Issue - meetings

Governance Update

Meeting: 20/02/2019 - Clwyd Pension Fund Committee (Item 47)

47 Governance Update pdf icon PDF 146 KB

To provide Committee Members with an update on governance related matters and to agree the response to the MHCLG consultation on Fair Deal – strengthening pension protection.

Additional documents:

Decision:

(a)  That the Committee considered the update and provided comments.

 

(b)  That the Committee agreed to the extension of the existing Custodian contract until it is no longer required due to asset pooling.

 

(c)  The Committee considered the proposed response to the Fair Deal consultation, highlighting any changes they would like to make and agreed to the response being submitted to MHCLG, subject to delegating incorporating any further changes agreed to the Clwyd Pension Fund Manager.

 

Minutes:

Mr Latham confirmed that they are making progress on item 1.01 and that interviews for the Accountant and Governance Support Officer are tomorrow, they will be advertised through the graduate post shortly. Mr Everett commented that they have been working hard on the staffing restructure and posts.

 

Mr Latham highlighted page 117 and the work that the Scheme Advisory Board are undertaking and its importance as it impacts on the Fund.

 

Mr Middleman gave an update on Fair Deal, highlighting that there has been a consultation and that there is a draft response in the papers for agreement in principle.  Mr Middleman gave an overview of the background on Fair Deal, noting that it is about protecting the rights of employees who are outsourced from a public sector to a private sector employer. Currently they remain in the LGPS or transfer to a scheme which offers benefits that are “broadly comparable” to the LGPS as certified by an actuary. Under New Fair Deal the broadly comparable route will disappear. 

 

The questions asked and answered are set out from page 134. The second question discusses the definition of a Fair Deal employer, which is all public bodies with the exception of further and higher education employers. In the response, the Fund has commented that this seems reasonable but there is a potential inconsistency which needs to be clarified if it’s the intention.

 

Question 3 relates to transitional arrangements, for example what happens to those that were in a broadly comparable scheme when the contract ends. Their pensions and rights will be compulsorily transferred back to the LGPS, which potentially increases risks and costs to employers as they will be transferred across on an individual transfer basis which can be generous for individuals due to the assumptions used versus the transfer offered. Previously they would be transferred on a “bulk basis” in a way that usually protected the employer but gave a fair outcome to the members also. Mr Middleman commented that there are not many broadly comparable schemes so in the overall scheme of things for the LGPS it may be something that can be lived with to make it simple to operate.

 

Mr Middleman noted that the key element of the consultation is on page 136 which discusses the introduction of “deemed employer status”. If the Council outsourced services, then the Council could be the “deemed employer” and the outsourced employer would not require an admission agreement or bond.

 

Whilst the admitted body route would still be available, this would simplify the process in cases where the Council agrees to take all the risk. This would mean that an exit debt calculation is not required. However, Mr Middleman noted that the new employer’s relationship with the Fund should be fully documented as they still need to pay contributions to the Fund. This makes it critical for employers in the Fund to have clear policies so that all parties understand their obligations and this should be part of the process for  ...  view the full minutes text for item 47