Agenda and draft minutes

Cumbria Fire Local Pension Board
Monday, 14th January, 2019 1.00 pm

Venue: County Hall Kendal, Committee Room 1

Contact: Jackie Currie  Email: jackie.currie@cumbria.gov.uk

Items
No. Item

1.

APOLOGIES FOR ABSENCE

To receive any apologies for absence.

Minutes:

An apology for absence was received from Mrs J Willis.

 

2.

Membership and Terms of Reference pdf icon PDF 115 KB

To note any changes in membership to the Board or Terms of Reference (copy enclosed)

 

 

Minutes:

The Senior Manager-Pensions and Financial Services updated the Board on a further amendment needed to the Terms of Reference in relation to substitutes as, during the review process before being presented to Council, further revisions were made.  The revised Terms of Reference state “Substitutes are permitted and sufficient substitutes will be appointed to ensure that the representation described in 7.2 can be maintained whenever a substitution is required.”

 

The Terms of Reference and Membership of the Board as amended by the Council on 10 January 2019 will be brought to the next meeting, as they had not been approved when the papers for this meeting were published.</AI2>

 

RESOLVED that,     the current Terms of Reference be noted.

 

 

3.

DISCLOSURES OF INTEREST

Members are invited to disclose any disclosable pecuniary interest they have in any item on the agenda which comprises

 

1          Details of any employment, office, trade, profession or vocation carried on for       profit or gain.

 

2          Details of any payment or provision of any other financial benefit (other than from the authority) made or provided within the relevant period in respect of any expenses incurred by you in carrying out duties as a member, or towards your election expenses.  (This includes any payment or financial benefit from a trade union within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992.

 

3          Details of any contract which is made between you (or a body in which you have a beneficial interest) and the authority

 

(a)       Under which goods or services are to be provided or works are to be           executed; and

 

            (b)       Which has not been fully discharged.

 

4          Details of any beneficial interest in land which is within the area of the authority. 

 

5          Details of any licence (alone or jointly with others) to occupy land in the area of the authority for a month or longer. 

 

6          Details of any tenancy where (to your knowledge)

 

            (a)       The landlord is the authority; and

 

            (b)       The tenant is a body in which you have a beneficial                                                     interest.

 

7          Details of any beneficial interest in securities of a body where

 

(a)       That body (to your knowledge) has a place of business or land in the          area of the authority; and

 

 

(b)       Either –

 

(i)      The total nominal value of the securities exceeds £25,000 or one        hundredth of the total issued share capital of that body; or

 

(ii)     If that share capital of that body is of more than one class, the total nominal value of the shares of any one class in which the relevant person has a beneficial interest exceeds one hundredth of the total issued share capital of that class.

In addition, you must also disclose other non-pecuniary interests set out in the Code of Conduct where these have not already been registered.

 

Note

 

A “disclosable pecuniary interest” is an interest of a councillor or their partner (which means spouse or civil partner, a person with whom they are living as husband or wife, or a person with whom they are living as if they are civil partners).  

 

Minutes:

There were no disclosures of interest made on this occasion.

 

4.

EXCLUSION OF PRESS AND PUBLIC

To consider whether the press and public should be excluded from the meeting during consideration of any items on the agenda.

 

Minutes:

RESOLVED that,     the press and public be not excluded from the meeting during discussion of any of the items on the agenda today.

 

5.

MINUTES pdf icon PDF 78 KB

To receive the minutes of the previous meeting held on 2 August 2018 (copy enclosed)

 

 

Minutes:

RESOLVED that,     the minutes of the previous meeting held on 2 August 2018 be agreed as a true and accurate record.

 

6.

Schedule of Future Meetings:

To note the schedule of future meetings of the Cumbria Fire Local Pensions Board, as follows:-

 

·         23 April 2019            1pm

·         16 July 2019             1pm

·         22 October 2019     1pm

 

Minutes:

The Schedule of Meetings for 2019-2021 was noted.  The next four meetings of the Board would take place as follows:-

 

23 April 2019

16 July 2019

22 October 2019

4 February 2020

 

7.

REVIEW OF FIRE LOCAL PENSION BOARD RISK REGISTER pdf icon PDF 154 KB

To consider a report from the Director of Finance (s151 Officer) (copy enclosed)

 

 

Additional documents:

Minutes:

The Board considered a report from the Director of Finance (Section 151 Officer) which presented to members the updated risk register, which was attached at Appendix 1 to the report.

