ITEM PF15
PENSION
FUND COMMITTEE – 20 FEBRUARY 2004
ADMISSION
AGREEMENTS
Report
by Head of Finance
Introduction
- This report introduces
to the Committee amendments that rewrite the section of the regulations
concerning the admission of other bodies to the Oxfordshire Pension
Fund. The Committee last received a report about admission in May 2000,
when the major change of allowing private companies to join the scheme
was first permitted.
- This latest amendment
renames the bodies eligible for admission and simplifies the regulation.
- This report will
also introduce a new request for admission and report on the current
status of bodies recently applied to the Committee for approval to join.
- The Committee
is asked to note these changes do not affect admission to the fund for
Town and Parish Councils and the other scheduled bodies.
New Regulations - The
LGPS (Amendment)(No 2) Regulations 2003
- The Statutory
Instrument, effective from 1.1.2004, reorganises this portion of the
regulations to produce a more logical flow for the requirements with
which a body applying to join must fulfil. This involves separating
the different requirements for a body to apply for membership as either
a ‘community admission bodies’ or ‘transferee admission body’. There
are no significant alterations to these requirements from those mentioned
in the report of May 2000. However for the benefit of the current Committee
the following section summarises the admission criteria, incorporating
these new names.
- Community Admission Bodies
include -
A
body providing a not for profit public service, having a community of
interest with a Scheme employer or is approved by the Secretary of State.
A
body which receives contributions from a Scheme employer. Where contributions
from one or more scheme employers total less than 50% of total money
received then the Scheme employers providing the funding, have to agree
to be guarantor for any liability these regulations impose on admission
body. This is now to be part of the admission agreement.
It
is from these two categories above, that Oxfordshire most commonly receive
applications, but there are other categories. In the event of a future
application under a different category the full definition will be provided
to the Committee.
- In the past the
committee has required that the body seeking admission provide their
services mainly within the County boundary.
- Transferee Admission
Bodies –
A
body, not a Community Admission Body, providing a service for a Scheme
employer, as a result of a transfer of service or assets, or as a result
of a direction made under S 15 of Local Government Act 1999 or directions
under s 497A of the Education Act 1996, or provides a public service
approved by the Secretary of State for the purposes of admission to
the Scheme.
For
an admission to continue from these bodies, the scheme employer determines
the level of risk it is prepared to accept and because of early termination
of the contract due to insolvency or the winding up of the body. Where
identified this risk must be covered by a bond or indemnity taken out
by the transferee admission body with a provider approved under the
regulations. The regulations now specify which body has to obtain the
risk assessment and the guidance accompanying the regulation gives employers
flexibility about the level of risk the new body will be expected to
cover through the bond.
- When a transferee
admission body has followed the procedure, and has a bond or indemnity
in place, Oxfordshire must admit to the Scheme employees shown to be
employed in connection with the transferred service.
Issues arising from the
amending Regulations
- There are not
significant changes to the current process for seeking admission to
the fund, other than bringing the paperwork in line with these regulation
changes. The draft admission agreement will need to be reviewed to ensure
that all clauses reflect the change of terminology.
- When the regulations
were issued a guidance note to cover the procedure for transferring
staff accompanied them. This guidance covers the statement of practice
on Staff Transfers, A Fair Deal For Staff Pensions, and recommends two
permissible ways for pension protection, either by seeking admitted
body status with the LGPS or as a transfer to a broadly comparable scheme.
Following the second route requires having bulk transfer terms to provide
day for day transfers to the new scheme. To date no employer within
the Oxfordshire Fund has followed this path. This would involve additional
administration within the pension section and liaison with the employer.
- Copies of this
guidance have been sent to Personnel and the Procurement sections, as
the pensions aspect is only one element within the whole process. The
Office of the Deputy Prime Minister circulates statutory instruments
to District Councils, who should now be aware of these guidelines.
New Application Community
Admission Charter Community Housing
- Cherwell District
Council has balloted tenants and the transfer of its housing stock is
to take place in March 2004.There are likely to be 90 staff transferring
to the new body and the majority are in the Local Government Pension
Scheme (LGPS). New employees joining the Company will also be offered
access to the LGPS.
- The actuary is
currently dealing with the request to determine the future employer’s
contribution rate and the cost to the District Council, as a result
of the transfer, of the past service shortfall.
- The District Council
wished to bring this application to the Committee for an agreement in
principle to join the LGPS in advance of the transfer date to ensure
that the admission agreement could be drawn up to enable the legal collection
of contributions from the date of transfer. An agreement in principle
will also provide reassurance for staff involved with the transfer.
- Charter Community
Housing will be providing a non-profit making public service and will
have close links with Cherwell District Council. With the transfer of
the Housing stock there will a continued community of interest between
the two bodies and an interdependency of operations. Although not a
statutory requirement for this kind of transfer, Cherwell District Council
are also investigating the costs for an indemnity bond, as described
in paragraph 8 above to provide additional protection against increases
to their contribution rate in the event of commercial failure of the
new body.
- The transfer arrangement
does not have an expected termination date, which is one of the main
differences between these applications and the best value transfers.
- The District Council
and the Charter Housing Association have been informed of the responsibilities
the new employer will have to accept, including the regular review and
publication of its use of discretionary powers. These requirements will
all be included in the admission agreement, and as stated above should
be drawn up before the transfer date.
- This Committee
has previously accepted the West Oxfordshire Housing and Vale Housing
Association as an admitted body following a similar transfer.
Other Admitted Body
Matters
- This committee
has previously given approval for Elmore Community Services to update
their admission agreement, and for Oxford Night Shelter to become a
new employer within this fund. These agreements are now signed and completed.
- The Head of Finance
may wish to report orally on late payment of contributions by a current
admitted body.
RECOMMENDATIONS:
- The Committee
is RECOMMENDED to:
- approve
the application of Charter Community Housing Association subject
to all parties agreeing to the terms of the admission;
- note
the changes to the regulations and confirm that applications
from Community Admission bodies should provide their service
within the County Boundaries; and
- note
the information about the signing of the agreements for the
Oxford Night Shelter and Elmore Community Services.
C
GRAY
Head of Finance
Background
papers: SI2003 No.3004 and Admission Agreements
Contact
Officer: Sally Fox, Pensions Services Manager. Tel. 01865 816080
February
2004
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