Amendment regs (January 2019) Consultation ran: Laid: 18 December2018 Effective: 10 January 2019 Headlines 1. Walker v Innospec Common law or civil partners as if deceased member was male 2. Allows MHCLG to produce guidance for funds 3. Corrects 55-60 for pre 1998 leavers 37
Fair deal Consultation ran: 10 January 2019 to 4 April 2019 Laid: Effective: Headlines Where an LGPS member is compulsory transferred, a new provider will be required to provide LGPS. And on subsequent merger or takeover with transfer of assets and liabilities. 38
4 year valuations Consultation ran: Laid: Effective: Headlines Awaited 2019-2020-2024 (1-1-4) 2019-2022-2024 (1-3-2) 2019-2021-2024 (1-2-3) 39
Cost cap Why Hutton arrangement Unfunded schemes- Funded different approach Amendments to bring costs within 2% not back to start position 40
Cost cap amendments Cost cap broken (cheaper than expected) Scheme Advisory board planned changes But legal challenge by Firefighters and Judges Government have placed the changes on hold until clarity
Cost cap amendments Consultation ran: Laid: Effective: 1 April 2019 Expected Headlines Lower contributions for those under £22,500 • Minimum death grant £75,000 • Removal of tier 3 ill health • Better early retirement factors • 42
Possible 2019/20 banding table Band Range Member 50:50 rate contribution rate 1 Up to £14,400 5.5% 2.75% 2 £14,401 to £22,500 5.8% 2.9% 3 £22,501 to £36,500 6.5% 3.25% 4 £36,501 to £46,200 6.8% 3.4% 5 £46,201 to £64,600 8.5% 4.25% 6 £64,601 to £91,500 9.9% 4.95% 7 £91,501 to £107,700 10.5% 5.25% 8 £107,701 to £161,500 11.4% 5.7% 9 £161,501 or more 12.5% 6.5%
Expected 2019/20 banding table Band Range Full 50/50 1 up to £12,850 2.75% 1.38% 2 £12,851 to £22,500 4.40% 2.20% 3 £22,501 to £36,500 6.50% 3.25% 4 £36,501 to £53,500 previously £45,200 6.80% 3.40% 5 £53,501 to £64,600 8.50% 4.25% 6 £64,601 to £91,500 9.90% 4.95% 7 £91,501 to £107,700 10.50% 5.25% 8 £107,701 to £161,500 11.40% 5.70% 9 £161,501 or more 12.50% 6.25% 44
2018/19 contribution bands Band Range Full 50/50 1 Up to £14,100 5.50% 2.75% 2 £14,101 to £22,000 5.80% 2.90% 3 £22,001 to £35,700 6.50% 3.25% 4 £35,701 to £45,200 6.80% 3.40% 5 £45,201 to £63,100 8.50% 4.25% 6 £63,101 to £89,400 9.90% 4.95% 7 £89,401 to £105,200 10.50% 5.25% 8 £105,201 to £157,800 11.40% 5.70% 9 £157,801 or more 12.50% 6.25% 45
Improved death grant Part time employee on • £20,000 actual pay Current death grant £60,000 • (£20,000 x 3) payable to nominated beneficiary, next of kin Will be increased to £75,000 • Anyone on a salary in excess • of £25,000 does not see any improvement 46
Tier 3 ill health From April 2019, if the IQMP agreed a member satisfies conditions for ill health retirement tier 2 would be awarded is the member did not fall into tier 1. 47
Enhanced early retirement factors More attractive Early retirement factors to be released, however already changed from January 2019: Years Early 2014-2018 2014-2018 January April 2019 Male Female 2019 1 5.6% 5.2% 5.1% ? 2 10.8% 10.1% 9.9% ? 3 15.5% 14.6% 14.3% ? 4 20% 18.8% 18.4% ? 5 24% 22.7% 22.2% ? 48
AVC changes - before Old AVC Rules New AVC Rules Retirement 1. Lump sum Retirement 1. Lump sum Options 2. Top-up LGPS pension Options 2. Top-up LGPS (not deferreds) pension 3. Additional 4. Annuity membership (subject 5. Can’t defer (other to conditions) than flex retirement) 4. Annuity 5. Defer Pay upon Pre April 14 definition Pay upon Post March 14 which AVCs which AVCs definition deducted deducted Limit 50% Limit No limit Death grant Estate Death grant Fund discretion Applicable AVCs entered into Applicable AVCs entered on or to before 1 April 14 and to after 1 April 14 councillors 49
