Agenda item

A report of the Director of Finance was presented to provide Members of the Teesside Pension Board with information on items scheduled in the Work Plan for consideration at the meeting.

At a meeting on 19 July 2021 the Board agreed an updated work plan that

set out areas for the Board to discuss or consider at subsequent meetings.  A copy of the work plan was attached at Appendix A to the submitted report. These were typically areas that the Pensions Regulator and/or the Scheme Advisory Board had identified as important for Local Pension Boards to consider.

Internal Controls and Managing Risk

The Fund’s approach to managing risk was detailed within its Risk Management Policy which was included for information at Appendix B to the submitted report.  A summary of the approach was also presented in the Fund’s Business Plan.

It was not possible, or even desirable, to completely eliminate risk and some level of risk in (for example) investments, was necessary to achieve the Fund’s long term objectives.  It was important that risks were identified and managed, and the Fund’s approach to this was summarised in the section on risk management philosophy on page 3 of Appendix B.

One important output of the Fund’s risk management approach was the Fund’s Risk Register, which listed and assessed the main risks to the Fund. The Risk Register was presented to the Committee and the Board at least once a year as part of the annual Pension Fund Business Plan. As the Business Plan was being presented to this meeting, Members had the opportunity to review and comment on the current risk register.

Discretions within the Local Government Pension Scheme (LGPS) Regulations

Administering authorities and employers within the LGPS had a number of areas where the regulations governing the scheme allowed them to exercise choices.  In some cases the administering authority or employer had to have a stated policy on how they would exercise this discretion, in others they could choose whether to make a statement of policy or not.

This was a complex area which had grown more complicated as the LGPS regulations had changed over the years.  When new regulations applied, they sometimes applied only in relation to future service or would not apply to those who had already left active service.  This meant the old regulations remained relevant in relation to some individuals, so administering authorities and employers would continue to have policies and/or exercise discretions in relation to several sets of old regulations as well as the new regulations.

The Local Government Association (LGA) had produced a full list of discretionary policies to be determined upon by scheme employers, administering authorities and other parties.  Some of the main discretions employers had that impacted directly on scheme members included:

• Whether to allow late requests to aggregate LGPS benefits or transfer in benefits from another scheme (‘late’ in this context meant over a year after a member joined the LGPS).
• Whether to waive early retirement reductions (and if so, in what circumstances).
• Whether to award additional pension to scheme members on retirement.
• Whether to allow flexible retirement.
• Allowing people to have a shared cost AVC additional voluntary contributions.

XPS Administration carried out an exercise several years ago to collect information from all scheme employers in relation to LGPS discretions.  This exercise was likely to be repeated in future.  XPS Administration also ensured that appropriate employer approval was received whenever an event that required the exercise of an employer discretion took place.

With reference to the discretion to allow employees to aggregate after twelve months of joining, this was to be extended for anyone who had joined since March 2020 in order that they were not disadvantaged due to the Covid 19 pandemic.

In relation to benefits for widows and widowers, the Head of Pensions Governance and Investments indicated that a report in relation to legal discrimination on benefits would be brought to a future Board meeting.  There were currently 3,214 widowers or dependents in the Fund.

AGREED that the information provided was received and noted.