Agenda and minutes

Pensions Committee - Friday 18th March 2016 10:00am

Venue: Oak Room, County Buildings, Stafford

Contact: Michael Bradbury 

Items
No. Item

34.

Minutes of the meeting held on 15 February 2016 pdf icon PDF 141 KB

Minutes:

The Director of Finance and Resources reported that following the special meeting of the Committee on 15 February 2016, which approved the draft Staffordshire Pension Fund’s initial proposal to DCLG which confirmed the Fund’s commitment to the  pooling agenda through the creation and development of LGPS Central, the proposal was submitted to the Department by their deadline of 19 February.  He added that it was believed that a total of eight proposals for “Pools” had been submitted to DCLG.  The Director also indicated that a further Special Meeting of the Committee had provisionally been arranged for 18 April to give Members an update on the current position.

 

RESOLVED – That the minutes of the meeting held on 15 February 2016 be confirmed and signed by the Chairman.

35.

Minutes of the meeting of the Pensions Panel held on 9 March 2016

Minutes:

RESOLVED – That the minutes of the meeting of the Pensions Panel held on 9 March 2016 be noted.

36.

Staffordshire Pension Fund Audit Plan 2015/16 pdf icon PDF 194 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Director of Finance and Resources submitted the proposed Audit Plan for the audit of the Pension Fund 2015/16 by Ernst and Young who had replaced Price Waterhouse Cooper as the County Council’s auditors. 

 

The Committee considered the Audit Plan which detailed how Ernst and Young intended to carry out their responsibilities as auditors. As this was the first year that the company would be the County Council’s external auditor, the Audit Plan was a preliminary assessment of the key issues which they believed would affect the audit.  The work the Auditors intended to undertake would provide the Fund with the following:

 

·         The Auditor’s opinion on whether the financial statements of the Staffordshire Pension Fund gave a true and fair view of the financial position as at 31 March 2016 and of the income and expenditure for the year; and

 

·         The Auditor’s opinion on the consistency of the pension fund financial statements within the pension fund annual report with the pension fund financial statements.

 

It was noted that although the Fund was audited as part of the County Council’s accounts, Ernst and Young would issue a separate opinion on the Fund and produce a Fund specific Audit Findings Report. This would be reported to both the Pensions Committee and the Audit Committee.

 

RESOLVED – That the external auditor’s plan for the audit of the Staffordshire Pension Fund (the Fund) for the 2015/16 financial year be noted.

37.

Pensions Business Plan 2016/17 pdf icon PDF 235 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Director of Finance and Resources presented the Pensions Business Plan 2016-17 and explained the key issues to be faced in the coming year which included:

 

·         The Triennial Valuation.

 

·         Implement I-Connect software with Fund Employers.

 

·         Implement Phase 3 pension payroll integration

 

·         Reconciliation of HMRC contracted out details.

 

·         Responding to the DCLG consultation on LGPS Pooling and setting up an appropriate pooling structure with LGPS colleagues.

 

The Committee also received an update on progress against the 2015-16 plan and noted that significant successes had been achieved in a number of areas including:

 

·         Establishment of Local Pension Board.

 

·         2015 Fire Fighters CARE Scheme implemented.

 

·         Retained Customer Service Excellence.

 

  • A review of the Fund’s passive investment arrangements which resulted in significant fee savings.

 

  • Collaboration and preliminary work with LGPS colleagues with a view to forming ‘LGPS Central’.

 

 

The Director also informed the Committee about some of the administrative difficulties which may be encountered where an academy or school choose to use a different payroll provider than the one used by the County Council or Entrust in the future.  Mr Dudson suggested that the Fund should seek reimbursement of those additional administrative costs from the academy concerned.  Mr Davis asked that a report on the issue of the potential for additional administrative costs be brought to a future meeting of the Committee.

 

Mr Marshall expressed the view that the Investment Management Fees were too high.  In response, the Director of Finance and Resources indicated that the fees were normally made up of two components - a fee in relation to the amount of assets under management (AUM); and a fee to reflect the level of manager performance.  The Director also added that under the Governments proposed arrangements for asset pooling, it was hoped that the fees paid to Investment Managers would be reduced due to economies of scale.

 

RESOLVED – That the Pensions Business Plan 2016-17 be approved and the key challenges which might affect performance be noted.

38.

Consultation on Reforms to Public Sector Exit Payments pdf icon PDF 238 KB

Report of the Director of Finance and Resources

Minutes:

The Committee received a report of the Director of Finance and Resources concerning a recent Government consultation on a proposed revision to exit payments to reduce the cost of redundancy and ensure greater consistency across the public sector.

