Agenda item

To consider the attached report.

We were advised that the Public Services Pensions Act 2013 (‘the Act’) had outlined new governance structures for Pension Funds to take effect from 1 April 2015. Under the new structure it was proposed that a Fund Manager should be advised by a Pensions Board which was to consist of a proportionate number of employer and member representatives.

The Act further provided for explicit regulatory oversight of pension schemes by the Pensions Regulator whose role would be to issue Codes of Practice on the governance standards of conduct and general practices expected of local government pension schemes (LGPS).

The changes to the Local Government Pension Scheme came into effect from 1 April 2014 and the Havering Pension Fund had successfully implemented the changes to the scheme.

The stated aim of the whole reform of public sector pensions was to raisethe standard of management and administration of public servicepension schemes and to achieve a more effective representation ofemployer and employee interests in that process.

The Government had issued a consultation paper on 23 June 2014 with aresponse deadline of 15 August 2014.  The Council had not submitted a response to the consultation due to the timing of the Committee and the complex issues that would need to have been considered. 

Section 4 of The Act required that each pension scheme had a Scheme Manager who would be responsible for administering and managing the Scheme.  It had been confirmed that the Scheme Manager would be the Administering Authority and would have the ultimate responsibility for the scheme.

The Scheme Manager was a function which could be delegated under S101 of the Local Government Act 1972.  Further, the Act also provided that the two roles of administration and management could be undertaken as separate functions by two scheme managers.

The Scheme Manager would be assisted by the Pensions Board.

Tin the summer of 2013 the Secretary of State for Culture and Local Government had created a Shadow Advisory Board to provide advice to Scheme Managers and Pensions Boards in relation to effective and efficient administration for the scheme. The Shadow Advisory Board has a Governance and Standards Sub-Committee which was currently working with The Pensions Regulator to develop the Code of Practice and subsequently an LGPS specific code.  Once the final regulations and the final Code of Practice were published the Administering Authority would have a number of decisions to make in relation to future governance arrangements, including:

•        Whether membership of the Pensions Committee and the Pensions Board could be combined or must be separate;

•           How to ensure compliance with TPR Code of Practice in particular with requirements for knowledge and understanding of Board members;

•           Whether to introduce the new arrangements in advance of the statutory date (assumed to be April 2015) in order to test the appropriateness of the arrangement for the Havering Fund; and

•           The extent to which these decisions would be informed by consultation with employers within the Fund and scheme members. 

Regulation 106 concerned the establishment of local pension boards.

This would be a board with responsibility for assisting the Scheme Manager in securing compliance with scheme regulations, other legislation and the requirements of TPR.  Each Scheme Manager was required to have a separate Pension Board.

The Pension Board was required to include equal numbers of employer and employee representatives.  Currently within the Fund there are approaching 30 employers including Academies, a University Technical College, Further Education Colleges and Admission Bodies.  There were over 16,900 members and consideration would need to be given as to how best to reflect this number and their variety in the formation of the Board.

The Act further required that those appointed to the Board did not have a conflict of interest requiring each to declare any such conflicts imposing a responsibility on the Scheme Manager to ensure such conflicts did not interfere with the ordinary course of the Fund’s business. 

Section 5(7) of the Act enabled subsequent legislation to provide that the Scheme Manager, where this had been delegated to a Committee, to also be the Pensions Board.

Having considered the report we have:

1.    Noted the report and that further information would be provided as it becomes available;

2.    Agreed to the creation of a joint Governance Reform Working Party with officers from the London Borough of Newham, as a joint oneSource arrangement;

3.    Agreed that the remit of the Joint Working Party be as set out in the report; and

4.    Delegated to the Transactional Manager the responsibility to manage the Working Party going forward.