Meeting documents

Apologies were received from Jacky Eubank and Bob Atkins (Ian Thompson attending on his behalf).

The Democratic Services Officer reported the following Changes in Membership:

Stewart Gilchrist, Milton Keynes Council – Resigned

Ian Frost and Gary Waghorn, Milton Keynes Council – New Members

Peter Watson, Aylesbury Vale District Council - Resigned

of the meeting held on 11 March 2008, to be confirmed

The minutes of the meeting held on 11 March 2008 were confirmed as a true record, subject to the figure on page 1 reading £1.284 billion and not £1 million.

Report presented by Clive Palfreyman, Assistant Head of Finance

Members received a report on the performance of the Pension Fund’s investment managers for up to the end of the second quarter of 2008, being until 30 June 2008 which showed the market value of the Fund, as at 30 June 2008, as £1.185 billion.

The report also showed the asset allocation split by class, the value of the fund held by each fund manager and the type of mandate, and the fund managers’ performance for the quarter to 30 June 2008.

The members discussed the performance of the fund managers over the last two quarters. The Pension Fund Committee is taking action where necessary and continues to monitor the performance of all the fund managers.

Details of the third quarter will be discussed at November’s meeting of the Pension Fund Committee. Members asking about the valuation of the Pension Fund were advised that the figures for March 2009 would be out in June 2009, therefore these figures would not be available for next year’s budget round.

The press has recently highlighted the international turbulence in the stock market, obviously being headline news and this is also reflected in the quarter to the end of June and expecting it moreso to be reflected in the quarter to the end of September.

Pensions are of course long term investments and there is therefore no short term risk to be concerned of at the moment as the investment is managed on a twenty to twenty-five years cash flow basis. The long term prognosis was that markets were expected to recover. Members were reminded that the stock market runs in cycles and two years ago the stock market was showing its highest returns; current levels are similar to that experienced in pre 1997.

Members were referred to Table 1 on page 5 showing the market value of the Pension Fund has fallen from £1.2 billion to £1.18 billion over the second quarter. There will be a further drop in the third quarter and it is anticipated that the Fund will continue to struggle until January/February 2009.

Tables 2 and 3 are showing negative returns. It was explained that the benchmark is set depending on the stock invested in. Some managers have cut stock and some have underperformed. Meetings were held over the summer with Fund Managers to discuss the investment strategy with regard to the current economic climate and to look at how Fund Managers were performing.

A Member asked for confirmation as to the figures in Table 4 regarding Pantheon (Europe). It was confirmed that the figures for Pantheon (Europe) are misleading as it is a comparatively small pot compared to the portfolio’s other Fund Managers. Table 3 shows that 1% of the Fund is minimal in the scheme of things; this time next year Members could expect up to a 5% allocation to Pantheon (Europe).

It was further asked why there were negative figures against the benchmark which had a positive return. This was due to small  ...  view the full minutes text for item 3.

Report presented by Julie Vrondis, Pensions Manager

Members received the report of the Pensions Manager.

From 1 December 2000 pension providers have powers to split pensions rights as part of the matrimonial assets if a couple divorced. This required a cash transfer value to be calculated and a person is entitled to one free valuation a year. If any more are requested, pension providers can charge as there is no statutory duty to provide this information.

Appendix 1 at page 13 of the agenda shows the charges set in 2000 as recommended by the National Association of Pension Funds (NAPF).  Appendix 2 are the current levels as suggested by NAPF, and Appendix 3 are the rates that the pension section propose to start charging. Members were advised that there are not a huge amount of pension sharing orders issued, maybe around ten a year. However, it is intended that a structure is put into place and reviewed annually.

A Member queried whether £1,000 is a lot of money when is comes to generating a cash transfer value. It was explained to Members that if it is a straightforward divorce then it is not a lot, but if the divorce is contested, then the costs can accrue with going back and forth between parties and solicitors.

Another Member suggested that a record was kept of work generated throughout the year to ensure that costs were covered.

The Pension Fund Consultative Group AGREED the revised charges, which will be reviewed annually.

Report presented by Chris Thompson, Principal Pensions Officer

Members received the Pensions Administration Performance Report.

In the past twelve months the section has seen the implementation of the new Pension Scheme. Despite expectations, the Pensions Team did not see a significant increase in the number of queries received and this can in part be attributed to the successful communication of the changes to scheme members and employers. There has been a steady increase in the number of daily tasks being completed by the team within the 10 day turnaround set in the customer charter. In September 2008, this was down to less than 1% of total work completed , which is due to the hard work of the Pensions Team and the two trainee pension administrators nearing the completion of their training and becoming multi-functional.

A Member asked about figures relating to qualitative measurement being recorded properly and accurately. Members were advised that there were various procedures for checking the workflow. Members were also advised that the Pensions Team were in the process of redesigning their workflow procedures which would enable the team to report on a more qualitative basis. The Chairman confirmed that the next report should contain a qualitative statement.

An Officer explained that she thought the information given in the quarterly newsletters was very helpful but a lot of information comes through which is technical and not easily understood. It would be useful to have updates as to what’s happening and what’s coming up in plainer English.

Members were advised that the large increase in daily tasks in June 2008 could be attributed to the start of the annual year end process whereby the Pensions Section takes the annual contribution data provided by employers and calculates a pensionable pay figure on which the annual benefit statement is calculated. This process identifies where information has not been supplied by employers throughout the year i:e changes in hours, employees leaving and new starters.

