To agree the minutes as a true record of the
meeting.
Minutes:
The minutes were agreed as an accurate record
of the meeting.
28/17
DECLARATIONS OF INTEREST
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To receive any interests from
members of the Board in respect of any item to be considered at the
meeting.
Minutes:
David Stewart asked that it be noted that he
was employed by Hammersmith and Fullham, an authority whose pension administration
is provided by Surrey County Council as part of the Orbis partnership. He would be leaving this role on
28 July 2017.
29/17
QUESTIONS AND PETITIONS
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To receive any questions or petitions.
Notes:
1. The deadline for Member’s questions
is 12.00pm four working days before the meeting (21 July 2017).
2. The deadline for public questions is seven
days before the meeting (20 July 2017)
3. The deadline for petitions was 14 days
before the meeting, and no petitions have been received.
The Board is asked to note the
contents of this report and the verbal update at the meeting.
Minutes:
Declarations of interest:
None
Witnesses:
Jason Bailey, Pensions
Lead Manager
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board
was provided with a verbal update on the Surrey Pension Fund
Committee meeting on 2 June 2017. Officers highlighted that the
management and investment performance was considered, and had
discussed how the improved funding level should be reflected in the
asset balance of the fund. Officers were working with Mercers to
analyse the options for changes in asset allocation, and would
report back to the Committee at its September meeting. It was
anticipated that any change would occur before the end of the
year.
The
Committee had considered the Board report on environmental, social
and governance considerations, and accepted the recommendations the
Board had made. This would be followed
up through the Board’s forward work plan.
The
Committee had extended the current actuarial contract, as the
tender through the Croydon framework had no longer been viable. A
further tendering process would be undertaken through the Norfolk
framework. The Board clarified that the tender would be for 2
valuation cycles.
The Board is asked to note the
content of this report.
The Board is invited to consider rating of internal audit recommendations as they
apply to the Pension Fund and the appropriateness of additional
actions identified to be recommended to the Pension
Fund Committee and agree the final form of a Local Pension Board
Progress Report
The Board recommends that the
pension administration team produce a further update report for the
next Local Pension Board meeting.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Siva Sanmugarajah, Lead Auditor, Internal
Audit
Key
points raised during the discussion:
Officers outlined the
annexes provided, and explained the context of the internal audit
report. It was highlighted that there was a distinction between the
sovereignty of the Fund and that of Orbis as a service provider, and that the progress
report was intended to reflect the Board’s areas of concern.
Officers also asked that the Board note that the administration
strategy and risk register, both of which were in development,
would clarify roles and responsibilities in respect to Orbis and the Fund.
The Board was
informed that Internal Audit would be reviewing Orbis’ response to the recommendations,
before a formal follow up audit was conducted in quarter four
2017/18. It was also noted that the Surrey Pension Fund Committee
would consider the Board’s review on 15 September 2017, and
the Surrey County Council Audit and Governance Committee would
receive a progress report on 27 September 2017. Board members
expressed some concern as to the duplication of process, and it was
clarified that the Pension Fund Committee had asked the Board to
review and lead with monitoring progress and responses from
Orbis on behalf of the
Fund.
The Board expressed
concern that it had frequently highlighted performance issues over
the past 18 months, and had received assurances that there would be
improvements. The internal audit report was highlighted as evidence
that there were continued challenges in delivering sustained
improvement.
The Board noted that
it had previously requested that any new business Orbis sought should be assessed on the basis of
risk to current service delivery. The Chairman highlighted that he
was to be informed if any new business was being tendered for, and
advised of what impact this was likely to have.
The Board questioned
whether officers were confident that staff increases were
sufficient to address identified backlogs. It was confirmed that
there was an increase of 4-5 Full-Time Equivalents (FTE) in the
team, and that this would be a short term measure to deliver the
improvement work. Officers highlighted that the internal audit
activity had been conducted through late 2016-17. It was also noted
that the impact on benchmarking data would be seen in the 2017/18
figures.
The Board queried
what additional management capacity had been created to respond to
the report’s recommendations. Officers highlighted that an
operations manager had been assigned from another area of
Orbis to review performance. It was
also the case that additional executive support was being recruited
to enable project oversight during a six month period.
