To consider the report.

Philip Boyton, Deputy Head of Pension Fund, gave an overview of the report. Starting with Scheme Membership (1.1 in the report), he informed that membership had steadily risen during the last six scheme years. He explained that it was necessary for the Pension Team to hold more than one pensionable employment record because scheme members could hold multiple pensionable employments at a given time. He then informed that the total cost for administration per membership record was £24.60, which was significantly below the London average of £50 and LGPS (Local Government Pension Scheme) in England and Wales of around £30.

Moving onto Membership by Employer (1.2 in the report), Philip Boyton pointed to the graph which showed a variance in total membership across the six local authorities (Bracknell Forest, RBWM, Reading, Slough, West Berkshire and Wokingham), which would have been influenced by the individual authorities’ policy on outsourcing services. Where there were low active records, there would be more outsourcing; where the active records are high, there was less outsourcing.

Philip Boyton explained that when services were outsourced, scheme members were to be transferred to a new employer who would then acquire admitted body status in the Fund. Therefore, whilst it looked like there were low active records for some unitary authorities, the scheme members had moved between scheme employers and would be recorded in the other scheme employer numbers which were being held in the Pension Team’s membership database.

Regarding Scheme Employers (1.3 in the report), referring to Chart 4 in the report, Philip Boyton informed that there were several types of scheme employers alongside the six unitary authorities. The largest scheme employer were academies, which were on-boarded under the Academies Act 2010. Under this legislation, schools were no longer funded through a local education authority and automatically became separate employers. This meant all non-teaching employees, including any new employees after conversion to academy, had a legal right to become members of the scheme. At the date in which the school became an academy, existing scheme members transfer to the academy and continue their membership.

As shown by Chart 4, Philip Boyton informed, there were some scheme employers which no longer had active members contributing to the scheme; but the Pension Team nevertheless was still responsible for administering those benefits on behalf of deferred and in-payment scheme numbers.

Philip Boyton explained that Admission Bodies were employers who chose to participate in the scheme under an admission agreement. These usually included charities and contractors, usually where a local government service was being contracted out to a non-local government employer.

Philip Boyton then stated that scheme member information was administrated through the i-Connect software, a secure internet-based application which managed the transfer of employee information from a payroll system to the pension system. Through this, when scheme employers process their monthly payroll, they were able to immediately transfer the appropriate data to the pension system rather than the Pension Team receiving paper forms via email or waiting until month 12 of the scheme year ending on 31^st March every year. With RBWM being the first scheme employer to be on-boarded in February 2016, over 90% of scheme member records had been on-boarded to i-Connect, leaving circa. 2,000 scheme member records yet to be on-boarded.

On Key Performance Indicators (KPI) (1.5 in the report), the target for each KPI was 95%. Three out of the four KPIs were achieving the target with the KPI in respect of deceased scheme member processing showing a fluctuation. The Pensions Team were working on improving this.

On Communications (1.6 in the report), Philip Boyton informed that the Pensions Team provided various methods of communication to scheme members and scheme employers through pension surgeries, presentations, employer meetings and training events. The Pensions Team continued to reach out to scheme members and employers both remotely and on-site.

Philip Boyton then discussed Special Projects, which included the McCloud Judgement and Pensions Dashboards Programme. Philip Boyton described the McCloud Remedy as one of the largest and most complex retrospective rectification exercises that the public sector would face, with its effects likely to be felt for many years into the future. Giving some context, Philip Boyton stated that the McCloud Judgement was related to two employment tribunal against central government. The claimants argued that protection introduced from a change to the scheme in April 2014 amounted to unlawful discrimination as the protections only applied to certain older members. In December 2018, the Court of Appeal ruled that younger members had been discriminated against because the protection was only afforded to older members.

Philip Boyton also informed that further supplementary consultation had recently been issued, whereby it was addressing matters affecting the LGPS.

On the Pensions Dashboards Programme, Philip Boyton informed that a ministerial statement on 2^nd March 2023 announced that the Programme required additional time to facilitate the connection of pension providers and pensions schemes. The connection deadline had been moved to 31^st October 2026, although the Pensions Dashboards could go live before then.

Councillor Tisi asked a series of questions. On the McCloud Judgement, he asked if there was a view on the impact and timing on the updated regulations. Philip Boyton answered that the regulations would be finalised from 1^st October 2023. There were protections afforded to scheme members already in place and it was believed the McCloud Judgement would impact only a small group of members. Philip Boyton stated that the Pensions Team would approach scheme employers for the required information when the final regulations were implemented to not impose an unnecessary burden on scheme employers. In spite of this, they had informed scheme employers to keep the records and not dispose of them.

Councillor Tisi then asked for confirmation that the Fund was doing well in regard to the benchmarks, and what were the implications of this. Philip Boyton replied that the KPI graph with the fluctuation (Deceased Processed within 5 working days) was highlighted to senior officers in 2022 to investigate the reasons behind this. The reasons they discovered was because of the Pensions Team training new team members at this time, and the complexities of managing deceased scheme member cases. Philip Boyton added that if a KPI declined in performance, a monthly review would take place to investigate the reasons behind this and work with the team members to resolve it.

Councillor Tisi then asked if there was any costs or penalties for KPIs being below target. Philip Boyton replied that the failures to meet KPI targets would by highlighted by both internal and external auditors. If a failure report was submitted to the Pensions Regulator, they would investigate the Fund’s internal processes. He added that, as part of the Scheme Advisory Board, there was consideration being given to mandate KPIs consistently across Funds in England and Wales in contrast to each Fund having their own local KPIs.

Councillor Tisi then asked what the Fund was doing to on-board the scheme employers (namely academies and schools) onto i-Connect. Philip Boyton replied that the scheme employers which the Fund was currently on-boarding had member records in trusts which meant they could be easily uploaded i-Connect. Regarding academies and schools, he informed that the Communications Manager and Assistant Technical Analyst from the Pensions Team were arranging verbal catch-ups with the scheme employers, adding that employers were responsible for ensuring that data reaches the Pension Team in line with the SLA (Service Level Agreement).

Alan Cross added that academies and schools had been around 80% for a long time and that a suggestion was to directly engage with them, reminding them of the deadline to on-board onto i-Connect.

Councillor Da Costa asked if there was any growing credit risks or concerns, especially as the cost-of-living crisis had increased pressure on Councils and organisations, such as employers falling behind on payments. Philip Boyton stated that contribution payments to the Pension Fund were not reliant on the i-Connect submission. i-Connect would deliver the value data directly into a scheme member's record. If a scheme employer had on-boarded in the middle of the financial year, the Pension Team would roll back the scheme member data to the beginning of the scheme year (1^st April) so that the Fund had a full scheme year worth of data.

Damien Pantling added that the Pension Fund was a public service pension fund and therefore was the highest creditor. Regarding credit risk, Damien Pantling informed that there were no scheme employers which were significantly behind; and if there were, it would be reported to the Committee.

AGREED: That the Pension Fund Committee notes the report;

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.