Agenda item

The Committee received a general update on the Pension Administration arrangements.

The report set out details of ceasing of contracting out from April 2016, tax changes from April 2016, negative pensions increase, current Government consultations, Pensions Administration Forum, and Admission agreements to the Fund.

The Human Resources – Service Centre Manager introduced the report and made the following points:

·         Under the regulations for the new (single) state pension there was no requirement to provide an additional state pension therefore the current rebate would cease which would result in the current rebate received, by employers and employees being removed

·         The Annual Allowance (AA) was currently set at £40k a year and was the maximum amount of taxed-relieved pension savings an individual could make in one year before receiving a tax charge. From April 2016 there would be a tapered reduction in AA down to a minimum £10K for those earning over £150K for the tax year 2016/17 onwards. Transitional rules would be in place for aligning Pension Input Period to protect pre budget pension savings from the impact of changes. There would also be a change to the Lifetime Allowance reducing from £1.25m to £1m from April 2016. The Annual Benefit Statement for members included information on annual allowance and life-time allowance

·         The September Consumer Prices Index (CPI) was used by the LGPS for calculating increases in pension benefits the following April. The September 2015 CPI was –0.1%. For those who had already retired/left service, there would be no increases to benefits from April 2016. For members in service, post 2014 CARE benefits could be reduced if HM Treasury chose to use their powers under legislation. HM Treasury had referred the matter to the House of Lords for a decision

·         The Government was currently consulting on proposals for exit payments and potential clawback arrangements. In relation to any payment as a result of termination of employment, it was proposed that the individual's pension would be reduced back to a threshold of 95k. For active member over 55 years of age, the scheme required them to take their pension benefits. Where an employee had a pension package, there could be major implications in terms of the effect on their pension. The employer did have some discretion to waive the requirement

·         The Government also announced a consultation on future pension taxation

·         The recent Pensions Administration Forum had been reasonably well attended and an improvement on attendance for the last meeting. Good feedback had been received from attendees. Relationships with the School Business Manager Forums were being developed  to encourage more Academy representatives to attend future Forum meetings

·         It was important to keep monitoring the membership of the Fund and the affordability of the scheme.   

In the ensuing debate, the following principal points were raised:

·         Would the Government proposals impact on the likelihood of staff seeking promotions? The Human Resources – Service Centre Manager commented that she anticipated that this may  cause come issues  for staff seeking promotion particularly for staff with many years of local government experience

·         In response to a query, the Human Resources – Service Centre Manager confirmed that the proposed changes would impact upon staff further down the organisation's structure than had previously been the case.

RESOLVED that the general update on the Pension Administration arrangements from the Administering Authority be noted.