Agenda item

To consider a report from the Director of Corporate Operations updating the Panel and Board on administration performance for 2021/22 and developments affecting the pension scheme in the first part of 2022/23.

The Panel and Board received a report from the Director of Corporate Operations (Item 9 in the Minute Book) on the administration of the Pension Fund in 2021/22. Pension Services have performed well against the four key measures for good administration in 2021/22. The 2021/22 administration cost per member was £12.82 (£12.57 in 2020/21). The increase in cost from the previous year was due to the work on the McCloud remedy for which the Fund’s share was £62,000 (32p per member). There will be further costs of the McCloud remedy over the next two to three years. In addition, the Fund will also incur costs in 2022/23 on two further projects; pension dashboards and GMP rectification.

The McCloud remedy project has continued with the large majority of employers having provided data for the period 1 April 2014 to 31 March 2021. Returns for the period 1 April 2021 to 31 March 2022 have in the main been delayed as employers have prioritised end of year queries.

Employers have provided their annual returns to Pensions which provides information on active members and is used to produce annual benefit statements and valuation data. All these returns have been uploaded onto the pension administration system, although there has been a higher level of queries raised this year due in part to employers experiencing resourcing pressures.

It was confirmed at the meeting that the table in paragraph 10 on page 49 had an incorrect subtotal.  The correct table is shown below.

This error also meant that the percentages detailed in paragraphs 5, 30 and 31 of the report were incorrect.  These should have read that 40% of pensioners have now registered for the Portal (not 43%), 26% had opted to receive annual paper payslips and P60s (not 28%) and 34% had neither registered nor opted out (not 29%).  The errors did not impact on the point of paragraphs 30 and 31 which was to identify a cohort of pensioners (34%) who had not engaged with the Fund either by opting for a paper payslip or registering for the Portal.  Officers confirmed the intention to contact this group to reiterate the options available to them. A new reporting facility has been developed so that use of the Portal can be monitored to inform future developments and communications.

Work on reviewing cyber security has continued over the last six months with the results of the first annual vulnerability assessment now with the software supplier and Hampshire IT for consideration. No critical, high or urgent vulnerabilities were identified by the exercise.

At the start of 2022, the Department for Works and Pensions (DWP)

consulted on draft regulations to establish Pension Dashboards. Pension Dashboards will allow individuals to go to a single website and receive details of all the pensions they hold across UK pension providers, including public sector schemes. Hampshire’s staging date will be 30 September 2024, by which time the Pension Fund must be able to connect to the dashboard and respond to data requests, although dashboards will not be live and available to individuals until the majority of pension providers have connected. Preparations for the Pension Dashboards programme have commenced with officers attending webinars and training sessions to understand the statutory

requirements for this project. Civica are undertaking their preparatory work to be able to connect the system with dashboards in line with the defined project timescales.

In December 2019, the Panel and Board were updated on the progress of the GMP reconciliation project for the Fund which was nearing completion of the first, reconciliation, stage. The project was then paused while Civica developed the required software solution for importing the matched GMP values into UPM. Following the completion of the 2022 pension increase, the project can now move to the second stage; rectification. This stage involves calculating and correcting the under and over payments which have occurred due to the discrepancy in the GMP values held by HMRC compared to those held by the Fund.

GMP values need to be corrected for all membership statuses, however the key group is pensioner and beneficiary members who are currently receiving pension payments from the Fund. The initial data pass suggests that just under 35% of the group are currently being overpaid because the GMP held on the member’s record is incorrect. The total overpayment (i.e. the total of all overpayments since the pensions for affected pensioners have been in payment) is approximately £2.2m. Once these records are corrected, the Fund will reduce its ongoing liabilities. Conversely it is anticipated that the Fund has underpaid pensions by around £400,000 in total and these pensions will be increased, with the increase backdated from when the pension came into payment. the Pension Ombudsman has been clear that it would

be inappropriate to claim overpayments in situations where members would have been unaware they were being overpaid. The correction of pensions which are higher than they should be will be done so that the reduced pension comes into payment in April 2023. All affected pensioners will be written to in advance of the reduction.

RESOLVED:

(a)  That the Panel and Board agreed in principle that:

·         all records will be corrected to show the correct GMP value,

·         all underpayments greater than £1 per annum will be repaid to the member,

·         if the underpayment is less than £1 per annum, the record will be corrected but no contact will be made with the member, and

·         no attempt will be made at recovering overpayments

The Panel and Board agreed to delegate authority to the Director of Corporate

Operations to consider any special cases which may emerge when the

detailed assessment of the records is made.

That the remainder of the report, including the strong performance of Pension Services in 2021/22, was noted and that the forecast cost per member will increase in 2022/23 due to the work associated with the three statutory projects; McCloud, Pension Dashboards and GMP rectification.