending a workshop is sharing ideas, so we would like to thank our attendees for the lively discussions that took place. Highlights from those discussions are included in the short summaries below.

    Data preparation for the 2022 valuation

    Getting member data ready for the 2022 valuation is key in the short term. Our discussions focussed on concerns around member data provision and how best to approach the data cleansing process.

    Due to resourcing issues, almost all funds are seeing a backlog of leavers waiting to be processed. In an ideal world, the backlogs would be cleared and the actuary would receive data which accurately reflects these leavers as deferred members. But, this isn’t an ideal world and we know resources are tight, so there is no immediate solution. Instead, the focus should be to clear as much as you can and to speak to your actuary to ensure they have all the information needed to allow for these unprocessed leavers.

    "Another idea to help prioritise resources is to focus on the issues relating to the small employers in the fund. Just a small number of data issues could have a significant effect on the valuation results for small employers, so targeting these first may be an effective way to ensure the accuracy of valuation results."

    In terms of data quality, it was acknowledged that data quality may be quite good due to annual cleansing exercises and regular reviews as part of monthly or annual employer returns. However, most funds have their ‘problem employers’ – employers whose data quality and timeliness of provision is not meeting the fund’s expectations. How can the employer ensure good quality data? One idea was to apply initial checks to the inputs made by employers before it is submitted to the fund. This would help address any issues before it gets to the fund and reduce the work required by the fund. Overall, it was agreed that early engagement with these employers is the most effective way forward; to help the employers understand the importance of their data and why they should engage with the fund.

    Administering the McCloud remedy

    The overriding message was to not underestimate the amount of work that will be needed to implement the McCloud remedy. A significant level of work is needed and, where possible, many funds have already put additional resource in place or have a plan. Although we are still awaiting the consultation response, funds are making good progress with data collection – even though different approaches have been taken to use the LGA data template, largely due to fund size or employer profiles.

    Another important issue raised was managing member expectations. In reality, only a small number of members are going to see a change to their benefits. Therefore, there was reluctance to include “unnecessary” information in annual benefit statements as it was felt this would raise more enquiries. However, it was felt that there would be some benefit in including a disclaimer to say that members will be contacted if they are affected.

    There are still a number of unanswered questions and we await the guidance from the Department for Levelling Up, Housing and Communities (DLUHC) with baited breath. For example, what happens if you can’t get the data from a closed employer, or if you are provided with “bad” data where you believe correct data already exists? Everyone recognised the importance of a good audit trail to reduce the risk of future challenge, so even in the case of incorrect data being used, it is clear where the output to any calculations came from. This is particularly important where manual calculations are being made, which seemed relatively common, with more confidence being placed in the trusted pen and paper approach.

    The McCloud issue will be with us for many years to come which is why sharing ideas is so important.

    Administration resourcing and training

    The key to delivering the administration challenge is to have sufficient resources, both IT-related and trained staff. IT driven self-service facilities, employer data submission portals, automation of initial data checks and other processes all help reduce the number of staff that would otherwise be required. The available staff can then be allocated to the more complex case work and issues.

    "As a result, the type of staff and the skills needed have altered over the years, but finding and retaining trained staff is a key issue."

    The groups in both workshops chose to focus on the closely connected issues of recruitment and training. The pandemic has been a clear game changer in both areas, reshaping the issues and potential solutions. Staff are now able to work in one place and live in another, and remote training opportunities have proliferated.

    Issues arising in staff recruitment and retention included the small pool of applicants and a lack of recognition of the knowledge and experience required by pension administrators, leading to uncompetitive pay and loss of staff. Many funds reported unfilled vacancies. On a hands-up exercise, the vast majority of funds also said they had a key person risk, and all but one attendee had ended up in a pension career by accident! Increasing the status of the administration role, emphasising its appeal and widening awareness surrounding it are all key to increasing the recruitment pool and retention of staff through competitive pay. Ideas included, changing job titles; further professionalising the role; attending college and university job fairs; recruiting to a role’s core skills and teaching the LGPS; growing your own talent by training staff; mitigating key person risk through succession planning; and ensuring written processes and knowledge notes are in place.

    However, the size of the fund was a key differentiator in how easy it is to train staff, including utilising apprentice and graduate schemes. The larger funds were dedicating staff to the task, while some of the smaller funds are sharing training. The possibility of creating an administrator career training route, introducing new qualifications and training materials, was explored. This would enable people to learn about pension administration in preparation for a career and could be extended to, perhaps, create a bank of centrally funded and trained staff ready to take up roles.

    It was clear that the challenges are shared across funds, and the industry working together is key to their resolution.

    If you would like further detail or any assistance with the issues discussed above, please get in touch with Melanie Durrant or Louise Lau.

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