Agenda item

This report (LPB8) is the latest in the series of reports to the Pension Fund Committee and this Board on the Fund’s approach to employer management.  In particular, it covers the latest position in respect of our regulatory requirement to issue annual benefit statements to all active and deferred scheme members by 31 August 2017.

The Board welcomed Sally Fox, Pensions Manager, who gave an update on where she envisaged the Team would be by the end of August in relation to the despatch of Annual Benefit Statements. She reported that currently returns had been received from 159 employers and 25 were still outstanding. Of these 145 had been cleared and had balanced, and 126 had subsequently been loaded on the system. 68 employers had ready to run statements. The pensions Regulator had been updated that week.

She reported that work had been undertaken to identify errors much earlier in the process than last year. The principle issues outlined were as follows:

·         Employers were giving unclear information where it concerned people with multiple jobs. This required undertaking a ‘matching up’ process which was difficult and labour intensive. However, progress was being made;

·         Outsourcing was also a problem when parts of a company were situated in different areas, in that data could sometimes not be matched, the problem being that multiple jobs had not been correctly identified and data was thus crossing over jobs;

·         The payroll for the Academies was taking a long time to resolve;

·         There was more concern around those larger employers who had not yet made a return.

Sean Collins reported that the Regulator was moving towards, and would be imposing this year, an approach which was more fines based. This could mean that the Fund could be liable if the Pensions Team had not shown that it had followed up properly with employers.

The Board asked what proportion of statements would be sent by 31 August and how could the Board assist. Sally Fox responded that all depended upon employers answering the Team’s queries and on them giving the correct information. She added that she was confident that the Team would beat the 50% figure issued last year by 31 August, it would prove a challenge to be much higher than 75%. The Team had been working with UNISON on this issue and employers had been reminded that training was available to assist them. Mark Spilsbury added that Gloucestershire was in a similar position and had scaled up their resources to concentrate on the Annual Benefit Statements over the last 2 years, with the result that most were going out within the deadline. However, this had been at a cost to other Performance Indicators. His Committee had accepted that the Pensions Team were making progress.

A member of the Board made reference to the use made by other Pension Funds to the ‘I Connect’ system, which appeared to reduce the workload in respect of the validation process. Sally Fox responded that whilst she accepted that the validation process was automated, this did not change the fundamental problem which was that data had to be correct and vetted, and if it was incorrect it would be returned. The key focus had to be therefore in ensuring that the submission from employers, whether manual or electronic, was completed in a timely and accurate way.

A member of the Board questioned whether it was possible for data to be simplified to give only one payment reference for employees with more than one job. Sally Fox clarified that under the Regulations, each job had to be treated as a separate employment for pension purposes, with the scheme member entitled to opt out of the pension scheme in respect of one or more jobs, and potentially to receive payment of pension at different times if employment in the separate jobs did not end simultaneously. For that reason, data for each job did need to be clearly identified so that the separate records could be maintained.

A member reported that the Pension Regulator was trying to set up a data template which would be vaguely consistent across all funds. Sally Fox pointed out that each authority in England and Wales had its own discretionary policies which inevitably produced different data requirements.  Sean Collins added also that problems with data and its standardisation was a national problem and that a sub-committee of the Scheme Advisory Board had begun to hold discussions around this.

The Board re-affirmed its previous decision to call in particular employers in order to learn and understand the problems encountered from their perspective, together with their successes; and what could be changed by the Committee, or by recommendation to the Government.

In response to a query about whether there were sufficient resources within the Pensions Team to undertake this, Sean Collins explained that there was a need to ensure that staff were recruited and trained, and then retained, to enable the Team to solve and manage issues going forward.  The recent new office base in the Oxford Business Park had improved staff retention and had given the Team a stable base. The Committee had also agreed to procure additional resources under the LGPS Procurement Frameworks to address some of the issues associated with the current backlog of work/queries.

The Board AGREED that the letter to employees explaining why their annual benefit statement was late, as agreed at the previous meeting, be copied to the Trade Unions; and to include within the letter some advice that, if appropriate, to go to their Trade Union representative if they were concerned. Sean Collins undertook to alert employers prior to the letter being despatched.