To receive a verbal update.

Kevin Taylor, Pension Services Manager, introduced the verbal report, bringing 5 current issues to the attention of the Board. He started with the McCloud age discrimination remedy.

A Parliamentary Bill, the Public Service Pensions and Judicial Offices Bill, was laid before Parliament in July 2021 and made amendments to the Public Service Pensions Act 2013 in order to rectify unlawful age discrimination. As expected, it confirmed the remedy period as covering membership from the date of Scheme reform, 1st April 2014 for the Local Government Pension Scheme (LGPS) to 31st March 2022 for eligible members.

However, there had been further amendments to the Bill which would impact the McCloud remedy for LGPS. These amendments extend the scope of people potentially affected by the unlawful age discrimination. Originally, those in scope extended to scheme members who were within 10 years of retirement and were in the scheme on 31st March 2012. The amendments would extend in scope members to all who were in the scheme prior to 1st April 2012 and who do not have a disqualifying period. The increased scope of this amendment would create more work and require more resources in order to administer. In addition, administrators would need to collect more data for an increasing number of members to check who had been affected by the underpin.

While the new legislation was still being deliberated and guidance still awaited, it was anticipated that pension funds would need to have a plan to resolve the McCloud issue and implement the new remedy by 1^st October 2023 in spite of new LGPS regulations and guidance expected to be released in Spring 2022.

Alan Cross, the Board Chairman, asked if it would be a realistic task to implement a plan in spite of the timescale, the potential people in scope, the resources available and complexity of the task. He also asked what representative bodies were saying about the situation. Kevin Taylor replied that the LGA (Local Government Association) had similar concerns in regard to conducting such a task without the relevant guidance being issued. He mentioned the difficulty in accessing data for many individuals which could go back many years. This would involve a lot of work for scheme administrators and scheme employers alike.

Jeff Ford wondered if RBWM Council was in a position to provide the information from many years prior. Nikki Craig stated that scheme employers are required to retain payroll data for 6 years plus the current year and that it would seem to be appropriate to start collecting data as soon as possible. Philip Boyton, Pension Administration Manager, replied that all scheme member records were up to date as of 31^st March 2014 and from this date different scheme employers were in different positions with data depending on when they onboarded the i-Connect system. It was acknowledged there would be challenges in obtaining the data for certain scheme member records.

Kevin Taylor reassured Board members that pension records held by the Berkshire Pension Fund were relatively good and accurate compared to some other local authority pension funds, but he stated that the change in scope of people would create many issues, such as looking for data in respect of individuals who may not originally have been part of the Berkshire Pension Fund but rather another public service pension scheme. Kevin Taylor reiterated that due to this challenge new guidance was needed on how to collect and assess the data to ensure fairness to members.

Kevin Taylor summarised that despite the exceptional amount of work to be done, the number of scheme members who would benefit from the underpin was expected to be quite small. Alan Cross asked if there were any ways to target the right people to check if they were applicable for the underpin. Kevin Taylor replied that the checks could not be done until the calculations for people were completed at the point of becoming entitled to a benefit.

The Board then moved onto the Section 13 report which was introduced by Kevin Taylor. As required under Section 13 of the Public Service Pensions Act 2013, the Government Actuary's Department (GAD) had issued their ‘Section 13’ report on 16th December 2021.

The Royal County of Berkshire Pension Fund had been identified in the report as having the lowest funding level across the LGPS funds in England and Wales and a lengthy deficit recovery period despite GAD representatives having reassured Berkshire Pension Fund that they were taking the right course of action. Kevin Taylor added that employer contribution rates were gradually increasing.

Kevin Taylor then moved on to the Pensions Dashboards. On 31st January 2022, Department for Work and Pensions (DWP) launched a consultation on the draft Pensions Dashboards Regulations, the intention being that individuals would be able to access all of their pension entitlements in one place, including their state pension. The consultation was to close on 13th March 2022. Officers were waiting to see the Local Government Associations (LGA) response to the consultation before considering whether any further response needed to be made.

Kevin Taylor then mentioned the Levelling-Up White Paper, which was published by the government on 2nd February 2022. The white paper included references to LGPS funds making plans to have 5% if their assets allocated to projects in support of “local business”. Kevin Taylor mentioned that the Scheme Advisory Board (SAB) understood that in this context “local” refers to UK rather than specifically local to a particular Fund (given the global nature of investments). There would be no mandating beyond the requirement to have a plan.

Kevin Taylor then moved onto the Task Force on Climate-Related Financial Disclosures (TCFD): the requirement for LGPS Funds to assess and report on the financial risks of climate change in their investment and funding strategies. Berkshire Pension Fund were still waiting for consultation which meant that guidance and amendments to statutory legislation was delayed. Nevertheless, Berkshire Pension Fund was being proactive in this area.

Jeff Ford commented on the costs for the local authorities and pension scheme to fulfil the TCFD requirements. Arthur Parker, the Vice-Chairman, wondered if there was a body which could lobby the central government for addition funding because of a number of areas which required funding. Kevin Taylor and Alan Cross replied that the Scheme Advisory Board (SAB) and the Local Government Association (LGA) took on the role of lobbying the central government for additional funds and resources as well as specialist advice.