The SPP have provided a range of technical comments that should prove helpful in ensuring that government policy intentions are met and that unintended consequences are minimised.
Industry concern
SPP state that the provisions of Regulation 11, that relate to an authority’s high-level financial objectives, provide a basic framework for funding and are reasonable in some contexts but that it, “does not help in how Funds are expected to reconcile the return characteristics alongside contribution stability requirements of Regulation 11(2)(b), and the obligation to consider local economic priorities set out in Regulation 11.”
With regard to the wording of Regulation 13, which provides that asset pool companies must take all reasonable steps to implement the investment strategy of an authority participating in that pool company, the SPP believes that the wording used in consultation question 10 is much clearer than the wording used in the regulation itself and should therefore be adopted instead.
Regulations 10-15 infer that a Fund’s investment strategy is set by the AA once every 3 years alongside the actuarial valuation and is not reviewed or revised in the interim period. The SPP highlight that whilst the investment strategy is designed to be appropriate for the medium / long term, “…it should not be a set and forget approach in the intervening 3 year period.”
Finally, the SPP state that focusing only on stable primary rates “…does not ensure stability for employers where there are surplus funds to be managed or deficits to be recovered, and the investment strategy is critical to this.”
Industry support
The SPP have been supportive of various proposals too. For example, requirements to publish an Administering Authority’s (AA) investment strategy by a deadline of 30th September 2026, is described as, “challenging but achievable”.
In relation to Regulation 14, the SPP agrees that it is appropriate to link the three-yearly review of the investment strategy to the triennial valuation, “…given this is what happens in practice anyway.”
Kirsty McLean, Chair of the SPP’s Public Sector Committee, said: “The SPP’s response to the original consultation on this subject 12 months ago set out our concerns with much of what was being proposed and we are pleased to see there has been some movement on these. As we made clear in our response this week, we hope that our constructive comments prove helpful in ensuring that government policy intentions are met as best as possible and that unintended consequences are minimised.
We recognise that a sustainable LGPS is in the best interests of scheme members, employers and local taxpayers; that it can be a major source of domestic investment and that the LGPS continues to play a unique role in supporting the economic development of local communities.”
|
