Essex Pension Fund has combined its employer, investment and administration teams into a single structure to deal with an increased number of employers joining the scheme.
Local authority schemes have sought greater efficiency in governance as their employer base and scheme designs change, sometimes merging different teams to better administrate member benefits.
The trick whenever you do this sort of things is to make sure you’re left with adequate resources
Previously the council’s pension services consisted of an administration function, which also handled employer admissions to the fund and changes to employer profiles, and an investment team that dealt with contribution accounting and monitoring.
It has now created an employer team bringing together officers who had previously co-ordinated admissions and changes to the fund’s employer profile, with those responsible for the monitoring of, and accounting for, contributions in line with the funding strategy.
Kevin McDonald, director for Essex Pension Fund, said: “With local authorities continuing to outsource services resulting in further new employer admissions and an increasing number of schools attaining academy status – Essex has over 150 – it was felt that creating a new team from our existing staff was the best use of resources.”
As all these officers liaised with the fund’s actuary, it made sense to combine these activities, he said. The number of total staff handling administration, investment and employer liaison has remained broadly the same and all report into McDonald.
Russell Agius, partner at Aon Hewitt, said in his experience it is less common for schemes to combine their administration and investment functions. “Other services are going to benefit more readily [from merging],” he said.
It is common for schemes to merge their administration and actuarial teams, since a scheme’s actuaries use member data to calculate its liabilities and they therefore operate more closely.
Many local government pension schemes have been reviewing their governance arrangements in advance of LGPS reforms, which come into effect in April, said Barry Mack, head of governance at consultancy Hymans Robertson.
“It’s just a way of having someone with the expertise, competency and knowledge to [manage] both the administration side and the investment side,” said Mack.
Some LGPS have responded by outsourcing their investment or administration teams, he added.
Schemes merging investment and administration functions can benefit from economies of scale, said Richard Butcher, managing director at independent trustee company PTL.
However, he added: “The trick whenever you do this sort of thing is to make sure you’re left with adequate resources, [in terms of] the number of hours put in and expertise.”
