Agenda item
PENSION FUND ADMINISTRATION - Performance Report
The purpose of this report is to present the Fund’s administration performance for the period up to and including 17th November 2024 vs key performance indicators (KPI’s).
Minutes:
The Pensions Operations Manager introduced the report to the Board and highlighted the following points from it.
McCloud
· The first phase of the remedy project for pensioners has begun, and cases will be reviewed on a case-by-case basis.
· 2 further sub-projects have been established a) to write to all members that we believe are not in scope for remedy but may be if they have qualifying service elsewhere, b) data rectification for c5000 due to bulk tranche update errors.
· The deadline for McCloud remedy is August 2025.
Pensions Increase
· The Fund have made the decision based on the number of records left to be reviewed, that the Pension Increase project is now concluded.
· The majority of members have now been remediated or have been excluded as not needing to be increased.
· The remaining member records to be actioned will form part of the administrations team’s business as usual:
o 24 Death cases – awaiting responses from the spouse or next of kin to make payment of arrears to the Estate.
o 6 Dependant cases – awaiting responses from the dependant to make payment of arrears.
o 96 GMP cases – High level analysis shows that these may not be an underpayment. All these records will require more investigation and manual calculations to determine whether there is an under or overpayment. The plan is to project manage these cases across the administration team and complete in 2025.
KPIs – SLA monthly performance average July 2023 to October 2024
· Performance has improved for the majority of KPIs across this period.
Steve Harman said that he would like to express his thanks to the whole team of officers within the service for making such a dramatic improvement to the performance figures.
KPI cases completed Oct 2024 to 17th Nov 24
· The KPI target for all case types was achieved during this period.
KPI’s outstanding over 31 days – Oct 2023 to 17th Nov 2024
· This figure has decreased from 2,545 in October 2023 to 99 in November 2024
Service performance – Plan v’s Actual – 17th Nov 24
· We have currently achieved 90% of our plan which is ahead of our target of 65%.
Priorities for 2025
· Complete procurement for main Pensions Administration System (PAS) including Pensions Dashboard
· Implement Hosting of PAS
· Implement Pensions Dashboard
· McCloud remedy
· GMP project reconciliation
The Head of Pensions said that he echoed the comments from Steve Harman and praised the work of the team. He added that staff retention and recruitment have been really important over the past year, alongside the implementation of the pay review.
He said that he shared the cautious tone from the Pensions Operations Manager as it was likely that some resources will be diverted in 2025.
Jon Evans asked if there was a separate projects office.
The Head of Pensions replied that the Business Change Team has already been established within the service and provides additional support.
The Pensions Operations Manager gave a brief summary regarding APF GMP Reconciliation.
· In April 1978, the Government introduced a new state pension system. It provided for a flat rate state pension, which was available for everyone regardless of his or her employment history, plus an additional amount based on a person’s national insurance contributions. This additional pension element was called the state earnings related pension scheme (SERPS).
· Pensions schemes, including the LGPS, were able to opt-out of SERPS. This was known as ‘contracting out’. However, to do this a scheme had to guarantee to pay a benefit to a member that was equal to or better than that which they would have built up if they had been a member of SERPS. This amount is called a guaranteed minimum pension (GMP).
· The Government removed the ability to build up an entitlement to GMP on 6th April 1997. Therefore, only those who were members between 6th April 1978 and 5th April 1997 will have a GMP.
· The end of contracting-out in April 2016 meant that HMRC no longer had to track a person’s GMP entitlement. Therefore, HMRC decided to embark on a reconciliation project with all schemes. Their intention was to issue closure schedules containing contracted-out and GMP entitlements to each scheme and for schemes to carry out a reconciliation exercise, comparing data provided by HMRC against their own records.
· A summary of the reconciliation is as follows:
Category |
Membership Numbers at October 2023 |
A. Members where the record held by HMRC agrees with the Fund record. |
32,858 |
B. Members where the record held by HMRC disagrees with the Fund record |
6,468 |
C. Members with Fund record but no corresponding HMRC record. |
1,026 |
D. Members with HMRC record but with no corresponding Fund record |
5,271 |
E. Members now cleared from the exercise |
45,746 |
Total |
91,369 |
· Stalemate cases (figures in red above) represent those cases where it has not been possible to agree the GMP data held by HMRC with administration records. While in some cases it may be possible and reasonable to treat these as a ‘life event’ query in the future (if any suitable evidence exists), in practice it is expected that for the majority of cases a decision to either accept either HMRC or the administration record position as correct is required.
· Where SPA (State Pension Age) has been met and HMRC GMP at GMP payment date exceeds the £2 p/w tolerance; 816 potential cases have been identified as overpayments whilst similarly, a potential 277 underpayment cases have been identified.
· Recommendations have been drafted for the Board to approve and then to seek a decision from the Pensions Committee on 13th December 2024.
Steve Harman commented that he felt that the recommendations proposed were fair.
Helen Ball asked if the individuals concerned were to be informed.
The Pensions Operations Manager replied that they would, that these cases would require a manual review and it was estimated that the work would take 18 months to complete.
The Chair said that he was happy with the recommendations. He asked if other Funds were taking the same approach and was it legally compliant.
The Senior Associate replied that the Police and Fire Service in England & Wales have made the same decision and that no action has been taken on their response. He also assured the Chair that any data changes would comply with future statutory pension increases and meet any associated reporting requirements.
The Board RESOLVED to:
i) Note the service performance for the period ending 17th November 2024.
ii) Approve the following recommendations to be put forward to the Pensions Committee in respect of GMP.
· For Category B cases
o (a) Where member has not yet attained SPA, the HMRC GMP should be applied as part of BAU. No further rectification will be required.
o (b) HM Treasury tolerance of +/- £2p/w is accepted, and no further action is required.
o (c) Where an underpayment is confirmed, the member will have their pension increased to the correct level with arrears and interest calculated.
o (d) Where an overpayment is confirmed: -
(i) to agree that where an increased pension is being made that the pension is frozen at that level and no further increases applied until the correct level is attained.
(ii) Agree historic overpayments will not be recovered, in line with APF policy and as applied by other public sector bodies.
· For Category C cases
o (e) Recommend that the Fund record is accepted as accurate.
· For Category D cases
o (f) Recommend that the fund records are deemed to be correct.
· Further individual interrogation and analysis against Category B (under and overpayment) cases identified will be required to establish final and absolute totals.
· Updates on progress against cases identified will continue to be brought to the Pension Board and Pension Committee for review in future reports.
Supporting documents:
- Admin Performance Report, item 34. PDF 97 KB
- Appendix 1 - Administration Update December 2024, item 34. PDF 775 KB
- Appendix 2 - TPR data improvement plan, item 34. PDF 914 KB
- Appendix 3 - GMP Reconciliation Summary, item 34. PDF 89 KB