Agenda item

The Committee considered the Business Plan.

In the ensuing debate, the following points were raised:

·         Bridget Clark commented that the consultation on the McCloud Judgement had closed on 8 October and the Fund had responded accordingly. An Administration Forum had been held to explain to employers what was required from them as a result of the recommendations from MHCLG. Employers would continue to be engaged on this matter. The amount of work and level of resources required to deliver this work was considerable

·         The level of resources necessary to support the work associated with the McCloud Judgement were unknown and therefore a proportionate response was required at this stage. Bridget Clark indicated that the resource implications were being carefully monitored. In addition, there was a concern about future challenges from individuals who had been impacted as a result of not being in the Fund 

·         Bridget Clark explained that the Restriction to Public Sector Termination (known as exit cap) had now completed the parliamentary processes and ministerial sign off was awaited to establish the primary legislation. MHCLG had recently issued a consultation paper to support the Government legislation on exit caps which proposed radical changes to the way payments would be made when someone was released from employment on the grounds of redundancy or business efficiency where actuarial strain and/or a redundancy compensation payment was payable. As proposed individual members would be asked to make a contribution to the actuarial strain if they did not want any reduction on their pension payments in the future. This had an impact on members but also employers in terms of additional administrative input. The implementation of the changes would affect members on lower salaries who had longer service. Members would also be allowed to defer release of their pension when made redundant over the age of 55 which brought LGPS in line with other public sector funds. The consultation closed on 9 November and the Fund would respond accordingly. Resource implications were being examined

·         In response to a query about the deferment of the receipt of the pension when a member was made redundant over the age of 55, Bridget Clark advised that under the proposals members would have the option of taking their full pension as at the date of termination but they would need to make a contribution to the actuarial strain. They could take a partial reduction and that might or might not require a contribution. They could take full reduction as advised by the Government actuary or they could defer release of their pension benefits. If deferment was requested, at any point in the future they requested to receive their pension, the Government actuary had produced reduction tables to calculate the reduction from 46.3% to 0% dependent on how many years before their normal retirement age (NRA) the request was made

·         A representative of the Employers side commented that the process for the introduction of the public sector exit cap had speeded up and was being introduced at a time when councils were facing a funding gap as a result of the costs associated with Covid 19. Councils were therefore looking at the possibility of restructuring arrangements to close this funding gap and as a result potentially increase redundancies. These legislative changes would therefore create additional administrative costs. There was concern about the misalignment between the primary legislation and the LGPS legislation and the impact this would have on the Fund’s business plan. Although there would be some administrative savings for the Fund, there would be a barrage of concerns/enquiries from members who were closer to retirement. Employers would do all they could to help the Fund but communication was key going forward. Bridget Clark agreed that the impact of these changes should not be underestimated. The Fund would look to the LGA and SAG to provide clear guidance and templates to assist employees/members. She undertook to share the consultation response with Committee and Pension Board members.

RESOLVEDthat the Worcestershire Pension Fund Business Plan as at 7 September 2020 be noted.