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The £95,000 exit cap was revoked and the MHCLG was considering what actions could be taken regarding exit costs and payments within the public sector.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government would implement this, as the government still intended to have an exit limit despite the original cap having been revoked.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 Ministerial Statement dated 13th May 2021 on McCloud and the LGPS

Kevin Taylor said an announcement was made on 13 May 2021 by Luke Hall, Minister of State for Regional Growth and Local Government, expressing the progression on the requirements and outcomes of McCloud. Further details would be forthcoming with a consultation, and outcomes would be published later in the year, with guidance from the government and other parties. This would create considerable work and resource for the administration team.

Jeff Ford asked if the original date had been moved back. Kevin Taylor explained that the original underpin protection applied to anyone in the scheme on 1 April 2012 who was within 10 years of retirement. The Chairman said whilst it was a significant issue, the overall amount for the Local Government Pension Scheme (LGPS) was not expected to be large. Kevin Taylor said that the Fund actuary has already taking into consideration the potential impact of McCloud on the Fund and it was expected that the outcomes would not be significant for the Fund.