Report of the Director for Corporate Services
The Committee considered the final outturn position for the financial year 2020/21 together with a summary of the key achievements against that Business Plan.
The Director of Corporate Services indicated that due to the extensive move to home working, in response to the Covid-19 pandemic, 2020 proved to be a challenging year in many ways. In line with the recommendations of the Pensions Regulator, business critical and business as usual activity had to take priority, with key development activities being of secondary order. Whilst the final position against the plan was not as favourable as would have been liked, it still demonstrated continued progress and development in several areas.
It was noted that as well as continuing with a high standard of service delivery, key achievements during 2020/21 included:
· Continuing to implement i-Connect with the Fund’s larger Employers and developing new working practices with Third Party Payroll Providers following the introduction of i-Connect (both now moved to BAU activity);
· Promoting the use of Member Self Service / My Pension Portal (MPP) ahead of issuing most of the 2020 Annual Benefit Statements electronically;
· Demonstrating further improvement in Service Standards and Key Performance Indicators;
· Preparing for and successfully managing the transition of UK Equities to Impax Asset Management (Global Sustainable Equity) and LGPS Central Limited (Global Factor Based Equity); and
· Appointing an Investment Consultant to the Pensions Panel.
The Committee were also informed that there had been several Staffordshire Internal Audit Service reviews across the two Teams throughout the year:
(i) the Pension Fund Governance Audit received ‘substantial’ assurance, for the fourth year in a row;
(ii) the Pensions Administration Audit maintained its ‘substantial’ assurance rating for the third year in a row; and
(iii) the Pension Fund Investment Audit, focussing on Property Investment Management, also received a ‘substantial’ assurance rating.
With regard to performance, the Committee noted that:
· 2018/19 shows that a 90% performance target was achieved in 8 of the 11 published standards.
· 2019/20 shows that a 90% performance target was achieved in 13 of the 15 published standards.
· 2020/21 shows that a 90% performance target was achieved in 12 of the 15 published standards.
(i) Divorce Settlement – Details of Sharing Order
There were very few of these cases fortunately but there was some ambiguity around when the 4 months / 50 working days to legally implement the court order should begin. Unfortunately, the existing workflow process was not sufficiently detailed to monitor this aspect correctly. A manual check of the cases processed in 2020/21, revealed that all were completed well within the deadline, and the workflow process would be updated for 2021/22 to enable accurate reporting going forward.
(ii) Transfers In – Send Transfers In Quote.
A Transfer Value (TV) was the payment that arose when a scheme member elects to move their pension benefits between Employer schemes or alternative insurance-based schemes. The current value of the individuals pension benefits effectively followed them, and an appropriate payment was made to or from an LGPS Fund. For TV’s from other public sector pension schemes and from within the LGPS, the options now available to members were more complex to process, and communicate, than for transfers from external schemes. Whilst there had been some improvement in achievement, since last year, the internal processing deadlines were being reviewed to reflect the new requirements. In all TV cases, the strict statutory deadlines, prescribed within the various Pensions Schemes Acts, were always met, often well within the prescribed statutory timescales.
(iii) Deaths – Notify Dependents Pension.
Sadly, but not unsurprisingly, there had been a 25% increase in the number of deaths reported across the Fund in 2020/21. The fact that the Fund was only marginally under target was again testament to the hard work and the dedication of the various teams in working together to provide Members and their dependents with the courtesy and sympathy that they deserved at such a difficult time.
The Committee were also informed that the Fund would shortly be requesting data from its 500+ Employers, as part of the preparations for the ‘McCloud’ project. It was anticipated that 54,000 scheme member records across the Fund would be in-scope for the re-calculation of benefits going back to 1 April 2014, but until the Government’s response to the consultation was issued, delivery timescales were still unknown and the impact that this would have on service standards was a cause for concern.
The Director also indicated that unforeseen changes in Regulations also had an impact on workload of the Pensions Team. The recently revoked Public Sector Regulations 2020, which limited an exit payment to £95,000, where an Employee was made redundant or their employment was terminated for reasons of business efficiency were expected to return in some revised form soon.
The Director informed the Committee that it was reported to their meeting on 26 March 2021, that whilst the contract with the Fund’s existing administration system provider was not due to end until late 2022, structural changes within the IT infrastructure at the County Council, meant that there would be a need to move to an externally hosted service (whereby the software was held on servers outside of the Council) before then. Given the time that needed to be factored in, should there be a change in the administration system provider, and the working practices that stem from that, it was considered prudent to mitigate any risk of having to do so, at relatively short notice, by bringing forward the procurement process into 2021. Work had therefore begun on the procurement process, which would be carried out using the ‘National Framework’; a procurement framework, set up by the Norfolk LGPS for the wider LGPS. As part of scoping the tender, the estimated cost of the system, over the initial 7-year period, would be in the region of £5 million and by way of good governance it was considered important to bring this to the Committee’s attention as a significant but necessary cost.