AVC changes - after Old AVC Rules New AVC Rules Ret. Options 1. Lump sum Ret. 1. Lump sum 2. Top-up LGPS pension Options 2. Top-up LGPS (not deferreds) pension 3. Additional 3. Additional membership (subject membership (subject to conditions) to conditions) 4. Annuity 4. Annuity 5. Defer 5. Can’t defer (other than flex ret) Pay upon Not applicable Pay upon Post March 14 which AVCs which AVCs definition deducted deducted Limit Not applicable Limit No limit Death grant Estate Death grant Fund discretion Applicable Member left before 1 Applicable All others to April 14 and councillors to 50
Employer actions Amend APP Review process and discretions review past cases Ensure that you are deducting AVCs from correct pensionable pay 51
Discretions What are discretions? This covers decisions made within the scheme Secretary of State • Administration Authority • Employer • Fund Actuary • 52
Employer discretions Employer discretions Mandatory discretions 1. Whether to grant extra pension? 2. Whether to share the cost of purchasing additional pension (SCAPC)? 3. Whether to permit flexible retirement? 4. Whether to ‘switch on’ the 85 year rule upon the voluntary early payment of deferred benefits 5. Whether to waive upon voluntary early retirement any actuarial reductions? 53
Administration discretions Admin discretions 1. Decide on who monies are paid to on death of member 2. When to merge concurrent records within same fund 3. When to charge employers for early retirement ‘up front’ 4. When to extend time limits on notice to draw benefits 5. When to trivially commute a small pension 54
Discretions default position Default position If an employer has not established their discretions the default position is the main fund. However Actuary likely to assume most expensive scenario 55
Discretions Need to review periodically If an employer does have a discretions policy it is recommended that these are reviewed ‘periodically’ to avoid any discretion to be seen as live if any appeal lodged. 56
IDRP member complaint route Where a member challenges a decision made by the employer or the administration Authority in relation to the scheme they can request it is looked at again, this is under IDRP. Time limits apply (6 months of decision) Must be made in writing 2 stage process Further appeal to Pension Ombudsman available 57
IDRP What is covered by potential appeals Can be any decision but most likely areas are Reason for leaving Ill health tier Pay treated as pensionable Delays in making payment Discretion used but employer or fund Member can get assistance from Pension Wise/TPAS/The Money Advise Service 58
Stage 1 (employer or other nominated party) Review decision Inform parties of decision And if unsuccessful next stage available If successful, make corrective actions 59
Stage 2 (Admin Authority) Within 6 months of decision under stage 1, member may lodge stage 2 appeal. Cannot be handled by person involved in first stage decision Review decision taken based on information available. Inform member of decision and options if unsuccessful Instruct correction if upheld Option to offer compensation is considered appropriate 60
Pension Ombudsman The Ombudsman will review complaints on administration and management of personal and occupational pensions: Type of complaints it considers: Auto Enrolment Benefits (incorrect calculation/refusal/failure to pay) Fund switches Death benefits Failure to provide information to members Ill health Interpretation of scheme rules Pension Liberation 61
How key groups link together A. Pension Wise/The Pension Advisory Service/The money advisory now Single Financial Guidance Body (SFGB) (to assist members) B. The Pension Regulator (to act as policeman) C. Pension Ombudsman (ultimate arbiter) 62
Bits and Bobs 63
