To consider a report from the Director of Finance (s151 Officer) (copy enclosed)
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 of c. 98% by the end of December 2018.
The Senior Manager updated the Board on member self-service, where the number of FPS members that had enrolled for My Pension Online (MPO) as at 30th September 2018 had increased by 3% to 40% of all scheme members.
The Board noted that the Chair and an officer of the Scheme attended the Fire Pensions Annual Conference 17-18 September 2018. Attendees heard from a wide variety of industry professional and government representatives across the two days.
The Board noted that Northumberland County Council had arranged for FLPB training through the LGA on the 19 March 2019 to be held at Northumberland Fire & Rescue Service HQ (West Hartford). The Northumberland FLPB had invited officers and members of the Cumbria FLPB to attend.
The Chief Fire Officer said a new member had currently joined the Cumbria Scheme from another English Fire Service and highlighted an item of correspondence issued by the scheme operated there as an example of good practice that would be helpful to have in Cumbria. It was AGREED that Mr Nicholson would check with colleagues employed outside Cumbria for any feedback on information they receive, and report back to the next meeting.
RESOLVED, that the Cumbria FLPB note the performance of the Cumbria Firefighters’ Pension Scheme (FPS) to 30th September 2018 and any material policy or governance issues and national regulatory changes to 31st December 2018.