Agenda item

Report attached.

 

Officers reported that they had undertaken a review of the performance of the Pension Fund’s Actuary, Hymans Robertson, for the period 1 October 2015 – 30 September 2016.

 

The Havering Pension Fund had joined the Croydon Framework in March 2015 to obtain Actuarial and Benefits Consulting Services. Hymans Robertson had been the appointed Actuary under this framework agreement. The contract expired on 31 March 2018. Hyman’s had been the Funds Actuary since April 2010 and no changes had been made to the Hymans contacts as part of joining the Croydon framework but the Pension Fund had benefited from savings in procurement costs and fees.

 

The framework had also addresses the issues of:

 

·         allowing authorities the opportunity to work together on a range of projects, sharing knowledge and costs to achieve common goals at a fraction of the costs that would otherwise be incurred and to focus;

 

·         meeting the governments encouragement for greater efficiencies in the administration of pensions and the Framework was designed to help meet those efficiencies together as part of the Croydon Framework.

 

The following criteria had been used for the contract evaluation:

(a)      Internal quality control procedures;

(b)      Management processes that maintain the knowledge and expertise in depth to support the contract;

(c)       Ability to work to tight deadlines; and

(d)      Demonstrate long term commitment to Local Government.

 

The contract had set out a detailed service specification for the Actuarial Valuation Service and other actuarial services required.  Other actuarial services included:

(e)      meeting the requirements of FRS 17/IAS19;

(f)        admission of new bodies to the fund, including recommended employer contributions and bond assessments;

(g)      providing actuarial factors to enable the calculation of early or ill health retirements; and

(h)      advice and the provision of up-to-date information on topical issues.

 

The production of the triennial valuation was the key deliverable from the Actuary, together with regular funding updates and annual calculations required for the Council’s statement of accounts under the Code of Practice on Local Authority Accounting.  The last valuation had been at 31 March 2016 and the results were still awaited ad due in December 2016.

 

The Actuary had also provided advice regarding changes in legislation affecting the Pension Fund, reviews guidance, and provided scheduled and admitted body contribution rates and other calculations as required.

 

Since April 2015 the Actuary had undertaken the following:

 

2016 Formal Valuation

·         Preparatory work for the 2016 valuation

·         Preparation of letter outlining GAD section 13 valuations and what this means for the Fund

·         Attendance at pre valuation meeting on 22 October 2015, including projected results for the valuation

·         Provision of 2016 valuation guide

·         Attendance at valuation meeting on 24 February 2016 to discuss possible contribution strategies for the Fund and to begin scoping an the ALM

·         Continued liaison with GAD and software providers regarding the new universal data capture, including testing and feedback

·         Attendance at meeting to discuss section 13 results on 26 July 2016

·         Provision of salary growth analysis paper to evidence changes to the salary assumption

·         Assistance with Whole Fund data cleansing including correcting software provider issues

·         Whole Fund data reconciliation, calculations and initial results

·         Asset liability modelling to assist setting the Council contribution rates and checking the investment strategy continues to underpin the contribution plan

·         Attendance at meeting on 1 September 2016 to discuss initial results and asset liability modelling

·         Further asset liability modelling of alternative scenarios

·         Calculation of SAB standard funding ratio, including provision of actuarial certificate before the SAB deadline

 

Employers

·         Final cessation valuations for Havering Citizens Advice Bureau and KGB Cleaners

·         Indicative cessation valuation for Family Mosaic

·         Advice on cessation valuation options for May Guerney

·         Provision of bond and contribution rate assessments, including ill-health budgets, relating to Accent Catering and Breyers

·         Provision of contribution rate assessments for academies, including ill-health budgets, relating to Brookside Infants, Ravensbourne and Benhurst

·         Recommendations on contribution rate for Drapers Maylands

·         Work over the period to complete the bulk transfer of Elutec to London Borough of Barking and Dagenham Pension Fund

 

Governance

·         Advice regarding the register of members’ interest

·         Advice on service restructuring and governance compliance

 

Training

·         Delivered staff training on outsourcing

 

Accounting

·         Produced IAS19 and IAS26 disclosures for the London Borough of Havering and FRS17/102 disclosures for the Colleges and Academies;

·         Produced the actuarial statement for the statement of accounts;

 

General

·         Provision of newsletters and help with publications including:

o   High Earners tax newsletter

o   Review of Conflict of Interest policy

o   Regular legislative updates, 60 second Summaries, Briefing notes

 

The cost of the actuarial services were:

 

·         1 October 2015 to 31 March 2016             £44,155

·         1 April 2016 to 30 September 2016          £81,370

 

In addition, fees, including actuarial work had been recharged to other employees within the fund, as follows:

 

·         1 October 2015 to 31 March 2016             £24,943

·         1 April 2016 to  30 September 2016         £32,620

 

The increase in fees during this period could be accounted for by the triennial valuation.

 

The Committee were advised that Officers were very satisfied with the services provided by Hymans Robertson and accordingly have noted the report.