Bits and bobs Update on exit payment reforms. • £95,000 cap Exit payment recovery Exit payment review LTA (19/20) – expected to be £1,055,000 • Annual Allowance (19/20) – expected to be £40,000. • 2019 PI/CARE revaluation – expected to be 2.4%. • 64
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Lunch Break 66
Simplifying the customer journey through collaboration Mairi Spiby Stakeholder Manager Local Pensions Partnership 11 February LPP offices 169 Union Street London
The Pensions Ombudsman Key facts Unique Impartial powers Unlimited Legally redress binding Funded from Pensions levy
Casework Structure Casework function Stage 1: First First contact Stakeholder management Potential complaint Make an application contact Customer enquiries enquiries engagement Stage 2: Pre Early resolution Pathway and Early Informal and Early Casework flow, resolutions jurisdiction resolution Includes volunteer advisers Stage 3: Adjudication Informal 3 x multi-disciplinary teams resolution Stage 4: Ombudsman Ombudsman and Deputy Ombudsman Determination
The numbers: 2017/2018 • 72 staff • handled 6,319 enquiries, up 5% from 2016/17 • plus approximately 6,000 phone enquiries • accepted 1,676 new investigations, up 26% from 2016/2017 • completed 1,591 investigations, up 13% from 2016/2017 • 29% complaints determined by the Ombudsman were upheld, at least in part in favour of the applicant • 70% complaints now resolved informally • Average time to close a case halved to 5 months on average
Updated memorandum of understanding between TPO and FOS, December 2017 • The Pensions Ombudsman (TPO) – matters that predominately concern administration and/or management of occupational and personal pension schemes. • Financial Ombudsman Service (FOS) – matters that predominately concern advice in respect of sales or marketing of individual pension arrangements.
Clearer signposting for dispute resolution, September 2018 • The Department for Work and Pensions and The Pensions Regulator sign agreement clarifying signposting. • The Pensions Advisory Service (TPAS) deals with guidance requests and The Pensions Ombudsman (TPO) deals with all complaints and disputes. • Customers using TPO’s Early Resolution Service will not be expected to have first used a scheme’s internal dispute resolution procedure if the parties are in agreement.
LGPS complaint types Closed investigations in 2016/17
LGPS statistics Enquiries & investigations Year 2014/15 2015/16 2016/17 2017/2018 . Investigations 114 79 100 105 accepted Investigations 77 102 98 98 closed Outcome ‘formal’ determined 2016/17 2017/2018 investigations Upheld 13% (5) 38% (15) Partially upheld 18% (7) 13% (5) Not upheld 69% (27) 49% (19) Total 39 (39) 39 (19) Outcome ‘informal’ resolutions 2016/17 2017/18 Opinion accepted 34.7% (34) 25% (26) Resolution 25.5% (25) 30% (31) Total 60.2% (59) 55% (57)
Distress and inconvenience - non financial injustice • ‘Distress’ is things like concern, anxiety, anger, disappointment that an applicant experiences. • ‘Inconvenience’ is the time and effort spent by the applicant in relation to the maladministration and in having to pursue their complaint.
Redress for non-financial injustice No award Nominal non-financial injustice £500 Significant non-financial injustice £1,000 Serious non-financial injustice £2,000 Severe non-financial injustice Higher than Exceptional non-financial injustice £2,000
Assisting the courts Previous position – TPO only participated if: • it affected the Ombudsman’s legal jurisdiction or our office procedures Now – TPO may also participate if, for example: • the decision may have a wider impact on the industry • there are a large number of same-issue cases accepted for investigation • there is a real and significant concern over access to justice.
