Responding to COVID-19: insight, support and guidance
CIPFA, the Chartered Institute of Public Finance and Accountancy, is highlighting the importance of effective risk management to administering authorities throughout the UK responsible for managing Local Government Pension Scheme (LGPS) funds.
CIPFA has worked with Aon to revise and update Managing Risk in the Local Government Pension Scheme. The guidance explores how risk manifests itself across the broad spectrum of activities that constitute LGPS financial management and administration. The publication then explains how, by using established risk management techniques, these risks can be identified, analysed and managed effectively.
Neil Sellstrom, Pensions Network Advisor, CIPFA, said:
“The introduction of new governance requirements in the LGPS in 2015, specifically the Pensions Regulator’s new role and the establishment of local pension boards, reflects the increasing importance of risk management. It also reinforced the need for administering authorities to focus their risk management activities on all areas of scheme management and not just investment.
“Risk mitigation and control is well established in private sector schemes but in producing this guidance, we were keenly aware of the special nature of the LGPS as a funded public service scheme, most of whose participating employers are likely to have a greater capacity to absorb risk than their counterparts in the private sector. It is important therefore to strike the right balance between risk control and being too risk averse. Our guidance aims to help administering authorities to develop a risk management framework which will enable them to decide which risks can and should be controlled, and where the upside potential justifies taking the risk.”
Alison Murray, partner at Aon and Head of Public Sector Actuarial, said:
“Effective risk management stands at the heart of sound corporate governance across all organisations and functions and the LGPS is certainly no exception.
“We believe that many LGPS funds already have well developed and effective risk management strategies in place. However, in supporting CIPFA in relaunching this publication our intention is to encourage administering authorities to step back and to review their approach to all aspects of risk management – something which is particularly important given recent changes to the operation and governance of the LGPS and the changing circumstances of (Tier 3) scheme employers.”
‘Managing Risk in the Local Government Pension Scheme’ is available to download on the CIPFA website here.
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CIPFA is the professional body for people in public finance. It represents approximately 14,000 members who are public finance leaders and officials in the United Kingdom and overseas, specialising in high quality public financial management and governance for organisations in, and providing support to, government and public services. Its members work throughout the public sector, in national audit agencies, in major accountancy firms, and in other public and private sector bodies where public money needs to be effectively and efficiently managed. As the world’s only professional accountancy body to specialise in public services, CIPFA’s portfolio of qualifications is the foundation for a career in public finance. It also champions high performance in public services, translating its experience and insight into clear advice and practical services. Globally, CIPFA shows the way in public finance by standing up for sound public financial management and good governance.
Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance.
Aon announced in May 2018 it will retire the business unit brands of Aon Benfield and Aon Risk Solutions, which follows the retirement of the Aon Hewitt business unit brand in 2017. This move was designed to increase the rate of innovation across the firm and make it easier for colleagues to work together to bring the best of Aon to clients. Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.