Kevin Taylor introduced the report and stated that the report was informed by the Pensions Admin Strategy and the SLA in place with employers. The Pension Fund was in the early stages of reviewing the Administration Report, bearing in mind CIPFA guidance and peer review of other funds. A revised report would be brought to the Committee in due course.

A key ongoing issue was the McCloud case, with changes to scheme regulations being expected imminently. Certain teachers who worked full time in part time roles were wrongly excluded from the LGPS, which could add complexity to the McCloud issue. The £95,000 cap was back on the agenda, with the expectation that the government would insist on reviewing all cases to determine whether they should go ahead or not. In instances where these cases could proceed, scheme employers would need to get all strain costs associated with early retirements ahead of asking the government to review. In a successful review, the member would continue to receive full benefits as opposed to the reduced benefits suggested by the previous, now deleted £95k cap consultation. This was a good change in policy from a scheme member viewpoint.

The Chairman thanked Kevin Taylor for his report and stated that it was reassuring that there wasn’t anything to worry about, with the exception of the McCloud case.

The Vice-Chairman stated that McCloud was a potential liability, and asked for clarification on the £95,000 cap topic. The Vice-Chairman asked if the government would reimburse the pension scheme.

Kevin Taylor clarified that when a scheme member retired early, the regulations dictated that their benefits cannot be reduced to reflect their early payment. If somebody voluntarily retired, they would have a reduction to those benefits as they would be payable over a longer period of time. As these benefits could not be reduced, there was a strain cost that the employer had to pay to the Pension Fund to meet the early release of those benefits at an unreduced rate. Those strain costs were originally going to be included in the £95,000 cap, with those costs alone possibly running over the cap. The new proposal was that the strain costs would be included as part of any representation made by an employer to the government to allow those benefits to be paid early at an unreduced rate. The government would examine this to see whether any alternative options could be sought. If the government agreed to the early release of benefits, the employer would need to make that strain cost to the Pension Fund, with the scheme member continuing to receive their benefits unreduced in line with current legislation.

The Vice-Chairman stated that he noted that two more admitted bodies had been added since the last report and asked about the process for admitting these bodies.

Kevin Taylor stated that an admission body would only come from an existing scheme employer outsourcing a service under The Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). Pensions were not covered by TUPE but were covered by the Best Value Direction order instead. This resulted in a responsibility on the outsourcing employer to ensure equivalent pension rights going forward. Admitted bodies were monitored in the same way as any other scheme employer.

The Chairman asked if there were any particular areas of note in the Administration Report in the future.

Kevin Taylor stated that McCloud was the biggest issue to be aware of. Pension dashboards was another project requiring a large amount of work but would bring about a number of benefits.

Councillor Wisdom Da Costa asked if the impact of the McCloud case would be a workload issue or a material financial impact on the Fund. Councillor Wisdom Da Costa also asked if any strain on workload was evidenced with regards to changes in the number of members.

Kevin Taylor stated that the McCloud case would cause an administrative burden. The actuary had already included an element within all calculations for the McCloud costs to allow for the potential risks and additional liabilities arising as a result. With regards to churn of membership numbers, the Pension Fund was a relatively small team working with a relatively large membership. Automation of the process was key in reducing workload on employees.

RESOLVED UNANIMOUSLY: That the Pension Fund Committee notes the report and;

i)               Notes all areas of governance and administration as reported;

ii)             Notes all key performance indicators; and

iii)            Approves publication of the quarterly Administration report on the Pension Fund website.