To agree the minutes as a true record of the
meeting.
Minutes:
The minutes were agreed as an accurate record
of the meeting, provided that the typographical error of
‘changes’ be corrected to ‘charges’ on
point 3 of item 65/19.
3/20
DECLARATIONS OF INTEREST
Share this item
To receive
any declarations of disclosable
pecuniary interests from Members in respect of any item to be
considered at the meeting.
Notes:
·In line with the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012,
declarations may relate to the interest of the member, or the
member’s spouse or civil partner, or a person with whom the
member is living as husband or wife, or a person with whom the
member is living as if they were civil partners and the member is
aware they have the interest.
·Members need only disclose interests not currently
listed on the Register of Disclosable
Pecuniary Interests.
·Members must notify the Monitoring Officer of any
interests disclosed at the meeting so they may be added to the
Register.
·Members are reminded that they must not participate
in any item where they have a disclosable pecuniary interest.
Minutes:
There were none.
4/20
QUESTIONS AND PETITIONS
Share this item
To receive any questions or petitions.
Notes:
1. The deadline for Member’s questions
is 12.00pm four working days before the meeting (Friday
7 February 2020).
2. The deadline for public questions is seven
days before the meeting (Thursday 6 February
2020).
3. The deadline for petitions was 14 days
before the meeting, and no petitions have been received.
John Smith, Pensions Governance
and Employer Manager
Neil Mason, Strategic Finance
Manager (Pensions)
Key
points raised during the discussion:
A Member
asked for action A38/19 to be marked as ongoing rather than
complete as the Board will receive the updated report on compliance
with The Pensions Regulator’s Code of Practice in
May.
A Member
asked for action A39/19 to be marked as ongoing rather than
complete as the consultation had been extended to allow employers
more time to comment on the Draft Administration Strategy. He asked
that the item be added to the forward plan depending on when the
Board received the information from the consultation
responses.
The Head of
Pensions Administration discussed the completed action A34/19 which
was the annex on ITM’s analysis of the ‘Backlog
Healthcheck Report for the Surrey Pension Fund’. He noted the
six cases within the frozen refund population which were
approaching the five-year deadline for payment under the 2013
Regulations. He had spoken to the Pensions Operations Manager about
the risk of a technical breach of law and concluded that as long as
refunds were paid into an Escrow account the liability would be
discharged.
The
Pensions Governance and Employer Manager commented that paying
grants approaching the two year deadline into Escrow accounts would
also avoid breaches of law. Members would be provided with an
update on the matter ahead of the statutory deadline.
The
Strategic Finance Manager (Pensions) noted that he was in
consultation with lawyers on whether the Escrow account could be
administered in-house by the Orbis Pension Administration
team.
RESOLVED:
The Board reviewed its action
tracker.
Actions/further information to be provided:
Action
A38/19 will be marked as ongoing rather than complete as the update
to the Board is due in May.
Action
A39/19 will be marked as ongoing rather than complete and will be
added to the forward plan where appropriate.
Members
will be provided with an update concerning the six cases within the
frozen refund population ahead of the statutory deadline under the
2013 Regulations.
A Member
welcomed the presentation on cyber security at its last meeting in
October and reiterated that he would like the Board to annual
update on Cyber Security be added to the forward plan.
RESOLVED:
The Board reviewed its forward
plan.
Actions/further information to be provided:
The Board is to receive an
annual update on Cyber Security.
The
Chairman noted that risk A22 on the Council’s move out of
County Hall was graded Red at the last Pension Fund Committee but
had since been changed to Amber, recognising that efforts were
being made to secure accommodation for the Pensions Administration
team at a location close to County
Hall.
Responding
to a Member query, the Strategic Finance Manager (Pensions)
explained that moving the administration to a new location did not
pose any special logistical risks because it was already
ring-fenced from the other elements of Orbis. The Head of Pensions
added that it was important to house the Helpdesk and the
administration function in the same building in order to facilitate
cooperation and maintain a good working relationship.
In response
to a Member query on the timescale of the move, the Director -
Corporate Finance stated that the move was not imminent and
explained that there was an options appraisal with Property
Services later in the year to further discuss the logistics of the
move. Finalisation of which directorates were moving to the new
civic heart in Woking and those which would be dispersed around
existing sites remained outstanding.
The
Strategic Finance Manager (Pensions) discussed the review of
governance in the LGPS by the Standards and Outcomes Workstream and
the Compliance and Improvement Workstream working groups and how
the Fund was meeting the recommendations of SAB in order to develop
Phase III of the ‘Good Governance’ report which would
go to SAB next month.
To increase
accountability, the Strategic Finance Manager (Pensions) explained
that the ‘Good governance in the LGPS’ report
identified the proposal for each administering authority to have a
single named officer - ‘the LGPS senior officer’ - who
was responsible for the delivery of the pension function. That may
be a relevant senior officer with good knowledge of the pension
function and, even if it was the Section 151 officer, a change to
the constitution would be needed.