 

The Fire Local Pension Board (FLPB) follows accepted best practice across Pension schemes in formally reviewing Scheme risks at every meeting. The Scheme Manager maintains a risk register that is considered to be a dynamic document, updated as and when any developments arise that lead to a change in the risks to the Scheme.

 

In October, the FLPB reviewed the risk register and agreed that it should be refreshed with consideration being given to those risks that were most critical to the Scheme.

 

Officers from the Scheme had liaised with the Council’s Senior Risk Officer to produce a revised risk register that was consistent with the format used for the Council’s Corporate Risk Register. This new reporting template had been introduced with the aim of:

 

     Simplifying the structure of the report around the Scheme risk description format …There is a risk that…..caused by…..resulting in.

 

     Improving the visibility of the controls and measures in place for the quarter being reported.

 

     Improving the visibility of the controls and measures being developed or implemented during the next quarter reporting period and onwards.

 

The Board noted that the number of risks had remained the same; however the risks had been rearranged within the register to collate risks under the headings of Scheme Administration and Governance & Regulation.

 

The revised risk register had 12 risks comprising of 1 red risk (information security arrangements); 2 amber risks (Pension administration processes and timeliness of managing a breach); and 9 green risks.

 

The Finance Manager – Pensions Investments & Governance took Board members through the report, and highlighted the following:-

 

              Consolidated Risks:

 

Information Security Arrangements          Previous Risks: Cyber Crime / Digital Information Security

Failure to comply with General Data Protection Regulations (GDPR)

           

The risks associated with cyber-crime/data security and compliance with GDPR had been consolidated into one overarching risk that ensured consistency between the Scheme risk register and the corporate risk register.

 

              New Risks

 

Timeliness of Breach Reporting – there was a risk that escalation of breaches by employer or the Scheme may not be conducted in a timely manner.

 

Regulatory Changes - there was a risk that the Scheme may in the future, be mandated to change the benefits payable under the Scheme or other such regulatory change. 

 

The Chair asked what was being done to try to mitigate the risks associated with cyber-crime and the Senior Manager replied that officers were working closely with the Your Pensions Service to look at this and had also met with colleagues in IT to discuss this issue.  It was AGREED that risk mitigations would be made clearer for the next meeting of the Fire Pensions Board.

  

RESOLVED that,     members note the revisions to the risk register of the Scheme and the controls in place to mitigate Scheme risks.

 

8.

Monitoring Report for the Period ending 30 September 2018 pdf icon PDF 122 KB

To consider a report from the Director of Finance (s151 Officer) (copy enclosed)

 

 

Additional documents:

Minutes:

The Board considered a report from the Director of Finance (Section 151 Officer) which advised them of any material risk management, policy or governance issues and national regulatory changes to 31st December 2018 and any performance monitoring issues of the Scheme to 30th September 2018.

 

The Senior Manager – Pensions and Financial Services took members through the report in detail.

 

Members noted that in relation to the actuarial valuation and funding position the draft results of the 2016 valuation showed that the employer cost (as measured by the cost cap mechanism) had fallen to 11.6%.  This meant that the cost cap floor had been breached (i.e. costs are more than 2% lower than the 16.8% of pensionable earnings cost target set out in the 2015 firefighter scheme regulations).  As such, action must be taken (e.g. improving member benefits) to bring the cost back up to within the target cost range.

 

Under scheme rules the Home Office must consult with the Scheme Advisory Board (SAB) on the action to be taken to bring the cost back within the target cost. If no agreement could be reached, the default mechanism was to amend the rate at which benefits accrued. Members noted, for clarity, this referred only to the 2015 scheme.

 

The SAB was currently awaiting a response from the Home Office to their proposals and the FLPB would be advised on the outcome of this at the next meeting.

 

Members were informed that the employer cost per the cost cap mechanism is calculated on a different basis to employer contribution rates. A key factor in calculating employer contribution rates is the discount rate (also known as the ‘SCAPE rate’) and changes had been announced to this which would have a more significant impact (an increase) on employer contributions than any changes arising from the triggering of the cost cap mechanism.  This increase will be incorporated in the Council’s Medium Term Financial Plan, and is expected to be partially covered by a Government Grant.

