Agenda and minutes

Pensions Committee - Friday 24th October 2014 10:00am

Venue: Oak Room, County Buildings, Stafford. View directions

Contact: Julie Plant  Email: julie.plant@staffordshire.gov.uk

Items
No. Item

19.

Declarations of Interest

Minutes:

There were no declarations of interest on this occasion.

20.

Minutes of the meeting held on 18 July 2014 pdf icon PDF 96 KB

Minutes:

RESOLVED – That, subject to the inclusion of Eric Shaw in the list of attendees, the minutes of the meeting held on 18 July 2014 be confirmed and signed by the Chairman.

21.

Minutes of the Pensions Panel held on 9 September 2014 pdf icon PDF 58 KB

Minutes:

RESOLVED – That the minutes of the meeting of the Pensions Panel held on 9 September 2014 be noted.

22.

Staffordshire Pension Fund - Pensions Board - Proposed Constitution pdf icon PDF 92 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Committee were informed that the Government had issued draft regulations which provided the framework for the creation of Pension Boards.  The County Council subsequently responded to the consultation having considered the matter in detail at the meeting of the Pensions Committee on 18 July 2014.  A second consultation was issued on 10 October 2014 with a closing date of 21 November 2014. The consultation was in two parts:

 

·                A further short consultation on the new governance arrangements

·                Proposals for how the future costs of the Scheme would be controlled as required by Section 12 of the Public Services Pensions Act 2013.

 

The stated aim of Pensions Boards was to assist the Scheme Manager (the administering authority) in securing compliance with:

 

·         Pensions law.

·         Other legislation relating to the governance and administration of the Scheme.

·         Requirements imposed by the Pensions Regulator.

·         Ensuring the effective and efficient governance and administration of the scheme.

 

The Committee noted that, under the latest draft regulations, it was a matter for the Full Council to consider how it proposed to constitute the Pensions Board but that it could delegate this function to the Pensions Committee.  The draft regulations also required that the Board should have an equal number of employee and employer representatives with a minimum of two from each side. In the early draft regulations it was stipulated that the elected member representatives could not be from the scheme’s administering authority but this had since been changed and now provided that: “No officer or elected member of an administering authority who is responsible for the discharge of any function under these regulations (apart from any function relating to local pension boards or the Local Government Scheme Advisory Board) may be a member of a local pension board”.

 

The final regulations would not be available until early in 2015 and therefore to allow sufficient time to consult with employing bodies and to implement the Board by April 2015 it was considered necessary to push on and to consider how the Pension Board could be set up in Staffordshire.  Amendments could be made to reflect the outcome of any final regulations provided they did not substantially affect the decision of the Committee. 

 

The Director of Finance and Resources sought the views of the Committee with regard to how the Board should be constituted in terms of its membership.  Following a debate it was proposed that that consultation be undertaken with employing bodies and Trades Unions on the following suggested Board Membership:

 

·         2 Employer representatives – one local authority officer and one local authority elected member to be selected from amongst the employing bodies through the Employers Forum.

·         2 Employee representatives – one Trades Union representative and one representative of Scheme Members  (to be selected through an “open invite” process.

·         A maximum of 3 “independent” Members (who can be a retired local authority Member/ Officer with relevant expertise).

·         That the Board be allowed to engage an independent expert as advisor who would not form part of the Board  ...  view the full minutes text for item 22.

23.

Pension Fund Annual Report and Accounts 2013/14 pdf icon PDF 51 KB

Report of the Director of Finance and Resources

 

(Cover Report and Appendix 2 attached – Annual Report enclosed separately)

Additional documents:

Minutes:

The Committee were informed that under regulations, the Pension Fund had to publish an annual report which included the accounts. The external auditors were also obliged to issue a statement on the accounts.

 

The Director of Finance and Resources submitted the draft Annual Report and Accounts 2013/14 for the Staffordshire Pension Fund, explaining the need for formal approval of its contents by members prior to its publication. He went on to explain that the report would be published on the Pensions website and that no hard copies would be printed.

 

The Director summarised the Funds accounts and made particular reference to the inclusion in the document of the independent auditors report on those accounts which stated that they were consistent with those included within Staffordshire County Council’s Statement of Accounts for the year ended 31 March 2014.

 

Mr Davis suggested that a copy of the Annual Report and Accounts be forwarded by email to those organisations who are employers in the Staffordshire Pension Fund.  Mr Elsey also suggested that to raise staff awareness of the Annual Report and Accounts, a link should be included in the next Chief Executive’s Update.

 

RESOLVED – (a) That the 2013/2014 Pension Fund Annual Report and Accounts (enclosed as Appendix 1 to the report) be approved and the external auditor’s statement on pages 66 and 67 be noted.

 

(b) That the separate report from the external auditors entitled “Staffordshire Pension Fund - Report to the Pension Fund Management Board” (attached as Appendix 2 to the report), be noted.

 

(c) That a copy of the Annual Report and Accounts be forwarded by email to those organisations who are employers in the Staffordshire Pension Fund.

 

(d) In order to raise staff awareness of the Annual Report and Accounts, a link to it be included in the next Chief Executive’s Update.

24.