The
Strategic Finance Manager (Pensions) positively noted the
introduction of the requirement for s151 officers to carry out LGPS
relevant training which would ensure a good level of knowledge and
understanding to be passed between the Board, SAB and Pension Fund
Committee.
Discussing
the recently approved Council budget, the Strategic Finance Manager
(Pensions) emphasised that the Surrey Pension Fund budget was
ring-fenced from it. In response, the Chairman noted that it was
good practice to separate the employing authority from the
administering authority and requested that training for Members of
the Board and Fund Committee be run alongside each
other.
The
Strategic Finance Manager (Pensions) provided an update on the 2019
Valuation noting changes from 2016 to the Funding Strategy
Statement (FSS), including colleges and higher education
institutions which were adversely affected by the decrease in their
recovery periods and treated similarly to private companies. He
explained that the Pension Fund team ...
view the full minutes text for item 7/20
John Smith, Pension Governance
and Employer Manager
Anna D’Alessandro,
Director - Corporate Finance
Neil Mason, Strategic Finance
Manager (Pensions)
Key
points raised in the discussion:
The Head of
Pensions Administration emphasised the challenge in addressing the
issues realistically by balancing ongoing projects with the changes
necessary to ensure good performance. He added that small problems
had cumulative impacts on managing the backlog effectively, such as
the recent poor audit report which focused on the migration of the
integrated payroll system, the need to acquire further modules for
Altair in order to make immediate payments and the need to make
adjustments if pay increases were greater than expected. Those
difficulties were exacerbated because a key employee was on
long-term sick leave and the software supplier had been contacted
to provide specialist support.
Responding
to a Member query, the Head of Pensions Administration explained
that annual events put pressure on the Pensions Administration team
and although there were sufficient resources to manage them,
prioritisation of workstreams was crucial.
The Head of
Pensions Administration noted the error last year concerning
pensions increases, in which the letter to scheme members only
stated the percentage increase and not the difference between the
old and new pension - and the Pensions Helpdesk were not informed
of the omission. The Head of Pensions Administration and the
Pension Governance and Employer Manager stressed that more
collaborative working between the Pensions Helpdesk and Pensions
Administration team was essential and officers were seeking
assurance for this year’s exercise.
The
Director - Corporate Finance explained that Internal Audit had
completed two reviews of Pensions Administration over the last year
and were currently formulating a position statement on the service.
Progress was being made behind the scenes and a follow-up audit had
been scheduled. She noted that areas of concern had been identified
which provided clarity going forward. Governance would start to
become more joined up with a monthly project board composed of
senior officers to monitor actions from Internal Audit reports and
the Cabinet Member for Corporate Support and the Executive Director
- Resources would be cited on the performance of the Pensions
Administration.
The Head of
Pensions Administration referred to the first annex of the actions
tracker on Action A6/18 which presented a series of bar charts
illustrating progress against agreed milestones in the service
improvement plan for the first four months. He noted that the
timescales provided were ambitious such as the procurement of the
new system and its implementation later in the year.
Responding
to a Member, the Pension Governance and Employer Manager commented
that the plans would need to be flexible as it would be difficult
to obtain a temporary extension from the current supplier, Aquila
Heywood. In response to the Chairman, the Head of Pensions
Administration explained that the market had become more
competitive as a result of the new LGPS pension systems procurement
framework which was expected to be implemented shortly.
The Head of
Pensions Administration reported that the strength of integrated
modules within the Altair system was good and tightly controlled,
but there was a lack of clarity surrounding the Key Performance
Indicators (KPI) as the numbers did not add up. The KPIs needed to
be meaningful and have visibility across the service, prioritising
fundamental areas needed to deliver a good service.
The Head of
Pensions Administration noted that the KPIs must be accurate in
order to address the backlog. Other funds had similar issues, such
as in Hampshire who as a result decided to focus on the project for
a year, and the interdependence within the pensions sphere
including the TPR and TPO provided scrutiny. In response to a
Member who noted the loss of trust in pension funds, the Head of
Pensions Administration shared that concern. He stressed that the
KPIs lacked integrity and required greater consistency across key
areas to be delivered effectively by the Orbis Pensions
Administration team.
The
Director - Corporate Finance commended the new Head of Pensions
Administration as he brought realism to the role by understanding
the logical sequence of events and their timescales. He recognised
that the issues were not a quick fix and was establishing a
baseline for the service, ensuring that it would be future proofed
to address concerns by the Cabinet Member for Corporate Support on
the backlog.
In response
to the Chairman’s concern that the full extent of the backlog
surfaced last year despite the issue accumulating over a number of
years, the Head of Pensions Administration noted that it was
crucial that all relevant parties took responsibility for their own
KPIs to address the backlog.
Members
sought further clarification on how the Pensions Administration
team would ensure business as usual as well as addressing short
term priorities such as deaths, retirements, divorces and transfers
that affected people’s wellbeing. In response, the Head of
Pensions Administration explained that targets differed across
Orbis’ clients, rather than looking retrospectively the
Pensions Administration team had a forward plan on their key
priority areas and appropriate timescales. For example the
tolerable performance for death notifications was at 90% but it
should be 100%.
