Agenda item

The Governance & Risk Advisor introduced the report to the Committee and highlighted the following areas from it.

Hymans LGPS Online Learning Academy (LOLA)

Committee members have agreed to complete all training modules within twelve months of becoming a Committee member and repeat the completion of the modules every three years.

The schedule for completion of the modules is contained within the training programme (Appendix 3) for members who have not already completed the previous version. Module 7 should be completed by the end of December 2023.

Quarterly Review of Risk Register

Following the quarterly review of the risk register, one new risk has been identified and there are two changes to the current risk score.

NR18 - A new risk has been added to capture reputational risk to the Fund. Unforeseen events or service issues leads to reputational damage to the Fund amongst its stakeholders. This risk has been considered and mitigating actions are set out in the risk register.

NR04 – Governance of the Fund is not in accordance with APF policies and internal controls are not adequate. This risk has been increased from medium impact and unlikely (6) to high impact and likely (16) following the non-payment of pension increases to some members. The risk has been increased while the incident is fully investigated, and Internal Audit have been asked to review payroll procedures and internal controls for year-end processes.

NR08 - Employers unable to meet financial obligations to Fund. In the current economic climate the risk of employers being unable to meet financial obligations to Fund is elevated. There has been an increase in S114 notices issued by councils nationwide and Higher Education employers are particularly constrained as fees are fixed but costs have increased due to inflation. The Fund has no specific information about employers being unable to meet financial obligations and has strong covenant management and information gathering processes in place as a mitigation.

Internal Audit Findings

Internal Audit presented their findings to the Pension Board on 7th December along with the external auditor report.

The Fund’s Annual Report has also now been published.

Councillor Toby Simon asked how the Director, One West manages his role in terms of working for the Fund and Internal Audit.

The Director, One West replied that he was not the Head of the Audit Team and that his role was to accelerate issues when needed and assess risk on behalf of the Fund. He added that he keeps the role under regular review with other senior members of staff.

Charles Gerrish asked why the System Access Control – Internal Audit Report had not been shared with the Committee at an earlier meeting.

The Director, One West replied that if a ‘No Assurance’ (Level 1) rating had been assigned then the report would have been accelerated to an earlier meeting of the Committee. He added that the intention had always been to bring these reports during Q3.

Councillor Joanna Wright asked if other Councils were to issue Section 114 notices what impact, if any, would that have on the Fund.

The Director, One West replied that this is a risk that is accelerating across all Local Authorities. He added that if a Council declares that it is unable to meet its budget it will be placed into shortened, accelerated Improvement Plan and only be able to perform its statutory functions. He stated that actions involving pensions are protected by guarantee.

He said that lobbying in terms of funding to Local Authorities can be directed towards both the LGA and the Scheme Advisory Board. He added that a number of disconnects do exist between central and local government. He informed the Committee that an announcement regarding Local Government Funding was due within the next week.

Nick Weaver asked if an employer was to submit notification that their level of contributions needs to change would the Fund be in a position to handle this.

The Group Manager for Funding, Investment & Risk replied that it was and that contributions can be adjusted on the basis of affordability. She added that the level of contribution and over what period can be set and would be judged on a case-by-case basis. She said that the Fund was covered with a policy.

Councillor Toby Simon asked if the Committee receives a Covenant report.

The Group Manager for Funding, Investment & Risk replied that it does and that it was published as part of the agenda for the meeting that took place in June 2023.

The Committee RESOLVED to:

i) Note the Committee & Investment Panel workplans, training programme.

ii) Note the service plan.

iii) Note the risk register.

iv) Note the findings set out in the Internal Audit reports.