Stakeholder connections Regulators, Ombudsman, Oversight Bodies &Training Consumer Public Sector Groups & Pension Unions Schemes Stakeholder Relationships & Legal Forum Master Trusts Public Sector & Trustee Pension Providers Boards Private Sector Pension Providers
Key achievements The TPAS resolution function transferred to TPO. One place for customers to go for all complaints about occupational and personal pension schemes Process change so cases are resolved at the earliest point. Led to simpler and shorter customer journey, with no loss of quality 70% of cases resolved informally and time taken halved to five months. Backlog of 730 cases cleared Stakeholder engagement, increase in collaborative working leading to better signposting, improved networking and sharing of good practice
The role of the Local Pension Board LPP Practitioners’ Conference for LPFA Fund employers, Omolayo Sokoya – LPFA Local Pensions Board (LPB) 11 February 2019 80
What are the aims of the LPB? • Established by Public Sector Pensions Act 2013 • Assist administering authority to: − Secure compliance with Regulations, other legislation and governance, and Pension Regulator’s requirements − Ensure effective and efficient governance of the Scheme 81
Who is on the LPFA LPB? • Independent Chair – William Bourne • Four Employer representatives. Name Date appointed Frank Smith 2015 Adrian Bloomfield 2017 Amy Selmon 2017 Sean Brosnan 2015 • Four Scheme Member Representatives Name Date appointed Omolayo Sokoya 2015 Peter Scales 2015 vacant Appointment in progress vacant Appointment in progress 82
What does the LPB add? • A voice for Scheme Members and Employers - As the body is made up of member and employer representatives, it is able to bring useful and different perspectives to bear, particularly in improving communication and engagement. • Expertise: e.g. pensions administration, risk management, auditing, governance, good understanding of pension fund management, LGPS knowledge and issues facing the LGPS. • Extra leverage to help Pension Fund Committee to achieve its objectives ‘A second pair of eyes leads to better decisions’ 83
84 What have we been involved in? Meetings • Meetings take place on a quarterly basis in London and members of the LPB attend induction/training sessions. Topics that we have been involved in: Creation of the LPP - • The LPP, the entity created with Lancashire County Pension Fund to manage assets, liabilities, and administration, we wanted reassurance that it is working for your benefit. • To that end we have encouraged an independent review of its cost- effectiveness.
85 What have we been involved in? Communications • To improve the communications between the fund and its members and employers. We have made recommendations to LPP’s engagement team, and are providing feedback via a working party. ✓ Enhancing the member website ✓ Newsletter to members and employers ✓ Customer survey ✓ Pension surgeries ✓ Pre-retirement courses ✓ Employer meetings ✓ Member conferences ✓ Annual Benefit Statement - Members would have received a more user friendly and descriptive ABS for their benefit. Issued in August 2018 a clearer informative document with notes of guidance including a quick guide to your benefit statement with links to how to improve your pension benefits
86 How can employer assist further? • Employers can assist further on this area by supplying the LPP their staff’s email addresses so they can communicate directly with members • Remind staff what a significant benefit being a member of the LGPS is by communicating with staff directly and reminding them of the excellent pension scheme that they are in at a cost of X% employer contribution. • Employer can carry out some testing with their members. Key questions thought to be: ➢ Do you understand how your pension works? ➢ Do you know where to access more information? ➢ Have you used LPFA website/ written information to understand more in the last 12 months? ➢ If so how useful did you find it. Etc.
