Cabinet:

1.     CONSIDERED  the Funds Actuary report at Appendix A (exempt)

2. NOTED the summary of initial legal advice as the rider to Appendix A (confidential and exempt).

3. CONSIDERED the comments from HCFHE on the rationale for the merger of HCFHE and HSFC with NCC at Appendix B (exempt)

4. AGREED the College’s request to transfer all HCFHE and HSFC members from the Havering Pension Fund to the London Pensions Fund Authority (LPFA) as set out in Option A in this report.

5. DELEGATED authority to Chief Operating Officer to take all necessary actions and steps considered appropriate in order to give effect to this decision.

The Cabinet Lead Member for Finance and Property, Cllr Roger Ramsey presented the report to Cabinet.  The background to the current situation was outlined.

As a consequence of an increasing number of colleges experiencing financial challenges, the government commenced a national programme of area based reviews covering further education and sixth form colleges in 2016, the intention of which is to create fewer, more effective and more sustainable colleges

A number of financial economic challenges facing the colleges are the main driver for a proposed merger. An earlier attempt for HCFHE to merge with Barking and Dagenham did not go ahead. The current proposal is for both the HCFHE and HSFC to merge with NCC.

NCC was created by the merger of Hackney Community College and Tower Hamlets College in 2016, Redbridge College in 2017 and Epping Forest in August 2018. NCC Pensions Administering Authority is the London Pensions Fund Authority (LPFA).

In preparation for the merger the colleges have requested permission from Havering as the Administering Authority to transfer the pension arrangements for all staff of the colleges (current and former employees) from the Havering Pension Fund to the LPFA.

HCFHE has produced a paper setting out the rationale for the merger for members to consider and this is attached as Appendix B to the main report.

The Fund’s Actuary (Hymans) has produced a report, at Appendix A, which sets out the possible two scenarios of the proposed mergers to be considered

a.     Scenario A - where all members (actives, deferred and pensioners) transfer out to LPFA.

b.     Scenario B – where only active members transfer their past service out to LPFA.

Secretary of State Approval would be needed to transfer the pension rights of former employees from one LGPS Fund to another under scenario A. Once permission has been granted by Havering then the colleges will proceed with seeking Secretary of State approval

The Secretary of State will consult with all parties (all three colleges and both Funds) before granting approval. However, if all parties are agreeable, Secretary of State Approval is likely to be granted. The approval process takes about 2 – 3 months to process.

No approval is required from the Secretary of State if only current employees transfer over under scenario B.

Both colleges have confirmed that given their existing and future economic financial pressures they would not be able to proceed with the merger unless all members transferred out to the LPFA under scenario A.

Following general discussion,

Cabinet:

1.     CONSIDERED  the Funds Actuary report at Appendix A (exempt)

2. NOTED the summary of initial legal advice as the rider to Appendix A (confidential and exempt).

3. CONSIDERED the comments from HCFHE on the rationale for the merger of HCFHE and HSFC with NCC at Appendix B (exempt)

4. AGREED the College’s request to transfer all HCFHE and HSFC members from the Havering Pension Fund to the London Pensions Fund Authority (LPFA) as set out in Option A in this report.

5. DELEGATED authority to Chief Operating Officer to take all necessary actions and steps considered appropriate in order to give effect to this decision.