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Report to: |
Pension Board |
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Date of meeting: |
16 November 2020 |
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By: |
Chief Finance Officer |
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Title: |
Pension Administration - updates |
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Purpose: |
To provide an update to the Pension Board on matters relating to Pensions Administration activities.
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RECOMMENDATION The Board is Recommended to: 1) Note the updates;
2) Note the progress of management in implementing the
agreed actions arising from 3)
Note the proposed Pension Administration structure and costs
following transition |
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1. Background
1.1 The Pensions Administration Team (PAT) based
within Orbis Business Services carries out
the operational, day-to-day tasks on behalf of the members
and employers of the East Sussex Pension Fund (ESPF) and for the
Administering Authority. They also lead on topical administration activities,
projects and improvements that may have an impact on members of the
Local Government Pension Scheme (LGPS).
2. Key Performance Indicators
2.1 The Performance
Report, for the period February to September 2020 can be found at
Appendix 1.
2.2 Under the Good Governance review documents were developed and updated covering the Service Level Agreement (SLA) and Roles & Responsibilities with the future “in-house” Pensions Administration Team rather than provided through Orbis Business Services An overview of the proposed all-encompassing, high-level insight of the administration service was shared at the last Board meeting. Transition to the new performance measurements from the new sovereign database will go live in the new year, in the meantime, the Key Performance Indicator’s (KPI) presented continue to be from the shared Altair database. Note – the hardest task to achieve this year has been the “Employer estimate provided” as this has a 7 days target whilst under the new proposed SLA the target is10 days, same as “Employee projections provided”. In early October we ceased to provide redundancy quotations.
2.3 The Orbis Pensions Helpdesk was introduced in November 2019 and their performance is shown in Appendix 2. Management of the service recognise the results have been poor since lockdown and are actively working to improve resourcing, telephony tools, staff training, back-up plans, smoothing peaks & troughs and ultimately the quality of the customer experience. Note – we are closely monitoring the increasing number of abandoned calls. Now the ABS peak is past, we expect the call received numbers to fall.
3. Pension Administration Transfer and Staffing Update
3.1 No staffing changes have occurred since the last Board meeting. All administration staff are continuing to work from home and none have tested positive for COVID-19. Staff remain in good spirits and we closely monitor their wellbeing. It is not anticipated that staff will be returning to Lewes County Hall before April 2021 at the earliest.
3.2 A Transition Board
has been set up to oversee the PAT return to East Sussex. The East
Sussex plan has a target transfer date of 1 April 2021 but
recognising this is an ambitious target. The key milestones
are:
- Project governance & reporting – the principles of
disaggregation, regular meetings
- Pension Admin budgets & recharges – reconciliation will
take place as at 31 March 2021
- Design of Pen Admin function in East Sussex – structure and
processes
- Staffing – TUPE transfer, implementation of team structure,
recruitment & training
- Systems – re-procurement, new system approach, hosting,
data configuration, data
migration, user testing & pensioner payroll
- Projects – support where required
- Communications
- Regulatory & Compliance
- Helpdesk
- Post go live – ongoing support, Internal Audit review,
lessons learnt
3.3 The proposed
structure for the East Sussex PAT is set out in Appendix 3.
Job descriptions and person specifications for all the existing
Orbis roles have been collated and are being rewritten and will
shortly be put through the East Sussex Job Evaluation process. Most
of the recruitment will not begin until the existing staff have
been TUPE as some of that team are very likely to wish to apply for
other roles in the wider structure. The Surrey CC TUPE consultation
with 19 staff commenced on 21 October 2020 and closes on 20
November 2020. Staff are expected to belong to East Sussex from 1
December 2020.The estimated full year salary
cost of the proposed new structure is £825,000, an increase
of 18% on the estimated costs for 2020/1.
3.4 The estimated additional non
staff costs related to the PAT move back to East Sussex:
|
IT related expenditure |
Estimated Cost |
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Heywood separating databases |
£200,000* |
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East Sussex IT hosting data on Server |
tbc |
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East Sussex IT hardware & Software |
tbc |
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Other Costs |
tbc |
* Some of this
will be met by Surrey
These costs will be presented to the Pension Committee for
approval on 30 November 2020.
3.5
The Pension Board is asked to note the report and make any comments
for feedback to the Pension Committee.
4. Annual Benefits Statements as at 1 April 2020
4.1 The last Board received an update as at 31 August 2020 (the statutory deadline) and this is set out in Appendix 4. The Chair positively commented on the low error rate and these mostly being caused by “gone aways” and four Employers who had not provided end of year returns. The number of breaches outside of casual workers and the four Employers amounted to 0.4%.
4.2 The update letter was
sent to the Pensions Regulator (tPR) on 29 September 2020,
see Appendix 5, which highlighted the significant progress made compared to
2018/19.
4.3
Work has continued to progress the end of year returns and
data queries, with the plan to do a final run of ABS in early
November 2020. Any outstanding work thereafter would, by default,
become part of the continuing Data Improvement Project.