Freedom of Choice in Pensions - Update pdf icon PDF 73 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Committee considered a report of the Director of Finance and Resources concerning Government proposals on changes to how people can access their pension savings.  Under these proposals, a person would be able to access their pension from age 55 either in full or by drawing down on the “pension pot” over a period of time following their retirement. The substantive change was to remove the requirement to buy a retirement annuity.  Instead people would have freedom to take the “pension pot” as “cash” and to do what they wanted with it; which could include for example:

 

·         Buying an annuity

·         Spending it

·         Investing in property

·         Investing in other assets

 

The amount of tax free cash would be limited to 25% of the total “pension pot” with the remainder being taxed at the person’s marginal income tax rate.

 

The consultation explicitly excluded most people in the public sector having access to their pension in this way, as the majority of public sector schemes were unfunded ‘in order to protect the exchequer and taxpayers’. However the Local Government Pension Scheme as a funded scheme was not exempt and LGPS members would be able to take advantage of the same freedoms. It was not clear however, at the moment whether the current arrangements would continue ie transferring the pension rights via a personal pension account or whether the LGPS would be able to pay the member directly thus avoiding the account setup charges and commission that would arise when setting up a new personal pension account.

 

The Government was also proposing to introduce a safeguard that before taking their pension in this manner an individual would need to seek independent financial advice.  Who would be required to pay for the advice was yet to be determined, but initial indications were that the member would pay for the advice and be required to evidence to the Scheme Manager that advice had been taken from an approved FCA advisor before payment could be made.

 

The impact of the proposals on the Staffordshire Pension Fund were currently unknown and would depend ultimately on how many members decided to take their pension as a lump sum instead of the usual annual payments.

 

The Committee were also informed that Pension Scheme members were being encouraged to transfer their pension benefits from LGPS with the promise that they could unlock their pension. New companies had appeared in the market with the specific objective of targeting people with pension benefits to try to encourage them to move their pension rights from their current provider so that they can unlock some cash from their pension.  A person could only legally access their pension from age 55; where access was given before age 55 the person would find themselves with a large tax bill and probably find their “pension pot” had disappeared. The approval by HM Revenue and Customs of new pension arrangements is currently not as rigorous as it should be.  HMRC were to be given new powers to deregister pension  ...  view the full minutes text for item 24.

25.

Collaboration pdf icon PDF 54 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Committee were informed that the Chief Executives and Leaders of Staffordshire County Council and Cheshire West and Chester had met to consider a range of services where collaboration might be beneficial including pensions.  They agreed to explore further the opportunities for collaboration and the approval of the Committee was therefore being sought to the principle of signing a collaboration agreement for the two funds to co-operate in future.  This proposal also reflected the national move for funds to work closer together.

 

The Director of Finance and Resources indicated that agreeing to collaborate with a neighbouring fund of similar size made sense.  However, apart from their size, the two funds were significantly different at present and any closer working would take time.  The draft collaboration agreement (appendix 1 to the report) proposed a framework and timetable for collaboration and required progress to be reported to the respective Pensions Committees.

 

RESOLVED – That the principle of working in collaboration with Cheshire West and Chester (who are the administering authority for the Cheshire Pension Fund) and the collaboration agreement (set out in Appendix 1 to the report) be approved.

26.

Staffordshire Pension Fund - Funding Update pdf icon PDF 199 KB

Presentation by Douglas Green – Hymans Robertson, Actuary

Additional documents:

Minutes:

The Committee considered a report by Hymans Robertson detailing the approximate funding level calculations for the Staffordshire Pension Fund as at 30 September 2014.

 

The Committee noted that the funding level calculations were undertaken every three years using Fund membership data; cashflows since the previous formal valuation; and details of investment returns.

 

The Funding position as at 30 September 2014 showed a 76% Funding Level compared with 72% at 31 March 2013; with the fall in the Fund’s deficit being primarily due to the following factors:

 

·         asset returns had been more than expected; and

·         contributions had been paid in at a level greater than the cost of benefits accruing.

 

RESOLVED - That the Funding Update as at 30 September 2014 be received and noted.

27.

Exclusion of the Public

The Chairman to move:

 

‘That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraph of Part 1 of Schedule 12A of the Local Government Act 1972 indicated below’

Minutes:

RESOLVED - That the public be excluded from the meeting for the following items of business which involve the likely disclosure of exempt information as defined in the paragraph of Part 1 of schedule 12A of the Local Government Act 1972 indicated below.

28.

Exempt minutes of the meeting held on 18 July 2014 (exemption paragraph 3)

29.

Exempt minutes of the Pensions Panel meeting held on 9 September 2014 (exemption paragraph 3)

30.

Like for Like comparison of Valuations of Pension Funds as at 2013 - Analysis (exemption paragraph 3)

Update by Douglas Green – Hymans Robertson, Actuary

31.

Monitoring of Fund Liabilities(exemption paragraph 3)

Update by Douglas Green – Hymans Robertson, Actuary

32.

Admitted Bodies (exemption paragraph 3)

Report of the Director of Finance and Resources

33.

Debt Write-off (exemption paragraph 3)

Report of the Director of Finance and Resources