To receive any apologies for absence.

Apologies were received from Tony Pettitt, with Kieron Finlay and Julian Curzon as prospective substitute employer board members.

To receive any declarations of interest.

Although no formal declarations of interest were declared, it was noted that the Chairman received  an exit package when he left Reading Borough Council in 2018 and so these details will be contained in the data submitted by Reading Borough Council to MHCLG in response to their request for exit payment information.

To approve the minutes of the meeting held on March 4^th 2021.

RESOLVED UNANIMOUSLY: That the minutes of the meeting held on March 4^th 2021 be approved, subject to the following changes:

·       ‘Late submissions’ rather than ‘late payments’

·       ‘Very low perceived risk’ rather than ‘no perceived risk’

Jeff Ford asked if the Head of Pension Fund was appointed, and Nikki Craig, Head of HR, Corporate Projects and IT (at RBWM), said the recruitment process had ended and a public announcement would be made once the HR processes had completed. The successful candidate was due to start on 1 September 2021.

To receive a verbal update on the following:

a.     Exit reforms

b.     TPR Code of Practice

c.     Written Ministerial Statement dated 13^th May 2021 on McCloud and the LGPS

Kevin Taylor, Pension Services Manager, introduced the item.

a.                       Exit reforms

The £95,000 exit cap was revoked and the MHCLG was considering what actions could be taken regarding exit costs and payments within the public sector. On 9 April 2021, a letter was sent to local authorities requesting exit payment data as scheme employers of the Pension Fund. All local authorities in England and Wales were required to provide information on all exits from 2014 to date, so that the MHCLG could better understand the implications of potential regulatory change. The cap was an attempt to restrict “excessive” payments; however, it was identified that many average salary employees, as well as high earners, would be unintentionally caught in the cap. There was also unresolved conflict between the regulations.

Arthur Parker asked if the results of the consultation were published. Kevin Taylor said he had not seen any information, but it would be interesting to know how swiftly government would implement this, as the government still intended to have an exit limit despite the original cap having been revoked. The Chairman asked if local authorities were given the form to fill in and Arthur Parker said that a notification was sent to authorities regarding the format of the consultation that was responded to. The letter in the report suggested authorities would need to respond by May 2021, but this had not happened as the final form form was not sent in time to achieve this.

Kevin Taylor said the borough had received a request for information and was collating this. Nikki Craig said an email on 25 May 2021 was received from South East Employers (SEE), who had made representations to MHCLG along with the Local Government Association (LGA) regarding the requirement to provide information from 2014. SEE’s email said the MHCLG intended to send a letter setting out the finalised exit pay reporting requirements on 26 May 2021. It would be sent to Chief Financial Officers and it was highly likely that councils would be notified of the revised requirements before the SEE had site of the letter. The letter was likely to set a reduced reporting requirement of two years and sections where a short commentary on exit decisions could be given. A short extension to the deadline was being considered.

b.                       TPR Code of Practice

Kevin Taylor said an internal audit was undertaken almost three years ago to review the administering authority’s alignment to the Pensions Regulators code of practice 14 on administration and governance. The results from the audit were very good, but the Pensions Regulator was now consolidating the codes of practice into one code. Another internal audit may need to be undertaken once the new code was published. The Chairman said it was good practice to revisit the code on a periodic cycle and asked what resource would need to be put into place for the review. Kevin Taylor said documentations would need to be revisited and changed, such as the Members Handbook.

c.                       Written  ...  view the full minutes text for item 298.

To review and comment upon various draft papers ahead of final versions being presented to the Pension Committee.

The Chairman said the papers were emailed to the those present and were not published in the agenda as they were draft documents. The final version would be in the public domain once published in readiness for the next Pension Committee meeting on 14 June 2021.

5Ai.                  Draft Employer Flexibilities Report

Kevin Taylor said the report came to fruition following legislation amendments to the LGPS in September 2020 to give employers greater flexibility on how they dealt with exit costs when they left the scheme. The impact would be greater on private companies who joined the scheme under contract to other authorities but would have less impact on unitary authorities, town, and parish councils as ‘scheduled bodies’. When employers leave the scheme the Fund actuary has to undertake a cessation valuation and identify whether a deficit exited that required the exiting employer to make an exit payment to the Pension Fund. This could be a considerable amount that could be difficult for the employer to pay as a one-off amount and therefore employer flexibilities have been introduced. Payments could either be made in line with a deferred debt or debt spreading arrangement subject to the administering authority’s establishing policies to support the approach. The Fund actuary had produced the draft policies as well as proposing changes to the Funding Strategy Statement (FSS).

5Aii.                 Draft FSS

The Chairman said sections 3.12 to 3.14 were similar and should be consolidated, and section 5.4 needed to comment on the 2019-22 period. The Chairman asked when the next FSS was due to be reviewed and Ian Coleman said it was due after the next actuarial valuation at the latest. This would be late 2022, though anything that needed to be reviewed would be done so at any stage.

5Aiii.                Draft Contribution Review Policy

The Chairman said this appendix was a new policy and Kevin Taylor said this set out what the options would be and the processes that would have to be undertaken. The Chairman commented that an organisation that received an adverse audit report may also trigger a contribution review and could be added to the report. Ian Coleman said the recommendations were from the actuary and if issues arose, they would be changed. It was agreed for the comments from the Board to be given back to the actuary.

The Chairman asked if there were circumstances where the cost responsibility could be shared through mutual agreement and Kevin Taylor said the purpose of the policies was to avoid shared costs as the employer was responsible for the liabilities that they build up. The ‘new’ options available reduce the risk of an exiting employer not being able to afford any exit payment identified by the actuary thereby reducing the risk of other scheme employers having to meet a part-share of those costs.

By giving options to recover post-exit liabilities potentially benefited the Fund and other employers and allow employers to meet costs they might not otherwise be able to pay.

5Aiv.                Draft Debt  ...  view the full minutes text for item 299.

To discuss any other items of business.

The Chairman said the events tracker had not been included this time and suggested a standing note under the AOB item to verbally note training issues that were either available to members or were taken up at meetings. He had attended a recent PSLA conference.

Kieron Finlay and Julian Curzon were formally proposed as Substitute Employer Members to Berkshire Pension Board, and the Chairman indicated that he had sent a message to Unison in an attempt to identify a suitable Scheme Member representative (in line with the Governance Review).

UNANIMOUSLY AGREED: That Kieron Finlay and Julian Curzon be substituteMembers to Berkshire Pension Board.

The Chairman said Kevin Taylor could be contacted from Tuesday to Thursday, as he was flexibly retiring at the end of May. The Chairman said he would virtually attend the Berkshire Pension Fund Committee.