The Board commented
that it did not have a sense of the project plan, current backlogs,
proposed changes or timescales for improvement. It was reflected
that this made it difficult to assess the extent to which the
service had responded to the internal audit recommendations.
Officers agreed to circulate an improvement plan, and noted that
backlog ...
view the full minutes text for item 31/17
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Jasmine Jaffar, Performance Officer, Business
Services
Key
points raised during the discussion:
1.The Board noted that the complaints data had been
collected from April 2017. Officers outlined the work undertaken to
stream-line processes and how complaints data was collected and
recorded. The Board noted the low number of complaints, and it was
highlighted that this would likely increase as the service became
more focussed on collecting this data as a priority. It was also
noted that the 2nd quarter would show improvements in
response dates.
2.It was clarified that complaints were recorded where
timescales had not been met. The Board commented that transfer in
and out complaints seemed low when compared to performance in this
area. Officers agreed to record data on members contacts where
there were queries about transfer progress.
3.The Board queried what data was captured regarding
employer complaints. It was highlighted that these were frequently
handled through HR partnership forums, though officers confirmed
they were happy to log any relevant complaints in future
reports.
Actions/ further information to be provided:
None.
Recommendations:
That future reports include
employer complaints and member queries related to the progress of
transfers in and out.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board
noted that additional Key Performance Indicators (KPIs) requested
at the last meeting regarding transfers in and new joiners would be
reported from quarter one 2017/18. Officers commented that they
would expect to see the KPI related to new joiners receiving
information at 100% as there was a new bulk mailing process in
place. The Board was informed that transfers in were frequently
delayed because information was often provided late by the outgoing
scheme. It had been agreed that new members need to be kept
informed of progress, and that a procedure for this had been
subsequently introduced.
The Board
queried what actions had been taken in response to the decline in
performance related to retirements. Officers confirmed that the
team had revised its way of monitoring and allocating cases, and it
was expected that an improvement would be seen in quarter two
2017/18. It was highlighted that quarter one 2017/18 would see an
increase in the number of retirements, which was reflective of
recent care home closures in Surrey.
The Board
was informed that the process for employers notifying member
retirement had changed, and that there was now a requirement for
them to provide an advanced notification form. This process was
working well with employers and it was anticipated would have a
subsequent impact on the relevant KPIs.
The Board
noted there had been no breach of statutory limits in respect to
pension administration.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board
was informed that data quality was considered one of the primary
risks to local government pension schemes. It was in response to a
requirement of the Pensions Regulator that the quality assurance
work was being undertaken.
It was
noted that the Fund actuary, as part of the triennial valuation,
assesses the quality of scheme data. The assessment from the recent
valuation was that data quality was good for the Surrey Fund.
Officers commented that Hymans were planning to benchmark data
quality for the funds it worked with in the future.
Officers
highlighted that the administration software supplier (Heywood) are
to produce a report assessing the
quality of common and conditional data held by the
fund.
The Board
was informed that a global address screening programme had been
tendered, with final checks on the provider underway. The Board
questioned how more detailed investigations would be conducted
where required. Officers commented that this would be evaluated
following the results of the global exercise, though any activity
would be targeted to prioritise those about to retire or whose
benefits were due.
The Board
queried the reconciliation rate for employee contribution rates,
and whether a 2% threshold was a cause for concern.
Actions/ further information to be provided:
Additional information on how
the reconciliation rate for employee contributions for 2015/16
provided in the Fund accounts compares to other pension
funds.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board was
informed that there were no new risks identified since the risk
register was last reviewed. It was noted that the scoring remained
unchanged in some instances where the action identified was to
“treat” the risk.
Actions/ further information to be provided:
Officers to review impact on
risk scores where the action to treat the risk has been
taken.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board
reviewed its proposed response to the Scheme Advisory Board survey.
