Agenda item
DISCUSSION AND PRESENTATION FROM THE PENSIONS REGULATOR (TPR)
- Meeting of Pension Board, Monday, 12th March, 2018 10.00 a.m. (Item 7.)
- View the background to item 7.
Minutes:
The Board received a presentation from Rebecca Woodley, Industry Liaison Manager and Andrew Burton, Industry Liaison, The Pensions Regulator. The Pensions Regulator (TPR) regulates the governance and administration of public service pensions schemes, which provide pensions for civil servants, the judiciary, public sector workers, members of the police forces and members of the armed forces. In total 37% of the Pensions Regulator membership comprises of LGPS Scheme.
The TPR regulate compliance with the Governance and Administration. Requirements which were introduced by the Public Service Pensions Act 2013.Their Code of Practise sets out the standards of conduct and practice which members are expected to adhere to. The Regulator mainly engages with scheme managers and Pensions Boards and focuses on investment governance and uses there educate, enable and enforce regulatory approach to help schemes comply and address key issues. The Board during a question and answer session noted the following.
· TPR 2016 Survey response rate was good and that the overall response had improved when compared to the previous year.
· That one of the main focus for the TPR for 2017/18 was looking at locally-administered schemes, record-keeping and data quality. The Pensions Board noted that they their Chair was invited to attend the Pensions Committee and that they could refer matters onto the Committee. The Board noted that the above arrangement was not replicated in other Local Authorities.
· That the Board had requested Indemnity Insurance. Ms Woodley advised that the Local Government Association had raised the issue about Indemnity and commented that she was of the view that Pensions Boards did not need to have a separate Insurance and that the overall responsibility for schemes did not rest on the Boards. The Board held a short discussion about Indemnity and noted that they had a legal requirement and duty to assist in ensuring the well-being of the Pensions Scheme.
· That there was an increase focus on Pensions Administration in particular payments made to scheme members. The Board noted that an assessment about the quality of their data had been undertaken and that they scored positively and also had an Improvement Plan.
· That all Schemes are required to undertake an Annual Review of their Data and be able to evidence all improvements made in this area and that only 20% of Pensions Schemes had an Improvement Plan. There are concerns over the rate of improvement. Data improvement will need to be continually monitored.
· That it was imperative for Schemes to ensure that scheme members data was correct and that the above mentioned receive the correct payments at specified time and that overfunding is avoided. A percentile of 36% of respondents to a TPR Survey reported that delays in benefit payment as one of the top three complaints that are received.
· That Scheme Members are informed of expectations and works which need to be undertaken. This is hoped to prevent any material breaches. In areas where there are concerns, the TPR will review what systems are in place to address any anomalies. A record of all breaches should be kept by Scheme Administrators; this information should be used for future references and help to prevent the same issue recurring. The Board was advised that the TPR will take a more stringent approach if breaches are not reported especially if information about a breach is provided by a ‘Whistleblower’.The Board suggested that the TPR should publish breaches and agreed that this information could be used in ‘benchmarking exercises’.
· TPR will be visiting the LBTH Pension Scheme in May 2018
· One of the key focuses of the TPR for 2018 was 21st Century governance. The Board was advised that Pension Schemes were to be requested to provide information on eleven items of command data; these include National Insurance Numbers final salaries and dates of birth. The aim of the exercise is to produce a ‘snap shot’ of Schemes specific data. A total of 55% of Scheme Managers produce data. Scheme Managers of LGPS find this exercise more difficult than their other counterparts and this is due to the high numbers of employees involved.
· That it was good practise for Pensions Board to have a Risk Register and for Scheme Managers to attend Board Meetings.
· That the LBTH Pensions Board submission to the TPR on ‘ability’ was viewed as being slightly ‘modest’ and that one of the concerns about the Board was maintaining its knowledge. This aspect was reported to be difficult as their membership changed every year, in particular that of elected members. The Board commented that new members were required to quickly ‘get up to speed’ on areas. The Board noted that their members were granted leave to attend meetings by their employee and commented that remuneration for Pension Board Members would help to ensure the right calibre of individuals are appointed onto Boards. This would ensure that Boards remain robust.
· That the common breaches of the law made by Schemes were them failing to produce their Annual Benefits on time. Schemes which encountered a number of issues were School Academies. The Panel noted that services were often outsourced to 3rd Parties and that factor such as staff absences could have an adverse effect on the production of benefit statements. The Board commented that Service Level Agreements with contractors should help to negate concerns and noted that School Academies could be fined.
· That the quality of data was equally important as to benefit statements and that a breach of the former could be more detrimental and that both areas needed to be weighed when undertaking required exercises. Pensions Administrators should use their knowledge base when conducting the above. On average around 45% of Schemes get both exercises correct, the Fire Brigade and Police Services were reported to perform better than LGPS in the above mentioned areas. In 2017, 70% of all scheme members took part in all of the key exercises.
· That cyber security was paramount and needed to be given priority and maintained. The Board noted that the information kept on scheme members was a valuable resource to cyber fraudsters and were advised that all attempts made to ‘hack’ into the IT database should be monitored. The UK was reported to be at the forefront in cyber security and was ahead of other EU States in this area. The Board noted that I Connect was currently being used by their Pensions Administrators.
· That the Department of Work And Pension were currently developing a Pensions Dashboard, the Dashboard will inform the public about their pension’s entitlement. There is uncertainty on whether Public Services Pension Schemes would be requested to provide information.
· The Board held a brief discussion about the governance arrangements of pools within the London CIV and the lack of representation for beneficiaries. The Board commented that the LGPS governance arrangement could be used as a model. At current the TPR does not hold a view about the governance arrangements of the London CIV.
Members thanked Ms Woodley and Mr Burton for their presentation. Ms Woodley advised the Board that she will share recommendations made by Members to colleagues.
Ms Woodley and Mr Burton left the meeting at 11.25am.