 

They were informed that one area of the current consultation had a direct impact on the public service pension schemes. Currently the Local Government Pension Scheme (LGPS) Regulations award an immediate unreduced benefit to a scheme member who is age 55 or over when that person is made redundant. The cost of paying an early unreduced benefit (actuarial strain) fell to the employer. The new £95,000 cap on exit payments would already limit the contribution that an employer could make towards the actuarial strain payment. These additional proposals further limited the contribution that could be made by an employer by applying one or more of a range of the following restrictions:

 

(i)          Limit the employer funded top-up to no more than the value of the redundancy lump sum that otherwise might be payable, or

 

(ii)        Prohibit employer funded top-ups entirely, while giving the option for the individual to decide whether to use any lump sum exit payment (assumed to mean the redundancy payment) to increase their pension entitlement, or

 

(iii)       Change the age at which individuals would be able to have early access to an employer funded pension top-up as part of an exit package to 5 years before the person’s Normal Pension Age (NPA) in the scheme under which they are currently accruing pension benefits (now age 67 or 68 in most cases), or

 

(iv)       Stipulate a minimum age, such as 55 or 58, across all schemes for an individual to be eligible for an employer funded top-up payment.

 

The Committee considered a number of areas of concern which would need to be addressed in the response to the Government’s consultation.  They also noted that:

 

·         It would seem sensible for the government to set a minimum age across all public sector schemes for the early payment of pension benefits.  It was suggested that the Staffordshire Fund’s response should propose that age 55 should be retained at the moment, but be subject to a further review in say 5 years.

 

·         Last year the government introduced Freedom and Choice in Pensions and the change to the minimum age would have a knock on effect of when a member could receive benefits from a pension arrangement without incurring tax charges.

 

·         The regulations should be flexible enough for the employer to pay in full or in part the cost of the actuarial strain as this enabled an employer to manage its workforce. The employer could then decide whether they wanted the cost  to be neutral to them.

 

·         The LGPS regulations should be amended so that an employee being made redundant was not forced to take immediate reduced benefits. This would put members on an equal footing with those members who retired voluntarily.

 

·         The regulations should be sufficiently flexible to allow the member to pay for  ...  view the full minutes text for item 38.

39.

Pensions Administration - Pensions Forum pdf icon PDF 196 KB

Report of the Director of Finance and Resources

Additional documents:

Minutes:

The Committee received a report of the Director of Finance and Resources concerning the response to the request for nominations for co-opted members to the Committee to represent the Pensions Forum.

 

At their meeting on 18 December 2015, the Committee approved a proposal that one of the co-opted member seats on the Committee currently allocated to the “Trades Union Representatives” be allocated instead to the “Education Sector Representative”.  The Director of Finance and resources indicated that, following that meeting, a letter was sent to all forum members inviting nominations for the four vacant positions on the Committee.  Two nominations were received during January and February in respect of the Other Scheduled Employers representative (the Town and Parish Councils group) and a ballot would now therefore be conducted to select one of these two nominees.  No nominations were received for the other three groups and it was therefore proposed that a further letter be sent to the forum members reminding them of the importance of this role.

 

The Committee indicated their support for the proposal to send a further letter to forum members and resolved to review the position at their meeting scheduled to be held on 9 December 2016.

 

The Director also informed the Committee that an invitation to replace the retired member representative was extended in the newsletter sent to the Fund’s retired members and so far there had been two expressions of interest.  As the Committee was responsible for making this appointment, interviews will be arranged for the appointment during the next couple of months.

 

The Committee also noted that following the Staffordshire UNISON Annual General Meeting at the end of February, the Trades Union representative on the Forum would now be the new UNISON Branch Chairman, Hilary Mellor.

 

RESOLVED – (a) That the response to the request for nominations for co-opted members to the Committee to represent the Pensions Forum be noted.

 

(b) That the Director of Finance and Resources be requested to send a further letter to the forum members reminding them of the importance of this role.

 

(c) That the position be reviewed at the Committee’s meeting on 9 December 2016.

40.

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 paragraphs 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 paragraphs of Part 1 of schedule 12A of the Local Government Act 1972 indicated below

 

The Committee then proceeded to consider reports on the following issues:

 

41.

Exempt minutes of the meeting held on 15 February 2016

(Exemption paragraph 3)

42.

Exempt minutes of the meeting of the Pensions Panel held on 9 March 2016

(Exemption paragraph 3)

43.

Pensions Administration - Admitted Bodies

(Exemption paragraph 3)

 

Report of the Director of Finance and Resources

44.

LGPS Regulations Administration - Debt Write-off

(Exemption paragraph 3)

 

Report of the Director of Finance and Resources

45.

2016 Valuation

(Exemption paragraph 3)

 

Presentations by Hyman’s Robertson