To consider a report from the Chief Fire Officer (copy enclosed).
Members considered a report from the Chief Fire Officer which advised the Cumbria Fire Local Pension Board Members of any material risk management, policy or governance issues and national regulatory changes to 30 September 2020 and any performance monitoring issues of the Scheme to 30 June 2020.
The Technical Finance Officer took members through the report, highlighting the following:
· Risk - the current risk register had 13 risks comprising 1 red risk (information security arrangements); 2 amber risks (pension administration processes and the Sargeant Judgement); and 10 green risks.
There was 1 new risk which had been added, which was the impact of COVID-19 on Pensions’ Administration, which had potential for resourcing issues within Local Pensions Partnership (currently trading as Your Pension Service (YPS) in Cumbria) and the Fund to continue to provide an effective pensions administration service through the pandemic. The risk has a score of 6 (“moderate” but “unlikely”).
The Scheme and YPS had sought to mitigate this risk where possible to ensure that the Scheme could operate effectively throughout the pandemic with limited risk to the scheme members and the employer.
In addition to the new risk detailed above, the comments associated with some risks had been amended to reflect a number of developments including the release of the consultation on the proposed resolution to the Sargeant judgement. However, there has been no amendments to the scoring of any of the risks.
· YPS Performance - in the quarter to 30 June 2020, performance against all but one of the KPIs had been 100%, against the SLA target of 95%. One case in the ‘other’ category was resolved one day late, therefore reduced the quarterly performance to 99%. However, other than June 2020, performance has been 100% for every month since September 2019. The risk register noted that COVID-19 posed a significant risk to the administration service provided to the Fund. It was therefore a positive outcome that YPS performance had not been materially affected by the pandemic.
The report noted a slight increase in the number of scheme members signed up to My Pension On-Line (MPO).
· Local Pensions Partnership Reorganisation - Local Pensions Partnership (which operated in Cumbria as Your Pension Service) had, over the past year reviewed its internal structures. The organisation had recently separated its pensions administration services from its asset investment services.
The Local Pensions Partnership administration business was currently reviewing its existing practices and aiming to standardise a range of its key activities across all of its clients (of which Cumbria FPS was one), for example, the production of quarterly reports and the development of a new member and employer facing website, to be launched later this year. To aid, this, the organisation would be moving away from using the “Your Pension Service” brand and standardising naming conventions for all clients to Local Pensions Partnership Administration (LPPA).
· Scheme Discretions – it had been anticipated that the discretions policy would have been presented to this meeting, however work to clarify some legal points meant that this had not been possible. The Technical Finance Officer noted that since publishing the report legal sign off was now complete.
· Pensions Ombudsman - following the Pensions Ombudsman acknowledging the receipt of our initial response to a complaint made by an employee on 6 December 2019 the matter was reviewed by an Adjudicator in July 2020 (the first stage of the Ombudsman process). The Adjudicator did not agree that the complaint by the individual could be upheld and concluded that evidence did not indicate that there was maladministration on the part of CFRS.
· Internal Dispute Resolution Procedure (IDPR) - two separate IDRP appeals were received in June 2020. One was regarding the transitional arrangements associated with the Sargeant and McCloud case. As the IDRP cannot be used where proceedings in respect of a dispute had commenced in any court or tribunal the individual was informed that CFRS would not be able to take any further action on the matter.
The other IDRP was in relation to the overpayment of injury pension and was an appeal against reclaiming the amount overpaid. The IDRP was reviewed at stage 1 by the Chief Fire Officer in accordance with the procedure and was partially upheld.
· Pensionable Pay - following a recent court case, a recent High Court judgement on pensionable pay, CFRS was required to review and make an informed assessment on the pay provided to firefighters within the meaning of the different scheme rules to assess if they were pensionable. This assessment had now been completed and no pay elements needed amending.
· Data Quality - due to the pressures associated with COVID-19, key projects noted on the Data Quality Improvement Plan reviewed by the Board were currently on hold. This has enabled the team to focus their resources supporting priorities such as the timely payment of pension benefits. The Scheme has benefited from the work undertaken before the pandemic, and data quality will continue to be reviewed on a regular basis to ensure that data held by the Scheme continues to be of a good quality.
· Regulatory changes - Remedy to Sargeant Age Discrimination Case. On 16 July 2020, HM Treasury launched a formal consultation on its proposed changes to the transitional arrangements to the 2015 schemes (including the Firefighters scheme) to remedy the discrimination found in the Sargeant case.
The proposed remedy was complex but thorough. CFRS welcomed the proposals and considered these were appropriate to address the discrimination found in the 2015 pension scheme amendments.
· Public Sector Exit Payments Cap - The government first announced plans to cap exit payments in the public sector in 2015. Following a consultation in April 2019, on proposals to implement exit payment cap and the publication, on 21 July 2020, of the Government’s response to the consultation, The Restriction of Public Sector Exit Payments Regulations 2020 were approved by Parliament on 30 September 2020 and were due to come into effect on 4 November 2020.
The Regulations include a number of exemptions for payments to retiring firefighters which meant that was unlikely that any retiree from the Firefighters’ Scheme would be affected by this cap.
Additional legislation was required to amend FPS regulations to implement the exit cap. Further guidance was expected to be issued by the Local Government Association in due course and Officers would advise the Local Pension Board when this was released.
· Training – Board members continued to be notified of relevant training events (internal and external) as and when they arose and were encouraged to attend.
Members noted there was a specific item on training later on the agenda for this meeting.
One of the members asked a question about the response times referenced in paragraph 5.1.5 of the report for new retirements for deferred members and active members, and the length of time taken for YPS to process the retirements and the time cases were on hold due to information being required from either the employer, scheme member or AVC provider. He wondered whether the reason for the performance going down was COVID related.
The Senior Manager – Pensions and Financial Services said officers had raised this with YPS and a response was still awaited. However, she confirmed the issues were not COVID related, and AGREED to provide a written response.
RESOLVED, that the Cumbria Fire Local Pension Board receive and note the performance of the Cumbria Firefighters’ Pension Scheme (FPS) to 30 June 2020 and any material policy or governance issues and national regulatory changes to 30 September 2020.