Issue - meetings

57.1     The Committee considered a report by the Chief Operating Officer.

57.2     The Committee RESOLVED to

1) note the report;

2) request a report at the 17 July 2017 Committee meeting on GMP including the tendering process for stage 2 of the GMP reconciliation.

·         GMP Reconcilitation

42.1     The Board considered a report providing an update on the work of the Business Operations Team.

42.2     Graham Devenish (GD), Pension Operations Manager, said that the Pension Regulator is recommending GMP reconciliation tolerance level of £2, although the impact this will have on individual scheme members will vary. There is also the possibility that scheme members may owe the Fund and in theory this money could be clawed back. The cost of pursuing individual cases to the nearest penny may cost ESPF more than accepting a tolerance level of £2. GD added that HMRC’s deadline for closing their GMP records in December 2018 is very unlikely to change and only a limited service will continue after that date.

42.3     BR asked for clarity about whether the budget of £120,000 for 2017/18 will be sufficient to cover GMP reconciliation costs. GD said that ITM provided a stage 1 report for both Surrey and East Sussex at a lower cost due to the benefits of scale. The report compared a database of scheme members against HMRC records to find where there were mismatches; 15-20,000 people may be liable for GMP reconciliation but it is not clear yet the cost of this liability to ESPF. ITM’s involvement in the process is expected to cost £160,000 for both funds, which is well within the ESPF budget for 2017/18 or £120,000.

42.4     BR asked why the audit, actuary and ICT costs were around 60-70% higher than the benchmark. BS clarified that the CIPFA ICT benchmarking was a year behind and did not account for the reduced costs realised by the new pension administration system procured in April 2016. The Chair said that the audit fee was only £19,000 and so the fact it was comparatively higher did not have a significant impact.

42.5     BR observed that the overall cost of actuarial work was considerable when taking into consideration the work performed by the actuary on the behalf of specific employers, which is recharged to the Fund. SM said that the process of having the actuary produce bespoke financial statements for employers that are then independently checked was inefficient and there was no national discount rate. OO said that the ongoing savings at district, borough and unitary authorities involved redundancies that might have pension implications and so it was necessary for the actuary to check for these.

42.6     The Board resolved to note the report.