A Member asked whether any changes were expected to the Pension Fund in the longer term. They were referred to the previous consultation where employees had asked that their Pension Scheme be related to final salary. However the affordability of relating it to employees final salary was quite challenging as the overall Scheme would need to generate 9% return each year and more risks would have to be taken to achieve this. New entrants to the Scheme would have to be barred from this part of the Scheme.

The Pension Fund Consultative Group NOTED the performance statistics of the Team.

Report presented by Claire Perry, Principal Pensions Officer

Members received the CIPFA Benchmarking Club Report. Members were advised that out of 92 Administering Authorities, 53 took part which was the highest turnout so far. Each year data is supplied based on cost measures, workload measures, staff related measures and Industry Standard Performance Indicators.

Members were referred to page 28 of the agenda showing cost per member and that this was lower than the Club average.  Members were also asked to note that the total members per full-time equivalent was the 2^nd highest in the Club. Members then looked at the timeline and membership increase. Members were advised that the average was displayed and the figures below the benchmark show the cost is lower per member. The only year that we were higher than the average was 2003.

The Chairman asked whether there was anything different with the report. Members were advised that qualitative data is currently recorded as a scrap book showing the additional functions the team does compared to the other participating Authorities. This varies between authorities regarding communication, but overall Buckinghamshire County Council has done very well.

Ms L Turvey enquired as to the time spent in preparing this report and how useful the information actually was. Members were advised that the report shows where Buckinghamshire County Council is in comparison to other authorities. The report is very useful and takes approximately two days to gather the information, correlate and submit.

Local authorities whose Pension Funds had been outsourced are included in the benchmarking scheme but information was restricted due to the competitive market.

A Member asked about staff qualifications within the team. Members were referred to page 40 and advised that there was a training plan for each new member of the team and this encouraged further qualification. Some staff leave to work in the private sector once qualified but in the past two years there has been little fluctuation due to the training plan and the career matrix.

Report presented by Julie Vrondis, Pensions Manager

Members received the Discretionary Policies Report. Discretionary policies applicable under the LG Pension Scheme Regulations 2007 need to be made by each employer in the Fund. Members need to consider the local policy which is set by each employer within the Fund and fund policy which it is set as an administering  authority .

There are six specific matters on which employers need to declare their local policy as below:-

1. Discretion of employer to increase total membership of active member

Regulation 12 LGPS (Benefits, Membership and Contributions) Regs 2007

Under this regulation an employer has the power to increase the membership (pensionable service) of an employee in the pension scheme by up to 10 years. 

Current BCC Policy: BCC does not currently award augmented years

Suggested policy:  Employers could award augmented years on a case by case basis.

Reason for Change: Allowing augmented years on a case by case basis would give employers more flexibility. Augmented years are fully funded by the employer at the date of award.

2. Discretion of employer to award additional pension

Regulation 13 LGPS (Benefits, Membership and Contributions) Regs 2007

This regulation gives an employer the power to award up to £5000 per year additional pension on retirement.

Current BCC Policy: N/A, this is a new option

Suggested policy:  Employers could award augmented years on a case by case basis or employers could choose not make use of this regulation to award additional pension on retirement.

Reason for Change: Employers may prefer to award augmented years as above rather than augmented pension, it is probably easier to have just one method of increasing benefits rather two.

3. Discretion to permit flexible retirement

Regulation 18 LGPS (Benefits, Membership and Contributions) Regs 2007

This regulation enables an employer to let an employee, aged 55 or more (50 for protected members), reduce his/her hours or grade, and receive part or full payment of pension benefits under the main scheme regulations. If the employee would suffer an actuarial reduction in the pension and lump sum due to the early payment, the regulations confer a further discretion for the employer, at its own cost, to waive that reduction in any particular case.

Current BCC Policy: The BCC policy has been reviewed and a copy is attached

Suggested policy:  Employers should review their policies on flexible retirement, including whether or not a waiver of actuarial reduction will be made in any case.

Reason for Change: The new BCC policy imposes a minimum hour/pay reduction and also stipulates a minimum period for the member to remain employed with BCC. BCC will not waive reductions.

4. Discretion to permit early payment of pension

Regulation 30 LGPS (Benefits, Membership and Contributions) Regs 2007

Under this regulation a member of the pension scheme aged 55 or more (50 for protected members) may apply for the early payment of their retirement benefits, subject to the consent of their employer.  An application may be made by either a current employee or a former employee holding deferred  ...  view the full minutes text for item 7.

The next meeting of the Group will be held on Thursday 19 March 2009 at 10.00am in Mezzanine Room 2

The next meeting of the Pension Fund Consultative Group will be held on Thursday 19 March 2009 at 10.00am in Mezzanine 2.

To resolve to exclude the press and public as the following item is exempt by virtue of Paragraph 4 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating to any consultations or negotiations, or contemplated consultations or negotiations, in connection with any labour relations matter arising between the Authority or a Minister of the Crown and employees of, or office holders under, the Authority

RESOLVED

That the press and public be excluded for the following item which is exempt by virtue of Paragraph 4 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating any consultations or negotiations, in connection with any labour relations matter arising between the Authority or a Minister of the Crown and employees of, or office holders under, the Authority.

Report from Julie Vrondis, Pensions Manager.

Members noted the report which was being submitted to the Senior Appointments and Bucks Pay Award Committee on the Local Policy of the Local Government Pension Scheme.