Agenda item

A report of the Director of Finance was presented to provide Board Members with information on items scheduled in the work plan for consideration at the current meeting.  A copy of the work plan was attached at Appendix A to the submitted report.

 

Reporting Breaches

 

Under the Pensions Act 2004 certain categories of people involved with a pension scheme had a duty to make a report to the Pensions Regulator where they had reasonable cause to believe that:

 

a) a legal duty relating to the administration of the scheme had not been or was not being complied with; and

b) the failure to comply was likely to be of material significance to the Pensions Regulator.

 

This duty applied to the following people:

 

•           a trustee or manager of an occupational or personal pension scheme

•           a member of the pension board of a public service pension scheme

•           a person who was otherwise involved in the administration of an occupational             or personal pension scheme

•           the employer in relation to an occupational pension scheme

•           a professional adviser in relation to such a scheme

•           a person who was otherwise involved in advising the trustees or managers of             an occupational or personal pension scheme in relation to the scheme.

 

The Fund had a policy on reporting breaches, which was reviewed and approved by the Pension Fund Committee at a meeting held on 15 December 2021 and was enclosed at Appendix B to the submitted report. The policy included information on how to report a suspected breach of regulations and how a reported breach was evaluated to assess how it should be dealt with, and whether it should be reported to the Pensions Regulator.  The procedure, and the requirement to report breaches had been in place since 2015. 

 

The current Breaches Log was attached as Appendix C to the submitted report. This contained one recent addition relating to the provision of benefit statements to deferred members.  A significant number of deferred members had not received their annual benefits statements.  The entry in the Breaches Log outlined the position, and explained that a decision had been taken to record but not to report this breach, as it had a straightforward explanation, did not result in a loss to the individual, and steps were being taken to address the issue. 

 

Initial discussions had taken place with XPS regarding actions that could be taken to trace people who had gone away.  However, there was a cost and typically people made themselves known when they were ready to claim their pension.  It was a common problem across pension schemes.  If the issue continued next year, the Fund would need to reconsider whether or not to report it as a breach.

 

The Breaches Log would be brought to future Pension Board and Committee meetings.  A useful summary of dealing with breaches of the law in the LGPS produced by Hymans Robertson in 2019 was enclosed at Appendix D to the submitted report for information.

 

 

 

Pension Fund Procurements

 

Over the last year the Pension Fund had carried out one procurement exercise. This was in relation to the Pension Fund actuary.  The previous actuarial contract, awarded to AON, had been for six years from 2013, and this was subsequently extended for two additional years.  The first extension was to ensure there was continuity of actuary as the last triennial valuation was completed, and the second to allow the Fund to make use of the newly developed framework for procuring actuarial services.  Although there were no issues or concerns with the quality of service provided by AON it was appropriate to undertake tendering exercises to ensure continued value for money was obtained for the Pension Fund.

 

For several years, Norfolk County Council had provided the procurement, legal and project management support to the National Local Government Pension Scheme (LGPS) Procurement Frameworks, which were set up to allow LGPS Funds to collaborate effectively in procuring a wide range of services, thereby improving efficiency and value for money.  The Actuarial, Benefits and Governance Consultancy Framework was refreshed in 2021 with the assistance of a number of founder LGPS Funds, including the Teesside Pension Fund.

 

The four firms who currently acted as fund actuaries in the LGPS were all on the Framework, namely: AON, Barnett Waddingham, Hymans Robertson and Mercer.

 

The Head of Pensions Governance and Investments, working with colleagues from within his team and the Council’s Procurement Team, developed a specification, a set of questions and a scoring system for the actuary procurement, based around the Framework documentation.  An 80/20 quality/cost split was applied to the evaluation, in order to reflect the importance of obtaining the best quality actuarial advice and support for the Fund and its employers.

 

Three of the four firms on the Framework provided submissions.  The quality evaluation was carried out independently by two members of the Pensions team and coordinated and scored during a meeting led by one of the Council’s procurement specialists.  The cost evaluation was assessed in line with the methodology devised by the Head of Pensions Governance and Investments based on typical actuarial activity expected during the contract period.

 

The quality of submissions was very good, and all three of the firms that applied demonstrated that they would have been able to deliver the contract effectively – evidenced by the fact all three submissions scored over 80% of the total possible marks.  Hymans Robertson’s submission had a combination of very high quality with lower price which allowed it to beat the other two applicants.

 

Hymans Robertson included an outline transition plan within their submission, explaining how they would work to ensure an effective transfer from one actuarial firm to another.  As part of this process, the Head of Pensions Governance and Investments has had regular meetings with the two experienced LGPS actuaries, who were the senior contacts for the Pension Fund at Hymans Robertson.  Hymans Robertson had also liaised directly with AON to ensure relevant information had been transferred as seamlessly as possible.

 

Work had commenced for the upcoming triennial valuation of the Fund, as at 31 March 2022.  As part of this process Hymans Robertson was working with XPS Administration, as well as with the Pensions team and colleagues in Finance.

 

Future pension fund procurement exercises due later this year included a procurement in relation to the Global Custodian as well as a more complex procurement exercise in relation to the Pension Administration provider.

 

AGREED that the information provided was received and noted.