Issue - meetings

(a)       PFC noted the report and made themselves aware of the various current issues.

(b)       PFC noted the Employment Tribunal Ruling and the consultation regarding GMPs.

(c)        PFC agreed to the delegation to respond to the Pension Fund officers and that the response should propose option 2.

Mr Middleman presented the report on current issues affecting the LGPS.  He highlighted the item regarding the Employment Tribunal ruling regarding age discrimination against younger judges given they were not protected against changes in benefits.  This could potentially affect the LGPS as members within 10 years of retirement in 2012 have an underpin applied to their benefits.  Further updates will be provided if required.

            Mr Middleman also reported on the Guaranteed Minimum Pension (GMP) Consultation which covered the issue of equalising GMPs between males and females and also the promise to Government employees that they would receive full indexation on their GMP element via the State Scheme.  The consultation covered 3 proposals.  The deadline for responses was 20 February.

            Mr Middleman explained that the proposals were effectively passing the burden from the State Scheme to the public sector schemes. The proposals will also increase the administration burden, materially so under the first proposal.    This would entail LGPS Funds having to do a year on year benefit comparison including what members would receive from the State Scheme. 

In summary the 3 options:

1.    Case by Case approach: The lowest funding cost for employers but very difficult and costly operationally given the requirement for a year on year benefit comparison for each member.

2.    Full indexation for all members who reach SPA after 6 April 2016: No year on year benefit test so simpler operationally.  Would be the highest funding cost/risk and based on the valuation this is estimated to be £7m for the CPF.  This approach is already in place for members reaching SPA up to 5 December 2018.

3.    GMP conversion: Similar to 2 but requires a full GMP reconciliation and conversion.  The cost depends on the conversion terms.

            Mr Middleman noted that the operational costs under proposal 1 should not be underestimated and would require significant investment in systems and processes. Most LGPS Funds are favouring option 2 in their responses due to these operational challenges.

            Mrs Burnham noted that the preferred option after discussions at Advisory Panel is option 2.  This is in line with the objectives of the CPF which is to streamline operational matters as far as possible.

            Due to tight time scales Mrs Burnham requested that the consultation response is prepared by her and it is formally delegated to officers to respond on behalf of the PFC. 

RESOLVED

(a)       PFC noted the report and made themselves aware of the various current issues.

(b)       PFC noted the Employment Tribunal Ruling and the consultation regarding GMPs.

(c)        PFC agreed to the delegation to respond to the Pension Fund officers and that the response should propose option 2.