ITEM PF19
PENSION FUND COMMITTEE – 28 MAY 2008
ThE Governance Compliance Statement
Report by the Assistant Chief Executive & Chief Finance Officer
Introduction
1. Since 1 April 2006, all Administering Authorities for the Local Government Pension Scheme (LGPS) were required to publish a Governance Statement setting out the detailed arrangements for governance and stewardship. Statements were required to cover how the Administering Authority delegated its powers, the frequency of meetings, the terms of reference, structure and operating procedures in relation to the use of delegated powers, and the representation of scheme employers, and members within the arrangements.
2. This Committee considered and approved its first Governance Policy Statement at its February 2006 Committee Meeting. A copy of the approved statement is included at Annex 1 (download as .doc file) to this report.
3. In June 2007, the Local Government Pension Scheme Regulations 1997 were further amended to require, under regulation 73A (1)(c), each Administering Authority to publish a Governance Compliance Statement. This Statement is required to set out the extent to which its Governance Policy compliances with the statutory guidance published by the Secretary of State, and the reasons for any non compliance.
4. This Committee considered the first Governance Compliance Statement for Oxfordshire at its last meeting. The Statement identified three areas where the Authority is currently only partly compliant with the draft best practice guidance, and one area where it is non-compliant.
5. The three areas of partial compliance were:
· Committee representation. The Committee includes representatives from the City and District Councils, and the Beneficiaries Observer to represent scheme members (including deferred and current pensioners). Best practice suggests all key stakeholders should have representation within the main and secondary committees and panels. As Brookes University, the other educational establishments within the Fund, the Housing Associations and the small admitted and scheduled bodies do not have direct representation it is felt that we are not fully compliant with the principle. · Roles and responsibilities. Under best practice, there is a clear onus on the administering authority to ensure all committee members are fully aware of their role and responsibilities. Whilst initial briefings were provided to the Committee following the last Council elections, and updates have been provided since for new members on the Committee, no specific briefings are provided for substitute members, leaving a risk that these substitute members are not fully aware of their role and responsibilities. · Publicity. The best practice guidance indicates that the administering authority should publicise the governance arrangements in such a way to encourage engagement from stakeholders. At the time of the last report, whilst the pension pages on the internet provide some information on the governance arrangements, the Governance Policy itself was not readily available.
6. The one area where the Authority is currently deemed to be non-compliant is in terms of a clear policy on voting rights. Although the Governance Policy Statement makes clear our policy on voting rights, it does not provide a justification for not extending voting rights to the Beneficiaries Observer.
7. The Committee asked for an update and further information to this meeting on the areas of non-compliance.
The Areas of Non or Partial Compliance
8. The issue of Committee representation is one of balance with no right answer. Annex 3 (download as .xls file) to this report sets out some of the information on key stakeholders in terms of membership numbers, and the percentage of the Fund this represents, both in respect of total membership and current active membership.
9. The figures show that the County Council represents 63% of the total Fund membership, and 67% of the active membership. This compares to 78% of the voting positions on the current Committee.
10. The next biggest group comprises the City and District Councils which comprise 19% of total, and 16% of active membership. The two seats on the Committee filled by District Council representatives form the other 22% of the Committee Membership.
11. The biggest group of stakeholders not represented on the Committee is the Education sector, which forms 10% of total and 11% of active membership. Within these figures, Oxford Brookes University is the 3rd biggest employer in the Fund, behind the County and City Councils.
12. The Housing bodies represent 2% of scheme membership, and the Town and Parish Councils represent a further 1% of membership. The final 5% of total membership and 3% of active membership comprises a number of miscellaneous bodies. The two bodies within this with over 1% of the total membership are the Thames Valley Magistrates Services (no actives), and the Order of St John’s Trust.
13. The Committee needs to consider whether the current Committee representation adequately covers all significant stakeholders, or whether any changes should be proposed. Any changes would need to be determined by the full Council. In particular, this Committee needs to consider whether representation should be offered to Oxford Brookes University (as the 3rd largest scheme member, and as representative of the education sector), either by way of an additional seat, or in place of one of the existing seats held by a representative of the County Council. It is arguable that with such a change, the Fund would become compliant with the Best Practice guidelines.
14. In terms of roles and responsibilities, the issue of non-compliance relates to the current arrangements which allow the County Council representatives on the Committee to arrange a substitute member to cover for them at Committee in their absence. Whilst training and briefings on roles and responsibilities is available to all permanent members of the Committee, there is currently no requirement that any substitute member will have undergone any training. The Committee needs to consider whether it wishes to recommend Council to place any restrictions on substitute arrangements, in order to move to a position of compliance on this issue.
15. The rating of non-compliance in respect of publicity reflected the absence of the Governance Statement itself on the public internet site. At the time of writing this report, this issue was being addressed, and the compliance statement has been amended accordingly.
16. The area of non-compliance reflected the absence of a clear statement as to why the beneficiaries’ observer was not given voting rights on the Committee. This issue is complicated in that the current observer is a member of staff of the County Council and is therefore prohibited by law from being a member of a Committee of the Council. By granting voting rights to the Beneficiaries’ Observer, there is a danger that a bias against County Council current employees is introduced.
17. The Committee needs to determine whether it would wish to recommend Council to amend the status of the Beneficiaries’ Observer to a voting member, with the risk of bias against County Council employees that would entail, or whether it wishes to maintain the current arrangements. In the event that the Committee wishes to maintain the current position, it needs to be clear as to reasons, thereby allowing these to be recorded within the Governance Statement, ensuring compliance with best practice.
RECOMMENDATION
18. The Committee is RECOMMENDED to
(a) consider any changes it wishes to recommend to Council in respect of the membership, substitutions and voting rights of the current Pension Fund Committee; (b) consider any changes it wishes to make to the Governance Policy Statement in respect of the voting rights of the Beneficiaries Observer; and
(c) agree the revised Governance Compliance Statement as presented at Annex 2 (download as .doc file) to this report, and as amended in line with any changes agreed at (a) or (b) above, for submission to the Department for Communities and Local Government.
SUE SCANE Assistant Chief Executive & Chief Finance Officer
Background papers: Nil
Contact Officer: Sean Collins, Assistant Head of Shared Services Tel: (01865) 797190
May 2008
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