To receive an update from Kevin Taylor on the following papers:

a. Barnett Waddingham McCloud briefing paper

b. Scheme Advisory Board Public Sector Exit Cap guidance

The Board was reminded that proposals to change pension payments to a career average from a final salary had been challenged in the courts, and it had been ruled as age discriminatory. The LPGS therefore had to find a remedy to this judgement, and a full review was carried out to ensure that anyone who had been part of the scheme up until April 1^st 2014 had the underpin protection. Kevin Taylor told the Board that scheme employers would be affected by this, and a large amount of data still needed to be obtained in order to ensure nobody had been adversely affected. This was proving time consuming for employers and pension fund admin staff. However the actuary had indicated that the difference in cost between a career average and final salary pension was unlikely to be significant for those where the latter would now apply. Kevin Taylor advised that guidance from the Scheme Advisory Board on how to proceed was being awaited. He also said that no scheme member needed to contact the Pension Fund if they were concerned they would not receive their full benefit payments, if the underpin applied to them at the time. It was felt that communication around this issue would be important, and employers would need to develop an action plan to undertake the necessary work. The Board was reminded that this was a national issue, and it was not just the LGPS that was affected.

Kevin Taylor advised the remedy to the judgement had been developed and made based on the outcome of the court case that had made the ruling the changes were age discriminatory.

As part of the data collection, historic paper records would need to be collected and analysed as not all of it would be stored on iConnect. In many cases the ten most recent years’ of payroll had been retained. However there was likely to be guidance issued on what pension funds should do if an employer was unable to provide the required information, and what assumptions needed to be taken into consideration. Kevin Taylor stated his belief that employees who had had sizeable salary increases throughout their careers were likely to be the most adversely affected by the calculations.

Kevin Taylor told the Board that the actuary’s response to the consultation regarding the remedy was being reviewed; this, along with the national guidance that was expected, would be used to formulate the Fund’s plan going forward. No exact timescale was given, although it was expected the plan would be compiled within the next few months. Resource implications also needed to be taken into account while putting together the response plan.

Regarding the exit cap, Kevin Taylor explained that when an individual left local government their exit payment should not exceed £95,000. Kevin Taylor explained that if a scheme member was made redundant at 55, their benefits would be released without any actuarial deductions; however if they voluntarily took their benefits at the age of 55 then a reduction would normally be made to reflect the early payment. Significant strain costs were therefore possible. A consultation on a review of the exit cap was taking place through to November 9^th. Kevin Taylor stated his belief that the exit cap could be seen as being age discriminatory, and could have a significant effect on employee benefits. He stated that the exit cap appeared to contradict the advice given in the Pension Scheme Regulations. Alan Cross concurred and stated it would unfairly affect people who had been loyal to their employer. Nikki Craig advised the Board that RBWM had submitted feedback to the consultation and was awaiting further guidance.