A report of the Director of Pensions provided Board members with a copy of a recent report to Pensions Committee on this subject.  The report informed the Board of developments in the LGPS.  The appendices to the report contained the Fund’s response to HM Treasury consultation on ‘Restricting Exit Payments in the Public Sector’ and the Funds draft response to MHCLG consultation on ‘Changes to the Local Valuation Cycle and Management of Employer Risk’.

The HM Treasury consultation had been issued on 10 April 2019 with a closing date of 3 July and the MHCLG consultation had been issued on 8 May 2019, closing on 31 July. 

The Fund response to the HM Treasury consultation had been shared with the Chairs of Pension Committee and Pension Board for comment and approval prior to submission.

A draft response to the MHCLG consultation is attached as Appendix B to the report for Member consideration, comment and approval.

The report also updated Members of recent developments on the Scheme Advisory Board review of governance models for the LGPS.

Yvonne Murphy, Head of Pension Administration, summarised the report and informed the Board that comments had been received from the Chair of the Board which had been read out to the Pension Committee.  The Board was also informed that Pensions Committee had agreed that the Fund’s draft response to the MHCLG consultation on ‘Changes to the Local Valuation Cycle and Management of Employer Risk’ would be circulated to Members of the Pension Committee with the invitation to comment on the draft response and would be updated accordingly.

The Head of Pension Administration highlighted the key issues of the report which included the Government’s intent to cap the cost of early retirement packages within the public sector at a total cost of £95.000 per employer.  It was noted that the £95,000 cap would include the value of any early retirement strain payments, and it was envisaged that the ability to take an unreduced early retirement pension would be severely restricted for a number of members.

The Head of Pension Administration also highlighted that in relation to MPF the proposal to remove the requirement for further education corporations, sixth form college corporations and higher education corporations to offer membership of the LGPS to new entrants could lead to a reduction in the active membership base with an adverse impact on cash flow and the pace of scheme maturity. 

Paul Wiggins informed Members that excluding future higher education, further education and Sixth Form staff from the Local Government Pension Scheme had been the subject of an Emergency Motion at the recent National Delegate Conference which he circulated for Members’ information.

 Board members discussed this and raised concern that this would lead to a two-tier workforce in pensions with new starters being offered inferior and less cost-effective schemes.

On a motion by Patrick Maloney and seconded by Paul Wiggins it was;

Resolved – That all members of the Pension Board present at the meeting of the Pension Board held on 17 July,2019 urge the Pension Fund in it’s response to the Consultation on ‘Changes to the Valuation Cycle and the Management of Employee Risk’ to take full account of the views expressed at the Pensions Committee held on 16 July, 2019 by the employee representative in relation to the implications for employees of education corporations in England and that this resolution be forwarded to all Members of the Pensions Committee.