Agenda item

The Sub-Committee considered a report on changes to the Local Government Pension Scheme (LGPS) and the consequential effects on the Fund's administration systems and processes.

As from 1 April 2014 the new LGPS 2014 would be a Career Average Re-valued Earnings (CARE) Scheme and other changes would allow Scheme members more flexibility and affordability in respect of their benefits. All benefits accrued prior to 1 April 2014 would be protected.  It was noted that a number of other changes were expected to become effective as from 1 April 2015 when the government's new cost sharing and governance arrangements were due to take place.  A further report would be presented once the detail of these changes was known.

The Sub-Committee was informed that the changes represented the biggest change to Public Sector pension provision in recent memory and had necessitated significant amendments to the Fund's administration systems and processes. A major project was underway and was being robustly managed to ensure the 1 April 2014 timescale was met.

The greatest element of the changes was the move from calculating benefits based on final salary to a calculation based on career average pay. This requirement had highlighted the need for Scheme employers to share information with the Fund on a more frequent basis if benefits were to be correctly calculated.  The Sub-Committee was informed that the Fund's Pensions Administration Strategy Statement had therefore been amended to reflect the change in administration processes. 

The requirement to communicate scheme change to members had become more important than ever and a comprehensive communication campaign had been underway since 2013. Various media had been utilised during the campaign and Scheme employers had been provided with a communications toolkit to support them in communicating the change. Webcasts, road shows and online campaign windows had been used to create awareness and to provide information about the changes to Scheme members. A new online self service system allowed members to view and track their pension benefits.  It was planned to undertake further developments to the online system over the next twelve months.  The Sub-Committee was informed that the Fund's Communication Policy Statement had been revised to reflect this. 

It was noted that additional costs had been incurred as a result of these changes and this was expected to increase the charge to the fund in respect of administration in the current financial year, although the charges would not exceed the lower quartile benchmark as set by the fund.

It was also reported that the Government had just announced that no new Councillors would be eligible to join the LGPS from 1 April 2014. Councillors who were members of the Scheme on 31 March 2014 would be able to continue as members of the Scheme but only until the end of the term of office they were in on 1 April 2014. Further information on this recent change would be communicated as soon as possible.   

Resolved: 

(i)  That the changes to the Local Government Pension Scheme, as set out in the report, be noted.

(ii)  That the revised Pensions Administration Strategy Statement, as set out at Appendix 'A' be approved.

(iii)  That the revised Communication Policy Statement, as set out at Appendix 'B', be approved.