Report of the Director of Finance
Minutes:
The Pensions Committee was provided with a report from the Director of Finance relating to the Staffordshire Pension Fund’s (the Fund) Business Plan for 2024/25.
It was reported that the Treasury & Pensions Service had made good progress against the current year’s Business Plan. The detail on this was provided in Appendix 1 to the report.
Key Development Activities from the 2023/24 Business Plan included:
Performance Standards 2023/24
The Committee was made aware of the challenges implicit in administering the LGPS, and the regulatory complexity that brought with it. Planning for a wide range of new and changing legislation meant that there would always be room for improvement in performance. The Teams continued to look to develop efficiencies in current processes, using tools such as process mapping and re-engineering, which overtime it was anticipated would help to alleviate some resource pressures.
The Fund has experienced a small increase in staffing levels over the last 12 months. Whilst this clearly helped with delivering business as usual, it would also help with the demands of the ever-increasing large-scale projects that would need to be implemented. The 5-pillar Team structure had been successfully embedded; this would future proof the service and allow for succession planning. Doing this also facilitated internal promotions for the more experienced team members and had created a new wider Treasury & Pensions Management Team. The team continued to ‘grow its own’ and had increased the entry level roles from a Grade 5 to a Grade 6, reflecting the need to both recruit and retain team members. It was noted that a full set of performance statistics would be provided as part of the Outturn reporting for the June 2024 Committee.
Key Developments for 2024/25 (Pensions Administration)
Several areas that the Treasury & Pensions Team had identified as Key Development Activities for 2024/25 included:
The Pensions Regulators General Code of Practice – which was laid in Parliament in early 2024 and would come into force on 27 March 2024. Following an initial piece of work to identify any gaps, the Fund would formulate a plan to comply with the code within six months of it coming into force.
Improving Engagement with Scheme Employers - developing a process for improved engagement with Scheme Employers would ensure that they were fully aware of their responsibilities to the Fund and to their employees. Several options had been considered for this, including the reintroduction of an in-person Employer Training Day.
It was highlighted that one of the major pieces of work to be undertaken in 2024/25 relates to McCloud. Amendments to the LGPS regulations came into force on 1 October 2023 to enable LGPS funds to deal with the pensions remedy. The Fund had identified circa 30,000 Scheme Members in scope for a McCloud underpin protection test, and a communication exercise was carried out in December 2023 where all of the in-scope Scheme Members were contacted. The missing contractual hours and service breaks data has been collected from Scheme Employers, and the next steps in the project will be to load the missing data, bulk calculate rectification, recalculate past cases and plan how to produce the 2025 Annual Benefit Statements which must reflect any impact of McCloud.
Councillor Greatorex emphasized the additional needs of the smaller members of the Pensions scheme and welcomed the reintroduction of an in-person Employer Training Day.
Key Developments for 2024/25 (Pensions Investments)
Appointment of a second Independent Investment Adviser to the Pensions Panel
Cost and Resources
The Pensions Committee heard that the Fund had six main areas of ‘resource/cost’:
The most expensive area was highlighted as being Investment Management Fees. Whilst this figure appeared high, the actual returns on investments and cost benchmarking information presented to Committee annually, demonstrated that the Fund was receiving value for money in this area.
The LGPS Central Limited Strategic Business Plan and Budget for 2024/25, had not yet been approved by Shareholders and discussions between Partner Funds and the Company remained ongoing. However, the proposed LGPS Central budget had been included for 2024/25 within the Governance Pension Fund costs, with assumptions about future increases included in 2025/26 onwards. Members would be updated via the outturn report presented at the June Pensions Committee, on any agreed position on Governance costs for 2024/25 onwards.
In response to a question from Councillor Wilcox asking why the Actuarial Fees increase in 2025/26 and reduce in 2026/27, it was confirmed that this was a result of the additional work that would be undertaken as part of the triennial Actuarial Valuation that was due to take place in 2025/26.
In response to a question from Councillor Sutherland asking what the outturn costs were for 2023/24 and how these compared to the budget, it was confirmed that, as the 2023/24 financial year hadn’t ended at this time, the final outturn wasn’t available. However, no significant variance was expected.
Resolved: That the Staffordshire Pension Fund Business Plan for 2024/25 be approved, and the key challenges, be noted.
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