Agenda item

To consider the quarterly report of the Fund Administrator on pension fund administration.

The Committee considered a report from officers on operational and administration matters relating to the pension fund.

End of year processes had completed and Annual Benefit Illustrations (ABIs) were issued ahead of the statutory deadline.  Paper statements are still issued to the vast majority of scheme members, and they are used as an opportunity to communicate important messages about the scheme.

Data quality was generally very good, with scores slightly up from last year.  The aim is to maintain these levels but there could be some challenges this year.  There are good relationships with employers and good data which gave confidence that benefits had been paid correctly.

Hymans Robertson had concluded their review of the in-house Additional Voluntary Contribution (AVC) arrangements for scheme members.  Hymans Robertson recommended that the current service provider, Prudential, be retained but kept under review, and that the default standard investment, currently a ‘with profits’ product, be reviewed.  Officers would appreciate any input from Committee members into the review of the default option.

A further consultation was issued by government on 7 September 2020 covering the exit cap and other proposed reforms, which the government was keen to implement very quickly.  The proposed reforms would now cover all scheme members over 55 years old made redundant where there is a strain cost even if below the cap.  The reforms would be very complex to administer as scheme members could potentially have four different options to choose from.

Officers would be responding to the consultation on behalf of the pension fund but scheme employers would be encouraged to respond too.

Discussions regarding potential remedies for the McCloud judgement continued.  The estimated impact on funding level was likely to be relatively small, but remedies were likely to create a very large administrative burden which could result in thousands of benefit calculations being revisited.

The Local Government Association (LGA) Scheme Advisory Board (SAB) were also very concerned about these matters and would be engaging directly with the Ministry of Housing, Communities and Local Government (MHCLG).

Amendments to LGPS regulations come in to force on 23 September 2020.  The amendments will allow administering authorities to review scheme employer contributions between triennial valuations and provide greater flexibility for the repayment of deficits by exiting employers.

The Local Pension Board has reviewed the risk register specifically in relation to the impact of COVID 19.  To date there had been no serious impact on scheme employers and contributions.  Home working arrangements were not ideal for the service and presented additional data protection risks to manage.

Homeworking had had a negative impact on performance as measured by the Key Performance Indicators (KPIs) but not as great as feared.  The main priority was to avoid falling behind in the payment of benefits.  Transfers into the pension fund were a challenge as they involved a lot of paperwork being sent to the office.

Concerns were raised about how to improve performance as it was confirmed that the administration team would continue to work from home until the end of March 2021.  The administration team were still performing to a high standard in challenging circumstances and officers hoped to report an improvement at the next meeting.  It was agreed that information relating to KPIs would be included at the front of future reports.

The Chairman summarised that this meeting had rightly focussed on investment matters but the priority at the next meeting should be on administration.

Resolved

1. That the pension fund administration report is considered before pension fund investments at the next meeting of the Committee in November 2020.
2. That performance against the Key Performance Indicators (KPIs) is summarised at the front of future administration reports.
3. That the Committee are consulted on the proposed response to the government’s consultation on the exit cap and other matters.