Issue - meetings

61.1     The Board considered a report providing an update on various governance workstreams completed and changes affecting the LGPS and the ESPF introduced by Dave Kellond (DK) and drew the Board’s attention to the following:

Legal and regulatory changes

1)    The Education and Skills Funding Agency published a policy paper in November 2024 announcing that they will guarantee outstanding LGPS liabilities when a further education body closes, in line with the existing guarantee in place for academies. As a result, the Fund may consider whether the funding approach for the employers to whom the guarantee has now been extended should be revised.

2)    This will strengthen the covenant in the Fund for those employers identified as being affected. The Fund will communicate with those employers and review the implications of these changes.

3)    The Scheme Advisory Board recently sought an update to Counsel’s opinion on fiduciary duty, having last done so in 2014.

4)    In January the Scheme Advisory Board published the updated opinion of Nigel Giffin KC. This is intended as a review and update of the opinion given in 2014 and it considered financial and non-financial matters.

5)    It is the intention that from April 2027 most unused pension funds and death benefits will be included within the value of a person’s estate for Inheritance Tax purposes and pension scheme administrators will become liable for reporting and paying any Inheritance Tax due on pensions to HMRC. In the context of the Local Government Pension Scheme this will mean that any death grant payable would always fall within the estate of the deceased member for inheritance tax purposes, and as a result scheme administrators will be responsible for reporting and paying any inheritance tax due.

6)    A consultation seeking views on the processes required to implement these changes closed on 22 January 2025.  The response only addressed the process for implementing the changes, and not the issue of the change itself as that was not within the focus of the consultation.

7)    The response provided to the consultation makes clear the view that accounting for and paying of inheritance tax, should be the responsibility of the personal representative and not be that of the pension scheme administrator and the Funds responses appear to be consistent with that of the National Pension Officer Group and other LGPS funds.

Funding

8)  The Fund Actuary has prepared the indicative quarterly funding update as at 31 December 2024, rolling forward assumptions from the valuation and reflecting actual experience since March 2022, included as Appendix 5. The indicative funding report shows the funding position increase from 120% in June 2024 to 122.4%i n December 2024. This does however, represent a minor decrease from the position in March 2022 of 122.8% .

61.2     The Board RESOLVED to note the Governance report.