Agenda item

The purpose of this report is to present the Fund’s administration performance for the period up to and including 17^th November 2024 vs key performance indicators (KPI’s).

The Pensions Operations Manager introduced the report to the Committee 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.
• She updated the Committee to say that this figure had already reduced to c1200 and hoped to have these reconciled by the end of January. 
• 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:
  • 24 Death cases – awaiting responses from the spouse or next of kin to make payment of arrears to the Estate.
  • 6 Dependant cases – awaiting responses from the dependant to make payment of arrears.
  • 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.

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

Councillor Toby Simon referred to the subject of divorce quotes for Teachers and the issue of this in terms of McCloud and the need to have a quote from both schemes. He asked if this was a general problem.

The Pensions Operations Manager replied that they don’t yet have sight of the records for excess teacher service and are awaiting advice from the Scheme Advisory Board and the LGA.

The Technical & Compliance Advisor added that the McCloud remedy has only started recently and said that divorce quotes were being issued, although these were low in numbers. She added that it will depend on the teacher’s back service as to whether they have an underpin or not.

Nick Weaver stated that in his view the Pensions Admin Team have done a phenomenal job over the past 12 – 18 months.

The Chair echoed these comments and wished to thank all staff for their work on behalf of the Committee.

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 6^th April 1997. Therefore, only those who were members between 6^th April 1978 and 5^th 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:

• 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.

Jackie Peel commented that she was uncomfortable with the size of some of the differences and the fact that they were not able to challenge the data. She said that officers should prepare for any enquiries with regard to any pensions that are frozen as a result of this process.

The Governance & Risk Advisor addressed the Committee regarding LGPS Benchmarking in 2023/24.

• The Fund took part in the CIPFA Benchmarking exercise for approximately 15 years. However, over the years the number of Funds taking part in the exercise had declined and therefore the Fund has decided to make use of the SF3 data which all Funds are required to submit to MHCLG.

• Avon PF has more members than the average LGPS – but it is not a mega LGPS fund.
  • Avon: 125,867 members
  • Manchester: 428,804 members
  • Average: 78,000 members

• Admin costs per member are related to scheme size – Avon costs of £32 are on the ‘cost line’ and less than the LGPS average of £39.

• Avon is ‘cost average’ as the bulk of cost drivers are broadly near the middle of the LGPS range.

Councillor Mike Drew asked what factors have led to the high number of employers.

The Governance & Risk Advisor replied that this was due, in the main, to the increase in Academies and their outsourcing of services, such as catering, cleaning etc. She added that each employer is treated separately within the Fund.

Jackie Peel referred to the matter of fines to employers and said that she felt that there were more than in previous years and asked if that was a case of the Fund becoming tougher or employers becoming worse.

The Pensions Operations Manager replied that it was a little bit of both and added that a lot of them come within Multi Academy Trusts. She said that 40 employers were due to receive a data improvement plan and that 16 of these were also due to receive a fine.

The Committee RESOLVED to:

i)  Approve the GMP report in Appendix 3. That the Committee:

·  Notes the current position regarding the reconciliation between Avon Pension Fund and HMRC

·  Resolves the following course of action

o  For Category B cases

(a)  Where member has not yet attained SPA, the HMRC GMP should be applied as part of BAU. No further rectification will be required.

(b)  HM Treasury tolerance of +/- £2p/w is accepted, and no further action is required.

(c)  Where an underpayment is confirmed, the member will have their pension increased to the correct level with arrears and interest calculated.

(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.

o  For Category C cases

(e)  Recommend that the Fund record is accepted as accurate.

o  For Category D cases

(f) Recommend that the fund records are deemed to be correct.

ii)  Notes the service performance for the period ending 17th November 2024.