 

With reference to the Your Pension Service (YPS) performance, Members noted that the Local Pension Partnership (LPP) (which trade in Cumbria as YPS) underwent an internal reorganisation in April 2018. Prior to this restructure, YPS had given the Scheme assurances that there would be no impact on the quality of service provided.

 

Unfortunately, YPS experienced significant difficulties with the restructure and this resulted in a reduction in the quality of service being provided to Cumbria and other public sector pension schemes.

 

Performance against the key performance indicators within the SLA was 90% in the quarter to 30th June 2018 and 91% in the quarter to 30th September 2018. The SLA target for the service is 90% however performance before the restructure was approximately 98%. Whilst YPS performance in the year to date had been broadly equivalent to the SLA target of 90%, Officers had been clear that LPP should be striving to return to pre-restructure performance levels of c. 98%, YPS indicated that they expected to return to performance  ...  view the full minutes text for item 8.

9.

ANNUAL REPORT OF THE CUMBRIA FIRE LOCAL PENSION BOARD 2017/18 pdf icon PDF 90 KB

To consider a report from the Director of Finance (s151 Officer) (copy enclosed)

 

 

Additional documents:

Minutes:

Board members had before them a report from the Director of Finance which provided an Annual Report outlining the work of the Cumbria FLPB in 2017/18, which would be presented to Council in April.

 

The Board noted that the Annual Report for 2018/19 would be brought to the next meeting of the Board in April with a view to presenting that to Councilin June.

 

RESOLVED,     that the Board agree the Annual Report of the Cumbria FLPB for 2017/18 for presentation to the County Council in line with paragraph 2.3 of the Board’s Terms of Reference (Part 2Q of the Council’s Constitution).

 

10.

CUMBRIA FIREFIGHTERS' PENSION SCHEME (FPS) DATA REVIEW & DATA IMPROVEMENT PLAN pdf icon PDF 140 KB

To consider a report from the Director of Finance (s151 Officer) (copy enclosed)

 

 

Minutes:

The Finance Manager – Regulatory and Benefits presented a report from the Director of Finance (Section 151 Officer) which explained that, whilst it was considered that the Cumbria Scheme’s data was of a good standard, developing and maintaining a data improvement plan and continually striving to improve data quality was considered to be good practice.

 

Each year, Schemes were required under the Pensions Act 2004 to complete a Scheme Return to the Pensions Regulator. The Scheme Return included up to date contact details for Local Pension Board members, key officers, employers as well as information related to membership numbers.

 

In 2018/19, for the first time, Schemes were required to report on the quality of common and scheme-specific data in their Scheme Return.

 

In July 2018, the Pensions Regulator issued guidance as to how to calculate a Scheme’s data score. Cumbria submitted its Scheme Return to the regulator on time in early November 2018.

 

Common data includes basic data items used to identify scheme members. These data items are required to be held by all pension schemes. Scheme specific (conditional) data items are key to running a scheme as they are needed to enable pensionable benefits to be calculated.

 

Members noted that based on these criteria, Cumbria’s common data score as at October 2018 was 99.36% present and accurate, and Cumbria’s scheme specific data score as at October 2018 was 93.35% present and accurate.

 

The main factor contributing to missing “common data” related to the Scheme not having an accurate address for scheme members. Whilst the number of scheme members known to have inaccurate addresses held for them by the Scheme was very low (20 members of the Cumbria FPS) the Pension Regulator’s Code of Practice 14 provided specific guidance relating to data quality that Schemes should attempt to make contact with their scheme members and, where contact was not possible, schemes should carry out a tracing exercise to locate the member and ensure that their member data are up-to-date.

 

Members noted that the Scheme would be commissioning a tracing exercise to locate missing deferred scheme members of the Cumbria LGPS, and this would be carried out through the Norfolk Framework, which was launched in October.  If this exercise identified large numbers then Officers will bring a proposal back to the FLPB with a view to commissioning a similar exercise for all Fire deferred members. YPS have advised that they will undertake a review of scheme specific data items for the Firefighters’ Pension Scheme and the results will be presented to the next Fire Board.

 

RESOLVED,     that the Board note the findings of the data quality review and the data quality improvement plan.

 

11.

Verbal update of matters arising from Fire Pensions Annual Conference

Minutes:

The verbal update on matters arising from the Fire Pensions Annual Conference was noted.