Public Sector News
Sackers’ Public Sector Unit has wide experience of working with organisations on the complex legal and compliance issues that face public sector schemes and broadly comparable “passport” schemes. In this newsletter we focus on just a few of the current issues facing such schemes.
In this Alert:
- A Court of Appeal decision means local authorities may lose out on contributions where employing authorities are restructured.
- South Tyneside sought to recover contributions to the Tyne and Wear Pension Fund (the “Fund”) from the Lord Chancellor’s Department in respect of the pension entitlements of former employees of an authority for which it had inherited responsibility.
- Finding against South Tyneside, the Court of Appeal decided that the relevant regulations only imposed a liability to contribute on employing authorities with active members.
- Despite its historic liabilities, as the employing authority in question had no active members of the Fund at the date contributions were calculated, there was no liability to pass to the Lord Chancellor. The regulations were held not to impose a liability to contribute on former employers in respect of former employees.
- We await news of an appeal. Meanwhile the Local Government Association has queried whether these regulations should be amended in light of the wider implications of the decision.
- Involvement in US securities class actions is only available to trustees of UK pension funds who have (or had) at least some direct investment in US equities.
- Two distinct options are available to those trustees:
- Active Approach – seek to become a lead plaintiff and have control of the litigation.
- Passive approach – establish a monitoring process and claim your share of any applicable pool of money that may arise from a successful claim of settlement.
- The “active approach” taken by North Yorkshire and Merseyside Pension Funds against the Royal Bank of Scotland has generated publicity and fuelled the debate about the pros and cons of participating in such actions.
- It may be overstating the current position to say that trustees have a fiduciary obligation to adopt either approach, but all reasonable avenues for improving funding should be considered and a properly informed decision reached.
- The Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009 came into force on 1 January 2010.
- Key changes made by the regulations are:
- from 1 April 2010, a change in the definition of “investment” will mean that administering authorities will no longer be able to pool their pension fund’s money with their own cash balances and invest the total on the money markets (before returning a share of the interest earned to the pension fund);
- administering authorities now have an explicit power to borrow, for up to 90 days, for the purposes of their pension funds;
- from 1 April 2010, pension funds must have completely separate bank accounts;
- by July 2010, administering authorities must include information about their pension fund’s stock-lending policy in their statement of investment principles;
- authorities will need to report on their compliance with the Secretary of State’s guidance on investments;
- We await further guidance from CLG on the investment regulations.
- And finally… CLG published guidance on ABS in LGPS in December 2009. (ABS, now renamed “transferee admission bodies”, was introduced for private contractors to facilitate local authority outsourcing.)