Agenda item

The Board considered a report of the Director of Corporate Resources which provided information on the main administrative actions in the fourth quarter period from January to March 2024. The report also covered governance areas including administration of Fund benefits and the performance of the Pensions Section against its performance indicators. A copy of the report marked ‘Agenda Item 6’ is filed with these minutes.

Arising from discussion, the following points were made:

       i.          Work around McCloud appeared to be escalating rather than abating, which was of concern. The Director of Corporate Resources explained that the system was working reasonably well, though it was still an area that was complicated with regards to assessing cases and added an extra layer on top of final salary benefits, and manual calculations were being undertaken. It was believed the situation would go on for some time, with work continuing on cases in terms of manually updating records, addressing retrospective cases. Though there were calculations for retirements and deferred benefits, deaths were seen initially by system providers as an area that would not see many cases.  However, this had proved not to be the case, and additional work had been required, taking longer than expected. Thought was being given to the provision of additional support.

      ii.          Members noted the budget for 2024/25 had scoped in a contingency for McCloud if required.  Officers felt that permanent additional support was not currently necessary. A report would go to the Local Pension Committee with the recommendation for temporary resource, and a decision made on where best to use that resource.

    iii.          Members asked if there was a risk that challenges could be made against manual calculations that were wrong in years to come, and what was being built into the system to prevent this. The Director reported that the way answers were arrived at were all recorded and any challenge made could be assessed. In general, the difference the McCloud remedy made to benefits was very small, and so did not have a high financial impact.

    iv.          Members noted that some members would not get their full annual pensions increase in April 2024 due to some issues with the Heywood system. Heywood were working on a solution that would be implemented as soon as possible. The issue impacted around 750 people who would not get the minor increase applied for the first seven days of the month, equating to approximately £5. Members were further informed that the pension increase exercise took place annually, and was implemented to all pensions on the first Monday following 6 April, based on CPI (consumer price inflation) in September prior, which was 6.7% for the current year. Members in receipt of a pension for less than 12 months would receive a pro rate increase.

     v.          Scheme Members who had retired in the final 12 months were also entitled to the slight increase on the value of their care pension that took effect from the 1 April 2014, which was also revalued each year. If a person retired part way through the year, the care element was not revalued until the pensions increase exercise, and needed to be manually calculated from 1 to 7 April. Increases due would be paid in arrears on 30 April.

    vi.          A Member questioned if, whilst working on priority areas, there was an impact on lesser priorities. The Director said there were competing pressures, with McCloud becoming business as usual impacting on all areas, whilst being mindful of valuation, aggregations and preserved benefits work. The position was being monitored very closely, and recruitment was underway for new apprenticeships to help with general workload.

  vii.          Members heard that, in terms of the growing backlog, customer feedback and complaints had been stable, with the number of complaints being received low in number. This was due in part to the areas of backlog not having an immediate impact on members, such as preserved benefits and aggregations.

 viii.          Members were informed that regular contact was made with other East Midlands authorities to share best practice across shared issues.

RESOLVED:

a)    That the report on pension administration for the period January to March 2024 be noted.

b)    That the comments now made by the Board with regard to the McCloud remedy being enacted be forwarded to the Local Pension Committee for consideration at its meeting on 19 June 2024.