Board members suggested a few amendments, which were agreed. A
query was raised regarding the indemnity and insurance arrangements
for individual Board members. It was highlighted that this had been
confirmed previously with Surrey County Council.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board was
informed that the administration strategy would serve to formalise
much of the work delivered by the Pension Service, and was driven
in part by the growing number of employers in the Fund. It was
highlighted that customers in the context of the strategy meant
both employers and members.
The Board was
informed that the administration strategy would set out the
regulatory requirements, and support improved understanding of
employer obligations. It would also define what would be considered
activity outside of the Fund’s administration cost allowance
for each employer, and enable officers to review where
supplementary charges should be made. Officers outlined the
approach and timescale for consultation, with implementation
planned for the beginning of 2018.
The Board discussed
the approach to consultation, and was advised that this was
intended to encourage closer collaboration between employers and
the Fund administration. It was highlighted that smaller employers
often did not have dedicated pension liaison resource, and the
strategy should serve to clarify their statutory obligations in
respect to the scheme.
The Board expressed
the view that the strategy should set out core principles alongside
an annex outlining the key performance indicators, in order to
enable these to change as required. It was noted that the
expectations set out in respect to performance should also make
explicit what control mechanisms were in place where these were not
met.
Actions/ further information to be provided:
The Board to review the draft
strategy at its meeting in October 2017.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key points raised
during the discussion:
1.
The Board was informed that the risk register would serve to
formally identify and evaluate risk in relation to pension
administration. It was confirmed that a draft would be presented to
the Local Pension Board meeting in October 2017. Officers commented
that the first workshop with Pension Services staff had been useful
in capturing areas of concern.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board
was informed that the service specification would formalise the
operations of the Pension Service. It was noted that it would be
similar to the service specifications that Orbis has with commercial partners, and would work
in conjunction with the administration strategy and risk register
to support the activity of the Board and Committee.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Chairman
introduced the item by highlighting that it had been included on
the agenda at his request. It was noted that the private sector had
made progress in reconciling Guaranteed Minimum Pension (GMP)
liabilities, however local government pension schemes had possibly
been slower in tackling this area.
The Board was given a
summary of the issue, which had arisen following the ending of
State Second Pension provision, leading to the closure of the HMRC
GMP reconciliation services and the consequent need for pension
funds to agree a final GMP liability with HMRC and take future
responsibility for these member benefits. The Board was informed
that inconsistent record keeping by HMRC and many pension providers
made this a challenging area, and that there was a requirement to
complete the reconciliation by December 2018.
Officers confirmed
that ITM had been tendered to carry out the initial work on the
behalf of the Fund, commencing from the beginning of August 2017.
The outputs of the investigation would be shared with Board, and
further actions confirmed.
The Board commented
that the reconciliation could disadvantage some member benefits,
and it was queried whether specific guidance would be produced in
respect to how the Fund would rectify over-payments. Officers
reflected that the Committee and Board would need to take a view as
to what would be acceptable once the extent of the issue was
known.
The Board was
informed that the key areas of discrepancy were where pension
liability had been transferred between funds, short periods of
service where a member returned to a state second pension , or
where increases had been miscalculated. The Board explored the
issues related to increases, and it was highlighted that the
relationship between the local government pension scheme and GMP
increases were complex and there had been instances where
overpayments had been calculated due to poor record keeping by
HMRC.
The Board commented
that there was a need for pre-emptive communication to members, and
given the complexity of the issues it could be expected that there
would be some challenging conversations where individual members
were required to make repayments.
Actions/ further information to be provided:
An update following the ITM
activity to be reported to the Board in October 2017.
Neil Mason, Senior
Advisor (Pension Fund), Pensions and Treasury
Key
points raised during the discussion:
The Board reviewed
the action tracker. It was confirmed that a visit to Pension
Services would be organised for October.
The Board was
informed that annual benefits statements were on track to be issued
for 31 August 2017 deadline. Details were provided regarding the
move to electronic statements for active members. It was confirmed
that deferred members would receive paper statements along with
details of the planned transfer to digital for the next
year.
Actions/ further information to be provided:
None.
Recommendations:
None.
43/17
DATE OF THE NEXT MEETING
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Minutes:
It was noted that the next meeting of the
Board was 12 October 2017 at 1pm.