Agenda and minutes

It was reported that the County Council at its annual meeting on 24 May 2012 had approved the constitution of the Sub-Committee on the basis of 3 Conservative members, 1 Labour member, 1 Liberal Democrat member, 1 trade union co-opted member and 1 co-opted member representing the Lancashire District Councils and Unitary Authorities. The membership of the Sub-Committee and its terms of reference were reported.  It was also reported that the County Council had appointed County Councillors M Welsh and G Roper as Chair and Deputy Chair of the Sub-Committee for the remainder of the municipal year 2012/13.

Resolved:

(i)  That the appointment of County Councillors M Welsh and G Roper as chair and deputy chair of the Sub-Committee for the remainder of the 2012/13 municipal year be noted.

(ii)  That the membership and terms of reference of the Sub-Committee, as now reported, be noted.

Apologies for absence were received from County Councillor G Roper.

Members are asked to consider any Personal/Prejudicial Interests they may have to disclose to the meeting in relation to matters under consideration on the Agenda.

County Councillor M Brindle and Mr R Harvey declared personal non-prejudicial interests in the agenda as they were members of the Local Government Pension Scheme.

To be confirmed, and signed by the chair.

Resolved:  That the Minutes of the Meeting held on 5 July 2011 be confirmed and signed by the Chair.

The Sub-Committee considered the 2011/12 Annual Administration Report.  The report described the performance of Your Pensions Service (YPS) against the standards and targets set out in the Service Level Agreement between YPS and the Pension Fund Committee.  The report also explained the activities and events undertaken by YPS during the year. 

In considering the report, the following points were made:

·  Membership of the Scheme had increased by over 2.5%.  This was reflected in the increase in deferred and pensioner members as local authorities and other public sector bodies continued to reduce their workforce and employees left or retired.

·  There had been a considerable reduction in the number of New Member set ups and Transfer in Quotes and Payments.  Again this reflected the position in Local Government across the country.

·  The greatest negative impact on performance was the move to the integrated pensions administration and payroll system.  Whilst this development had caused some disruption in the short term, it would streamline the retirement process by reducing duplication.  The new integrated system would also enable payments to be made at source without the need to use the County Council's Accounts payable facility which would result in further efficiency savings.

·  Other factors which had affected performance and targets being missed included a government instruction to not process transfers for 3 months, whilst various actuarial calculation factors were reviewed and the need to move resources to deal with the considerable increase in the number of retirements. 

·  The number of requests for benefit estimates had been considerably higher than expected.

·  There were no plans to change any of the set targets.

·  The need for an interim management resource to specifically target improved performance, allowing other staff to concentrate on development areas had been recognised and agreed.

·  Staffing levels would need to be balanced against the introduction of new systems and the effects of future legislative changes to the Local Government Pension Scheme. 

·  YPS had agreed a project plan of future developments with its system provider, Heywood.  The plan included the introduction of Member Self Service that would enable Scheme members to access their pension records on-line, including payslips for pensioner members and benefit statements for active and deferred members.  This would be a significant development and involve considerable work to ensure data integrity. 

·  YPS was also considering a new development to enable the transfer of key information to the Fund from Employers HR/Payroll systems as a result of the introduction of auto-enrolment.

·  YPS had been reaccredited for the Customer Service Excellent award.

·  The One Connect customer service centre was responsible for providing a pensions helpdesk facility and was the first point of contact for Scheme members and employers.  A dip in performance had been addressed by providing additional resources i.e. 5 additional FTE staff and 3 temporary staff, and by bringing some administrative tasks i.e. post, scanning back in house.  This action had resulted in the number of calls successfully answered rising from 85% to 93%.

·  It was agreed that future reports should set out  ...  view the full minutes text for item 5.

The Sub-Committee considered a report on the proposals for the new Local Government Pension Scheme (LGPS) as announced by the Local Government Association and trades unions on 31 May 2012.

The main provisions of the proposed LGPS were:

·  All pensions in payment or built up before April 2014 would be protected. Current contributing scheme members pre-April 2014 benefits would still be based on their final salary at retirement and the current 'normal pension age' of 65.

·  The new scheme would be a Career Average Revalued Earnings (CARE) scheme. It would use the Consumer Price Index (CPI) as the revaluation factor (the current scheme was a final-salary scheme).

·  The accrual rate would be 1/49th (the current scheme was 1/60th).

·  There would be no normal scheme pension age. Instead each member's normal pension age would be their individual state pension age, with a minimum of 65 (the current scheme had a normal pension age of 65).

·  Average member contributions to the scheme would be 6.5% (the same as the current scheme) with the rate determined on actual pay (the current scheme determined part-time contribution rates on full-time equivalent pay).

·  While there would be no change to average member contributions, the lowest paid would pay the same or less and the highest paid would pay higher contributions on a more progressive scale after tax relief.