4.3 With regards to the 325
casual workers, it was agreed a policy was needed to deal with
the members who are on casual contracts and who did not have
pensionable service in the Fund during 2019/20. A briefing
paper was prepared (see Appendix 6) and consultation with
the Pension Board and Committee Chairs undertaken prior to the
following actions being implemented:
(a)
CARE Pay – these members who have received no pay of any kind
in the period 1 April
to 31
March, the decision is to use a value of £0.01 against
pensionable pay, so effectively
giving
no accrual of CARE pension for that year.
(b)
Final Salary Pay – This is only to be used in the calculation
of benefits pre April 2014,
so the
decision is to roll forward the existing final pay value from the
previous year, having
the
effect of calculating any final salary benefits as exactly the same
as the previous year,
by
maintaining the same final pay value and accrued service. Applying
the above would
have
the effect of producing an ABS of equal value to the previous year
(ignoring CARE
revaluation).
4.4 There will be a verbal update at the meeting as to the position as at 31 October 2020.
5. Internal Audit
5.1 Appendix 7 updates the Pension Board on the progress of implementing the Management Actions agreed for the Pension Administration Audit on Compliance with Regulatory Controls.
6 Projects update
6.1 Data
Improvement Project
Since the handover from Hymans to PAT progress has continued to be
tracked by the Working Party. Queries on the quality of the data
handover has caused delays and some work previously described as
complete by Hymans actually requires more actions. The annual
assessment using tPR data validator guidance has produced the
following results, showing a significant improvement in
scores:
|
Common Data scores |
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Fund |
2018 |
2019 |
2020 |
Difference between 2019 & 2020 |
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ESCC |
87.20% |
88.00% |
96.90% |
+8.90% |
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Conditional Data scores |
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Fund |
2018 |
2019 |
2020 |
Difference between 2019 & 2020 |
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ESCC |
87.30% |
89.80% |
96.00% |
+6.20% |
The full reports will be available for the next Working Group meeting when the next Phase 2 DIP is expected to be considered in readiness for a January 2021 launch.
6.2 GMP Reconciliation, Rectification and Equalisation
Orbis
commissioned JLT (Mercers) to undertake the reconciliation and
rectification work. The project has been held up by HM Revenue
& Custom (HMRC) provision of final data (received by Mercers
late July 2020) but the final reconciliation report is still
awaited. The existing Public Sector GMP Equalisation work around is
likely to be extended are part of a consultation, in response to
which is at Appendix
8.
6.3 Overseas
pensioners biannual mortality exercise
This year we are issuing letter to ALL overseas pensioners,
not just the incapacity and over age 70 members. 478 letters were
issued on 25 August 2020 and as at the end October 2020 we have
received 325 completed and appropriately verified returns. In
addition, we have 2 gone aways, 9 deaths and 3 pay-slip returned
cases (now suspended). This leaves 139 outstanding and we will send
an email chaser (or letter where not possible) in early November
2020.
6.4 i-Connect
The
implementation plan was disrupted by Covid-19 and the pensions
administration software review. The module is ready with Heywoods
and the SAP file is being tested by East Sussex (as the main
employer) and expected to be completed by the end of November 2020.
It is not anticipated that it will be rolled-out any wider for a
few months.
This will be a topic of discussion at the Employers Forum webinar
on 20 November 2020.
6.5
Pension increases as at 1 April
2020
The
annual pension increase for April 2020 was completed by
Heywood’s on 27th April 2020. As reported at the last
Pensions Board the work was largely successful in processing,
however uncovered a number of non-critical errors and warnings
which are the result of historical failings and local decisions on
what was deemed an error and were therefore not reviewed in
previous years pension increase runs. A meeting with
Heywood’s has been held to fully understand the errors and
warnings, which will then allow for the pension service to identify
which cases need to be reviewed as a priority. It should be noted
that the errors or warnings do not necessarily indicate an error or
an issue with the individual’s record or the amount of
pension or compensation they are being paid. These could just be
instances where upon checking the record, it is all correct. There
are about 2,500 incidences.
The April 2020 supplementary pension increases were overlooked and
Heywood’s were asked to undertake these in September 2020 and
they should be processed in the October 2020 pensioner
pay.
6.6 £95k exit
cap
On 5 October 2020, we wrote to all the East Sussex employers to
explain the exit payment legislation was passed by the House of
Commons on 30 September 2020 and comes into force 21 days after its
approval. There are a number of queries outstanding on how this
will work for the LGPS and whether both sets of legislation (Exit
Payment Regs from HM Treasury and Compensation Regulations from
Ministry of Housing Communities and Local Government(MHCLG)) will
be published at the same time, or what happens if they are
not.
Due
to the uncertainty on how these cases will be processed, the Orbis
PAT has paused the provision of early retirement termination
estimates with immediate effect, so as not to provide incorrect
figures for pension benefits and strain costs.
On 4 November 2020 the Exit Payment Regs become law but the MHCLG consultation on Compensation Regs does not close until 9 November 2020 and the LGPS Regs are unlikely to be updated until the end of 2020. The conflict is Regulations is causing much confusion, concern and the calculation position remains uncertain.
IAN
GUTSELL
Chief Finance Officer
Contact Officer:
Paul Punter
Email: paul.punter@eastsussex.gov.uk
Tele: work mobile 07895 207686 (no signal at home); home landline
01278 641726