In order to
assess the effectiveness of the KPIs, the Strategic Finance Manager
(Pensions) reported that the Pension Fund Committee was reviewing
the governance of the Pensions Administration team focusing on the
Administration Service Improvement Plan II (SIP II) and had given
assurance to three key areas: the prioritisation of projects, the
deliverability of the timeframes for projects and the ability to
adequately contract manage external providers - at present there
would be no requests to take on new clients.
The Board is asked to
note the content of this report and the Fund Risk Register (shown
as Annex 1) and Administration Risk Register (shown as Annex 2) and
make recommendations to the Pension Fund Committee (Committee) if
required.
The
Pensions Finance Specialist reported the new risk of the management
control of backlog A23, which was currently rated Amber for both
the inherent and residual risk. In response, the Board recommended
that the inherent risk be changed to Red as ineffective management
affected the accuracy of the Key Performance Indicators
(KPIs).
Discussing
risk A1 concerning incorrect data, a Member queried the ability of
the Board and Fund Committee to ‘interrogate data to ensure
accuracy’ as they received a summary of the data. In
response, the Head of Pensions Administration suggested that
interrogate be replaced with ‘seek assurance’ in the
accuracy of analysis by ITM, and other specialist
suppliers.
RESOLVED:
The Board noted the content of
the report and the Fund and Administration Risk
Registers.
Actions/further information to be provided:
Risk A23 -
the inherent risk be changed to Red.
Risk A1 -
the wording ‘interrogate’ will be replaced with
‘seek assurance’.
The report is an abridged
version of Amanda Jupp’s monthly
bulletin, which summaries LGA bulletins and circulars published in
quarter three (Oct – Dec).
Minutes:
Witnesses:
John Smith, Pensions Governance
and Employer Manager
Nick Weaver, Head of Pensions
Administration
Key
points raised in the discussion:
The
Pensions Governance and Employer Manager highlighted the McCloud
judgement and explained that a possible remedy might include an
extension of the underpin (LGPC Bulletin 190 - October) - the Board
would receive an update on the matter in due course.
He also
noted that The Pensions Ombudsman (TPO) had upheld a complaint
against an administering authority regarding a transfer of LGPS
benefits to an occupational pension scheme in which the member was
not an ‘earner’ despite receiving and acknowledging the
‘Scorpion’ warning leaflet. The TPO instructed the
administering authority to reinstate the member’s benefits in
the LGPS, in line with its new level of due diligence as of
February 2013 (LGPC Bulletin 190 - October).
The
Pensions Governance and Employer Manager noted the LGPS (Amendment)
Regulations 2019 which introduced survivor benefits payable under
the earlier regulations for opposite-sex civil partnerships,
meaning that the male survivor of an opposite-sex civil partnership
would be treated the same as a widower in a traditional
marriage.
The Head of
Pensions Administration informed the Board of the burden on
pensions administrations to be tax collectors, noting the
requirement of administrations to pay members’ “scheme
pays” pensions annual allowance (AA) tax charges. The
Pensions Governance and Employer Manager added that there may be
amendments to the tapered annual allowance in the upcoming
Government Budget in March, which would be designed to alleviate
issues affecting certain high earners such as doctors (LGPC
Bulletin 191 - November).
RESOLVED:
The Board noted the content of
the report.
Actions/further information to be provided:
The Board will receive an
update on the possible remedy to the McCloud judgement concerning
the extension of the underpin.
The report indicates a Breach
of Law between 1 October 2019 to 31 December 2019.
Minutes:
Witnesses:
Ayaz Malik, Pensions Finance
Specialist
John Smith, Pensions Governance
and Employer Manager
Key
points raised in the discussion:
The
Pensions Finance Specialist explained that the breach of law under
regulation 64 in which an exit valuation not calculated by the
actuary within three months of the termination date of the active
member who left the scheme - the employer had not challenged the
actuary’s late exit valuation.
The
relevant employer had been informed and there was no reason that
they would not pay the cessation amount which was at the lower end
of the scale and it did not constitute a material breach due to
there not being any significant monetary implications.
Responding
to the Chairman, the Pensions Finance Specialist noted that the
amount was over £600,000 in final payments which was
insignificant to the Fund. In response to Members’ further
queries on what constituted materiality, the Pensions Governance
and Employer Manager explained that materiality depended on the
quantum of the breach and cumulative effect over time of a number
of similar cases in relation to a pension fund.
Members
requested that further information detailing what constituted
materiality be provided, to effectively consider whether the Board
would make recommendations on the matter to the Pension Fund
Committee.
RESOLVED:
The Board noted the content of
the report and would consider whether to make recommendations to
the Pension Fund Committee based on the further explanations to the
Board on what constituted materiality in the action
below.
Actions/further information to be provided:
The Strategic Finance Manager
(Pensions) will circulate formal recommendations from officers
detailing their assessment on the materiality of the breach, with
the decision to be made by the Board Members present at the
meeting.