·  Scheme members who had already or were considering opting out of the scheme could instead elect to pay half contributions for half the pension, while still retaining the full value of other benefits. This would be known as the 50/50 option (the current scheme had no such flexible option).

The proposals would form the basis of consultation with scheme members, funds and other scheme interests later in the autumn with a view to the new scheme coming into effect on 1 April 2014.

The Sub-Committee was informed that the likely impact of the proposed LGPS 2014 was being discussed with the Fund's Actuary.  A further report would be presented to the Sub-Committee to enable a response to the consultation to be submitted on behalf of the Lancashire County Pension Fund.

Resolved:  That the report be noted.

At its meeting on 5 July 2011, the Sub-Committee considered a report on the relatively low take up of the Local Government Pension Scheme (LGPS) by County Council employees.  It was agreed that officers should explore the reasons why 25% of eligible employees were not in the Scheme and consider measures to improve communications with employees about the future operation of and changes to the LGPS.

The Sub-Committee received a progress report which set out the results of a survey sent to 8,000 County Council employees who were not in the LGPS. 

Members were informed that the survey had resulted in a 10% response rate and revealed the following headline results: -

• 33% of respondents said "can't afford it/don’t earn enough" was the main reason for opting out of the Scheme; 
• 17% of respondents said "not working enough hours/being part time"was the main reason for opting out of the Scheme; 
• 28% of respondents said that "more money" would encourage them to opt in to the Scheme; 
• 11% of respondents said that "working more hours/being full time" would encourage them to opt in to the Scheme; 

A proposed Communications Strategy to encourage a greater take up of the LGPS by County Council employees was presented.  It was noted that the government required the County Council to automatically enrol its workforce in the LGPS with effect from January 2013 and it would be appropriate to launch the internal communications campaign to coincide with the auto-enrolment date.

Members acknowledged that the level of take up of the LGPS had a significant impact on the long term viability of the Fund.  It was recognised that the greater the number of contributing members the longer the Fund was likely to remain cash flow positive. 

The Sub-Committee welcomed the proposed Communications Strategy and agreed that it would be key to preparing staff for auto enrolment, to improving the perception of the LGPS and to promoting the on-going (ill health cover, life assurance) and long term benefits of the LGPS to employees of the County Council and other employers within the Scheme. 

Members agreed that the communications activity needed to be clear, concise and provide employees with as many tangible examples of the benefits of the LGPS as possible.  With this in mind, it was agreed that a further detailed report on the development and proposed roll out of the Communications Strategy should be presented to the Sub-Committee in Autumn. 

It was also felt that consideration should be given to widening the membership of the Sub-Committee to enable other (non-County Council) employer representatives on the main Committee to be involved in taking forward the development and roll out of the Communications Strategy.

Resolved: 

1.  That the Communications Strategy, as now presented, be approved to   coincide with the County Council's auto enrolment date of January   2013.

2.  That a further detailed report on the development and proposed roll out of the Communications Strategy be presented to the Sub-Committee in Autumn and before the end of November.  ...  view the full minutes text for item 7.

The Sub-Committee considered a report on the Audit Commission's National Fraud Initiative, the most recent findings in respect of Lancashire County Pension Fund and progress on Your Pension Service investigations to date. 

Your Pension Service worked closely with Internal Audit in order to investigate matches identified as part of the data matching exercise undertaken by the Audit Commissions National Fraud Initiative (NFI).  The 2010/11 NFI exercise had identified 2,215 matches for the Fund.  Of these 66% had been processed and overpayments to the value of £98,436 had been identified for 31 claimants.  It was noted that in most cases there was a straightforward explanation for non disclosure and that the majority of cases were found to be genuine oversights rather than fraudulent cases. Only one of the 2,215 matches had been identified as potentially fraudulent with an overpayment of £19,718.  Legal advice was being sought in respect of that case.

Members were informed that the Audit Commission had, in September 2011, launched Phase 1 of its real time data matching service to prevent fraud against financial institutions by identifying where an applicant had falsely declared they had a right to work in the UK.  The Phase 2 extension of the real time data matching was currently being considered.

The launch of real time data matching was welcomed by Your Pension Service as it would bring clear and significant benefits to fraud prevention.  Data would be matched at the point of application across all tiers of central and local government and this would enable fraud to be detected much earlier.

It was suggested that there should be a policy to recover overpayments where no actual fraud had occurred.

Resolved:  That the report be noted.

An item of urgent business may only be considered under this heading where, by reason of special circumstances to be recorded in the Minutes, the Chair of the meeting is of the opinion that the item should be considered at the meeting as a matter of urgency.  Wherever possible, the Chief Executive should be given advance warning of any Member’s intention to raise a matter under this heading.

None.

To be confirmed.

The next meeting of the Sub-Committee would be confirmed by the County Secretary and Solicitor in due course.