Minutes:
Dan Kanaris from AON Hewitt attended the meeting and provided the Board with a presentation on the Pension Regulator's Code of Practice and Breaches.
The Board was informed that the Pensions Regulator issued the Code of Practice under the Public Service Pensions Act 2013. The Code gave the Pensions Regulator the ability to appoint a skilled person to assist the Pension Board, to issue improvement notices and for the production of an annual report to cover public service pension scheme matters.
Reference was made to the Governance and administration of public service pension schemes which set up the following scheme management responsibilities:
· Pensions Board Members to have knowledge and understanding.
· Conflicts of Interest and representation.
· Publishing information about schemes.
· Managing risk and internal controls.
· Maintaining accurate member data.
· Maintaining contributions.
· Providing information to members and others.
· Resolving disputes.
· Reporting breaches and late payment of employer contributions.
The Board was reminded that there were legal requirements regarding the knowledge and understanding of Pension Board Members. Members had to be conversant with the rules of the Pension Scheme, together with policies. In addition, Members must have knowledge and understanding of the law relating to pensions and any other matters which were prescribed in the regulations.
Reference was made to a training Policy which was being devised and to the Pension Regulator's toolkit which was user friendly and highly recommended for Board Members to use. A personal training needs analysis would be undertaken with both Pension Board and Pension Committee Members.
Discussion took place on the legal requirements around managing risks and internal controls. The Board was informed that internal controls meant that procedures had to be followed in the administration and management of the scheme. Systems and arrangements for monitoring were in place and that arrangements and procedures were to be followed for the safe custody and security of the assets of the scheme.
The Board was informed that before implementing an internal controls framework, schemes had to carry out risk assessments. The key elements of internal controls should include a clear separation of duties, processes for escalation and decision making and documented procedures for assessing and managing risks, reviewing breaches and managing contributions.
Members asked that consideration be given to putting internal controls into Service Level Agreements as a responsibility of the Administering Authority.
Officers informed the Board that Hillingdon did have a Risk Register but required a Risk Policy. The objectives were understood by officers but had not been put into a succinct document.
Discussion took place on the key elements of accurate member data for Pension schemes, and that employers included schools and the Council. Employers had to provide timely and accurate data, and if correct processes were not followed, consideration should be given to reporting breaches.
On maintaining contributions, the Board was informed that there was a legal requirement for Employer contributions to be paid in accordance with requirements in the scheme regulations. The regulator had to be informed as soon as reasonably practicable if there was a payment failure of material significance. There had to be effective procedures and processes in place to identify payment failures which would include a contributions monitoring record and putting internal controls in place to monitor the sharing of payment information between the employer, pension scheme and member.
The Board was informed of the legal requirement of providing information to members and others, which included annual benefit statements, and the Board noted that the present Pension Administrator had failed in relation to providing annual statements, and to communicating other information to members. The present Pension Administrator had reported themselves to the Pensions Regulator in respect of this breach.
Reference was made to the legal requirement to report breaches of the law and the role that Pension Board members had in this. Training would be provided to Board members to enable members to be aware of legal requirements and guidance.
The presentation given also provided information on enforcement powers which could be used if legal requirements were not met. The Board was informed that officers were developing an Administration Strategy which would cover the standards of governance and administration which were legally required.
It was stressed that the Board had an important responsibility for assisting in ensuring compliance with the Pension Regulator requirements and training would be provided to increase member's knowledge and skills.
The role of the Pension Board was to monitor processes and to look at whether they had been correctly followed. Discussion took place on the relationship of the Board to the Pensions Committee and in particular the role of the Board in checking that the decisions of the Committee were compliant with both the relevant legal requirements and the relevant Fund policies and strategies. Reference was made to the Pensions Committee Investment Strategy and the role of the Board to examine their mandate and whether it was designed to meet the objectives of the Investment Strategy.
Reference was made to the proposals for the pooling of assets across LGPS funds which would change the scope of the Pensions Committee role in making decisions on investments.
Officers reported that the Board would work with officers on the compliance checklist which would measure where the Scheme was in relation to the Pensions Regulator requirements and identify any gaps in governance where improvements were needed.
The Board noted Hillingdon's Plan of Action.
RESOLVED:
1. That the information provided be noted.