Issue - meetings

1.1.        This item was introduced by Ola Owolabi (OO).

1.2.        OO confirmed that there are no material changes contained within the new admission agreement template. JB added that the Government had recently increased employees’ rights to stay in a LGPS following a TUPE transfer to a contractor; this is expected to increase the number of employers joining the scheme via an admission agreement.

1.3.        BR sought reassurance that the administrative authority checked the solvency of new employers. OO assured the Board that due diligence was applied – background checks were carried out to determine if the employer was financially sound, and guarantees and bonds were sought to protect the fund from any future financial issues that the employer may experience. MK added that this process involved a considerable investment in time from both the pensions and legal officers.

1.4.        BR asked whether academies would pose a financial risk to the fund if they became financially insolvent. MK said that Government guidance was unclear, but Hymans Robertson’s advice was that they were effectively guaranteed by the Government – although a test case is likely to come before the courts soon. JB added that the National Pension Board had been raising this issue of underwriting with the Government.

1.5.        BR queried whether an insurance agreement could be put in place before admitting academies to the pension scheme, as is the case for voluntary organisations. MK said that this was not possible because academies were classified as ‘scheduled bodies’ and as such could not be excluded from the scheme.

1.6.        BR asked whether there was a risk to the fund from academies (and other employers) offering generous discretionary bonuses to members and then becoming insolvent. JB said that legislation made it clear that any cost implications for discretions had to be made up front by the employers and that these choices were fairly limited.

1.7.        The Board RESOLVED to note this report.