UK: LGPS Governance - A Step Closer To The Private Sector?

Last Updated: 5 March 2008
Article by Charmian Johnson

Originally published in Insight - Human Capital (Pensions), Spring 2008

The implementation of the new look Local Government Pension Scheme ("LGPS") in England and Wales took another step towards becoming a reality via the LGPS (Amendment) (No 3) Regulations 2007 ("Regulations"). These came into force on 30 June 2007 and amend the LGPS Regulations 1997 (the "1997 Regulations"). The introduction of new governance measures, pension fund annual reports and local administration strategies are designed to bring LGPS governance requirements closer to those in the private sector, with a view to improving administration and the auditing of the LGPS' funds. The Regulations place certain obligations on administering authorities to take actions over the period to December 2008.

Governance compliance statements

Regulation 73A of the 1997 Regulations (governance policy statements) has been replaced with a new section on 'Governance compliance statements'. The requirements under section 73A largely remain unaltered but the Regulations do introduce a new requirement, namely that an administering authority will be required to measure its governance arrangements against a set of best practice principles published by the Government. If its governance arrangements do not comply with all of the principles, then the administering authority will have to state the reasons for any such non-compliance.

The first of such statements must be published by the administering authority no later than 1 March 2008. Copies of the statement must now be sent to the Secretary of State as soon as possible after it has been published. (This will enable the responses to be collated and the findings on the governance arrangements to be published in due course.)

However, although the Government expected to publish its best practice guidance in August 2007, the Government only issued guidance in draft form in mid- October 2007. Authorities were invited to submit their comments on such draft guidance by 9 November 2007. Given the deadline of 1 March 2008 for administering authorities to publish their compliance statements, this does not give them very long to consider compliance. However, the Government has stated that administering authorities should prepare their statements on the basis of the draft guidance rather than waiting for amendments that might be submitted following the comments made during the consultation period.

Pension fund annual report

Although administering authorities already prepare and publish fund annual reports, the Government has decided to be more prescriptive about the contents of such reports. The purpose of new Regulation 76B in the 1997 Regulations is to provide external auditors with the means to undertake separate audits of LGPS pension funds as opposed to current practice whereby funds are audited as part of the main council audit.

Administering authorities will be required to include various specific items in their annual report, including details of the management and financial performance of the fund, details of the administration arrangements for the fund, details of the authority's investment policies, a funding strategy statement and a statement of the authority's investment principles. Administering authorities are advised to view the list of specific items as a minimum requirement and are encouraged to add any other material that may accord with the circumstances in their locality.

Regulation 76B requires administering authorities to publish their pension fund annual report by 1 December following the year end (in respect of which the report relates). The first report will therefore be due by 1 December 2008 in relation to the 2007/2008 reporting period. Although the final version of the Regulations no longer includes the draft provision that would have required administering authorities to submit copies of their annual reports to the Secretary of State, authorities are encouraged to submit copies to the Department.

Pension administration strategy

A new Regulation 76C is incorporated into the 1997 Regulations relating to the preparation and publication of local administration strategies. The new provision gives administering authorities the discretion to prepare and publish a pension administration strategy that will formalise the administrative arrangements between itself and the participating employing authorities.

Regulation 76C sets out a list of matters that the administering authority may consider to be appropriate for inclusion in the strategy. These matters relate to the performance of the administering authority and employing authorities in relation to their functions under the 1997 Regulations and include communication policies between the authorities and procedures for improving such policies, establishment of performance targets and performance level agreements in relation to their functions under the 1997 Regulations, procedures that aim to secure statutory compliance in respect of these functions and circumstances in which the administering authority can put the relevant employing authority on notice (see heading below) that their performance is unsatisfactory in relation to any targets or agreed performance levels that have been established within the strategy.

When an administering authority first publishes a strategy, it must send a copy to the relevant employing authorities and the Secretary of State. The administering authority must also revise the strategy following any material change to any of the matters contained within it and notify the employing authorities and the Secretary of State of any such revisions and where a copy of the revised strategy can be obtained. During the preparation and revision process, the administering authority must consult with the relevant employing authorities (and any other interested parties).

Poor administration and the recovery of additional costs

Regulation 6 inserts Regulations 81A and 81B into the 1997 Regulations to supplement the existing Regulation 81 that enables the administrative authority to recover administration costs from the employing authorities. Regulation 81A enables the administrating authority to recover additional costs they have incurred, as a result of an employing authority's (including admitted bodies) poor performance in carrying out their functions under the 1997 Regulations, by following the procedure for giving notice set out in Regulation 81A(2).

Regulation 81B provides that an administering authority may also have to pay similar additional costs if such have been incurred by their poor performance in carrying out their functions under the 1997 Regulations. The new power to enable an authority to recover costs incurred in respect of administrative functions is welcome as it will act as an incentive to ensure that there is a proper flow of information.

So...a Step Closer to the Private Sector?

The changes do bring LGPS governance closer to the requirements in the private sector, but for many, the new obligations will represent what they already considered to be good practice. However, administering authorities will need to be aware of the new documents, requirements and deadlines, and go through due process in preparing them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.