The Lancashire Local Pension Board met on Tuesday 2 April 2024 to discuss a range of pension-related matters. Key decisions included noting the updated Discretions Policy Statement and a revision to the abatement policy for re-employed members. The Board also reviewed reports on regulatory updates, breaches, communications, and the annual effectiveness of the Board itself.

Discretions Policy Review

The Board noted the updated Lancashire County Pension Fund Discretions Policy Statement and a revision to the Fund's abatement policy. The abatement policy, which applies to pre-1 April 2014 pension elements for members re-employed after ill-health retirement, will be discontinued from 1 July 2024. This change aligns with the fact that pensions earned after 1 April 2014 cannot be abated. The policy revision also means that any pensions currently abated will be reinstated from the same date. Arguments for discontinuing abatement included aligning with post-2014 regulations, the dwindling number of members with pre-2014 membership, and the potential for inconsistent treatment between members taking up local government roles versus those in the private sector. The administrative burden of abatement and the potential for overpayment if cases are missed were also cited. The policy update will be presented to the Pension Fund Committee for approval.

Regulatory Update

An update was provided on various pension-related regulatory issues. The McCloud remedy implementation is progressing, with 93% of membership data verified. After 31 March 2024, Local Pensions Partnership Administration (LPPA) will assume data accuracy for McCloud calculations. The Board was informed about a judicial review concerning the government's handling of McCloud remedy costs, which could impact member benefits or contributions. The Pensions Dashboard Programme is on track for LGPS connection in September 2025, with a National Audit Office investigation into the programme planned. The abolition of the Lifetime Allowance from 6 April 2024 was noted, with new lump sum allowances introduced, though most LGPS members are not expected to be affected. Public service pensions will increase by 6.7% in April 2024. New guidance for the Scheme Advisory Board (SAB) Annual Report is expected by April 2024. A SAB statement on surpluses was issued in December 2023, identifying strategies for managing them. The new General Code of Practice from The Pension Regulator is expected to come into force on 27 March 2024. The Economic Activity of Public Bodies (Overseas Matters) Bill, which seeks to ban politically influenced investment decisions, was also discussed. The Spring Budget confirmed new reporting requirements for LGPS Funds regarding asset allocation, including UK equity investment.

LCPF Breaches Report

The Board received a summary of the Lancashire County Pension Fund (LCPF) Breaches Log for the period 1 December 2023 to 29 February 2024. Seven data breaches were reported, none deemed significant enough to warrant reporting to the Information Commissioner or The Pension Regulator. These included documents sent to the wrong addresses or email recipients. Eight administration breaches were also reported, none considered materially significant to The Pension Regulator. These involved incorrect benefit calculations, overpayments, and issues with communication regarding the McCloud ruling. Contribution breaches were reported as zero for the period, indicating an improvement in employer submissions. However, the volume of complaints per 1,000 members (2.78) remained above the CEM benchmarking target of less than 1. The Board noted the intention to develop a dashboard-style report for future breach reporting.

Communications Update

An update was provided on communications activities by LPPA and the Pension Fund Team. LPPA has focused on employer engagement to ensure timely monthly returns and has issued life certificates to overseas retirees. A new retirement section has been launched on the LPPA website. The Pension Fund Team has been assisting LPPA with McCloud remedy data and addressing the digital gap by exploring options to obtain member email addresses from employers. Planned activities include encouraging PensionPoint registration, employer training, and the distribution of P60s and Annual Benefit Statements.

Annual Review of the Lancashire Local Pension Board

The Board considered the Chair's report on the annual review of the Board's effectiveness. Recommendations included continuing to allocate specific areas of Board activity to members for lead responsibility, arranging training sessions on legal updates, audit and assurance, investment vocabulary, and administration updates. The report also recommended ensuring new Board members receive adequate training and support, and implementing a process to utilise Board members' networks for greater engagement with employers and members.

Part I Reports Presented to the Most Recent Pension Fund Committee

The Head of Fund provided an update on decisions made by the Pension Fund Committee at its meeting on 8 March 2024, concerning reports including the External Audit Findings Report 2022-23, Budget Monitoring, the 2024-25 Budget, Overpayments, and the Training Plan.

2023/24 Training Record and Update on Pension Related Training

The Board noted the 2023/24 Training Record and an update on recent training events for Board members. This included participation in an internal workshop on legal duties and responsibilities. The Training Record will be updated to reflect attendance at these events.