This report updates the Committee on the Fund’s Risk Register, updating the position on risks reported to the last meeting and adding in new risks identified in the intervening period.
The Committee is RECOMMENDED to note the changes to the risk register and offer any further comments.
The Committee had before it a report (PF10) which updated the Members on the Fund’s Risk Register, setting out the position on risks reported to the last meeting and adding in new risks identified in the intervening period.
Mr Collins reported that since the risk register was last updated in March, there had been a number of significant events, including the Covid-19 pandemic, the publication of the consultation on changes to the LGPS Regulations as a consequence of the McCloud case, and the revision of the Committee’s Investment Strategy Statement including the new Climate Change Policy. The risk register had been reviewed in light of those events. One risk had been lowered, risk 2, and two increased. There were now 4 risks which required regular review, and these were set out in the report. He further reported that they had taken on the point from Local Pension Board to report the risks in future to every Board meeting.
One fourth risk scored Amber was the new risk 20 from the March register which covered the implications of the proposed new Regulations seeking to remedy the Court decisions in the age discrimination cases brought by McCloud and Sargeant. It was now known that the proposals involved bringing a wider group of scheme members within the current protection arrangements, initially only offered to those with 10 years of retirement.
The proposed changes would involve the Administering Authority having to complete 2 calculations for each scheme member to determine whether they were better off under the new 2014 CARE arrangements, or the previous final salary arrangements. The additional calculation to determine a member’s pension entitlement under the previous final salary arrangements would require data not routinely maintained on the pension’s software since the scheme changes in 2014. Whilst Oxfordshire has continued to collect this data from scheme employers since 2014, it had not been fully validated or loaded to the pension record. The data had not been provided where members had transferred into the Oxfordshire Fund since 2014.
There was therefore a significant risk that for certain scheme members, the Fund would not hold the data required to carry out the final salary pension entitlement, and/or would not be able to obtain/validate it from the scheme employer who could be outside the Oxfordshire Fund, had ceased to exist, no longer be a member of the Oxfordshire Fund, or changed their payroll provider since 2014. It was also likely that in some cases the information would need to be obtained/validated from multiple employers. There would a significant risk therefore that the required calculations will not be possible in all cases.
The second element of this risk related to the increased administrative effort required from both the scheme employers and the Administering Authority in order to meet the increased requirements. Even where it might possible to obtain the necessary data, there could be insufficient resources to complete the task. As this was a task that will impact across the whole of the LGPS, it was unlikely that there would be sufficient agency resource to fill all the gaps.
They were currently working with the Fund Actuary to identify the members who would be in scope for the extended protection, and to set up a project to load and validate the data they had already received, and to work with scheme employers and other Funds to collect the outstanding data. The Project Team would also review the resources necessary to undertake the work required and would determine whether to seek to make temporary appointments to the internal teams or seek to outsource the additional work to a 3rd party.
Another key aspect of the project would be to work with the Scheme Advisory Board on producing clear guidelines on how to calculate benefits in those cases where it was not possible to collect historic data to mitigate the risk of future claims against the Fund.
The Chairman reiterated the concerns made by Mr Collins in terms or resource and felt that there needed to be an industry response to this issue.
In relation the National Knowledge Assessment, the Committee noted that only 18 out of 99 authorities had completed the assessment.
Mr Collins reported that at the Committee briefing, the Chairman had raised a further risk to be added to the Register around the new regulations on 95 exit payment cap and the potential challenges around how they provided information to employees and scheme members. In view of that the Chairman had asked for it to be added to the Risk Register so it could be monitored.
RESOLVED: to note the changes to the risk register and offer any further comments.