Challenges the LPB faces • Tension between oversight and assistance roles • Limited powers • No template for the role – we have had to forge our own 87
88 Thank you Omolayo Sokoya Senior Finance Manager London Fire Brigade
Public Service Pension Employers LPFA Practitioners Conference 169 Union Street, London Rebecca Woodley Industry liaison manager 11 February 2019 The information we provide is for guidance only and should not be taken as a definitive interpretation of the law. DM 6469907 v2A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. E
Agenda • Our role, responsibilities and powers • Your role and responsibilities • Our expectations • Lessons from the 2017 survey - the importance of good data • Lessons from casework • Scheme returns • Data related initiatives • The need for cyber resilience DM 6469907 v2A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. E
The evolving Pensions Regulator • Our role is to protect workplace pensions We are being clearer, quicker and tougher • • We are changing in five key areas: − clarifying our identity − setting clear expectations − improving our regulatory oversight − using a wider range of regulatory interventions − being more efficient and effective Efficient and effective Intervention Regulatory oversight Clear expectations Identity and engagement DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Driving compliance through supervision • One-to-one supervision is part of our evolving approach to protecting and regulating pensions • In addition to the process for authorisation and supervision of authorised master trusts, supervision is being introduced for other workplace DB and DC schemes in both the public and private sectors ➢ www.tpr.gov.uk/en/about-us/how-we-regulate-and-enforce/one-to-one- supervision DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Landscape 31,940 6,050 DB / Occupational Hybrid DC schemes schemes 1.4m £1.5 trillion 12.6m £48bn active assets member members assets 11m 7.4m members active members AE Master Trusts 447 1.3m employers 81 Public 9.9m schemes MTs £16bn members 9.9m assets 16.7m employees 6m enrolled active members member Source: Corporate Plan 2018 - 2021 www.tpr.gov.uk/doc-library/corporate-plans.aspx DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Participation in workplace pensions by sector DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Balance of membership in public service schemes Source: www.tpr.gov.uk/-/media/thepensionsregulator/files/import/pdf/db-pensions-landscape-2018.ashx DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Introduction • We regulate the governance and administration of public service pension schemes, which provide pensions for civil servants, the judiciary, local government, teachers, health service workers, members of fire and rescue services, members of police forces and members of the armed forces • Our Code of Practice 14 sets out the standards of conduct and practice we expect DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Our roles and responsibilities • We regulate compliance with the Governance and Administration requirements introduced by the Public Service Pensions Act 2013: – we engage mainly with scheme managers and pension boards – investment: not the what (compliance with investment regulations) but the how (investment governance) - LGPS only ➢ www.tpr.gov.uk/guidance/db-investment.aspx • To educate and enable: – codes, toolkit, news-by-email ➢ www.tpr.gov.uk/doc-library/codes.aspx ➢ https://trusteetoolkit.thepensionsregulator.gov.uk/ ➢ https://forms.thepensionsregulator.gov.uk/news-by-email/subscribe • To enforce: – improvement and third party notices, fines etc DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Our regulatory powers • Appoint a skilled person to assist the pension board • Civil penalties – up to £5,000 to an individual or £50,000 to a corporate body • Collect data through the scheme return • Criminal prosecution • Improvement notices and third party notices – require specific action to be taken within a certain time • Information – require any relevant person to produce any relevant document or information • Inspection – at own premises and/or premises of a third party • Publish reports about a case (which might include naming those at fault) • Recover unpaid contributions from employers on behalf of the scheme manager • Report misappropriation – notify the scheme manager about pension board conflicts or misuse regarding assets • Skilled person report – require scheme managers to provide a report made by a skilled person nominated by the regulator DM 6469907 v2A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
TPR focus 2018 - 2019 • Ongoing risk assessment and intelligence gathering ➢ www.tpr.gov.uk/en/document-library/research-and-analysis • 2018 survey issued at the end of last year: – there are some additional questions (eg on the composition of pension boards, reviewing administration services, dealing with employers not providing data, cyber risk, common and scheme specific data, late ABS and breach reporting) – there is now a free-text box at the end of the survey which allows schemes to add extra notes in response to particular questions – it should be completed by scheme managers, or their representative, wherever possible (and we recommend other people, such as the pension board chair, are consulted) – responses are anonymous by default, but answers can be shared with us and/or the SAB if you wish DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Employer legal responsibilities – England and Wales Regulation 80 of the LGPS (England and Wales) regulations 2013 states: A scheme employer ‘ must give that authority such other information as it • requires for discharging its scheme functions ’ and ‘ Within three months of the end of each scheme year, each scheme • employer must give a statement to the appropriate administering authority giving the following details in respect of each employee who has been an active member during the scheme year ’: – the employee's name, gender, date of birth, NI number, unique reference number relating to each employment – the dates of active membership – pensionable pay received and employee contribution deducted – any employer contribution in relation to the employee’s pensionable pay – any additional employee or employer contributions ➢ http://www.lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r80 DM 6034372 v4B These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
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