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Governance Boards

Reforms introduced by the Public Service Pensions Act 2013 (the Act) are bringing about significant changes in the public service pensions landscape. These go beyond the terms and benefits offered in Scotland's main public service pension schemes to encompass a new approach to governance designed to reinforce the importance of transparency and accountability.

Being implemented from 1 April 2015, the new governance regime brings additional clarity around two key roles:

      · Responsible Authority – responsible for policy decisions on the pension scheme in question and for scheme regulations. Scottish Ministers fulfil this role in Scotland;

      · Scheme Manager - legally responsible for the operational management of the scheme in line with legislation. Scottish Ministers have delegated this function to the Scottish Public Pensions Agency (SPPA) for the four pay-as-you-go Scottish schemes (for the NHS, Teachers', Police and Firefighters') and the eleven existing fund authorities for the Local Government Pension Scheme (LGPS).

 

The Act also introduces new regulatory responsibilities for The Pensions Regulator and requires two new, statutory governance bodies to operate for each scheme – Scheme Advisory Boards and Pension Boards.

Advisory in nature, each type of board has a different focus:

      · There will be five policy-focussed Scheme Advisory Boards established, one for each of the Scottish NHS, Teachers', Police, Firefighters' and Local Government schemes. With partnership composition,  aside from their statutory footing, these are not significantly dissimilar to the partnership arrangements that have previously existed. Firmly focussed on the policy of the scheme in question, Scheme Advisory Boards provide an important route for Ministers to seek advice around policy matters relating to the pension scheme in question.

     · Pension Boards will exist to assist the Scheme Manager in the operational delivery of the pension scheme in line with scheme regulations and expectations set by The Pensions Regulator (e.g. in Codes of Practice). This role of assisting scheme managers around operational scheme management has not existed before. There will be one for each of the four 'pay as you go' schemes and a further eleven for the LGPS (one for each fund authority). The Act requires each Pension Board to have equal representation from members and employers and the four that will work with the SPPA on the pay-as-you-go schemes will be chaired by an independent person, appointed for that purpose, assisted by a non-executive vice chair.

The product of many months of discussion with stakeholders, the SPPA is taking steps to set up the infrastructure for the new Boards. Nomination packs for Pension Board members were sent out to employer and member groups in early January and the recruitment of chairs of the four Pension Boards for the NHS, Teachers', Police and Firefighters' pension schemes will start shortly.

Initial induction and training of Pension Board members, to ensure that they have the necessary knowledge and understanding to fulfill their role, is being planned for May and we expect the first Pension Board meetings to take place in June.

The Agency will also shortly be sending-out nomination packs for members of the five Scheme Advisory Boards.

Link to Scottish Government Website