ITEM PF15
PENSION FUND COMMITTEE – 21 FEBRUARY 2008
ThE Governance Compliance Statement and the Funding Strategy statement
Report by 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 complies with the statutory guidance published by the Secretary of State, and the reasons for any non compliance.
The Governance Compliance Statement
4. The Government published the draft Governance Compliance Statutory Guidance for consultation on 8 October 2007. The guidance covers the principles of good practice, and an advised format to indicate the extent of compliance.
5. The Government have not yet published the final Guidance, but under the requirements of the Regulations, the first Statement has to be published by 1 March 2008. The advice received has indicated that this first statement should be based on the draft guidance.
6. The first Governance Compliance Statement for Oxfordshire has therefore been based on the draft guidance and is included at Annex 2 (download as .doc file) to this report. The Statement identifies three areas where we are currently only partly compliant with the draft best practice guidance, and one area where we are non-compliant.
7. The three areas of partial compliance are:
· 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 colleges, the Housing Associations and the small admitted and scheduled bodies do not have direct representation it is considered that we are not fully compliant with the principle. However, to comply fully would arguably create an unwieldy Committee, so no proposal is made to change the current position. · 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 the briefing is circulated to new permanent members of the Committee, no 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 present time, whilst the pension pages on the internet provide some information on the governance arrangements, the Governance Policy itself is not readily available. This position will be amended shortly.
8. The one area where we are 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. The Committee needs to consider whether it wishes to amend the statement.
The Funding Strategy Statement
9. Under Regulation 76A of the Local Government Pension Scheme Regulations 1997, each Administering Authority must develop and maintain a Funding Strategy Statement (FSS). The FSS sets out the high level strategy the Fund is required to follow to ensure the resources are in place to meet all liabilities, whilst maintaining a near stable as possible employer contribution rate and a long term prudent view.
10. This Committee approved its first Funding Strategy Statement at its meeting in February 2005, as part of the process of agreeing the 2004 Valuation. The approved Statement is included at Annex 3 (download as .doc file) to this report. As part of the work on the 2007 Valuation, the FSS has been reviewed, and no necessary amendments have been identified. It is therefore not proposed to make any revisions to the existing Funding Strategy Statement at this time.
RECOMMENDATION
11. The Committee is RECOMMENDED to
(a) consider any changes it wishes to make to the Governance Policy Statement, and the Governance Compliance Statement as presented at Annex 1 and Annex 2 to the report and approve the Statements to be published under Regulation 73A of the Local Government Pension Scheme Regulations 1997, and
(b) note that no changes are currently proposed to the existing Funding Strategy Statement, as contained at Annex 3 to the report.
SUE SCANE Assistant Chief Executive & Chief Finance Officer Corporate Core
Background papers: Nil
Contact Officer: Sean Collins, Assistant Head of Shared Services Tel: (01865) 797190
February 208
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