This meeting will include an update from the Local Pensions Partnership Administration (LPPA)¹ on their Internal Control Assurance Report. The Board will also discuss a performance update of the Newham Pension Fund, the Fund’s administration strategy and the associated charging strategy, and the Fund’s risk register.

LPPA Internal Control Assurance

The report pack includes a presentation from Janet Morville-Smith² of LPPA on their Internal Control Assurance.

The presentation concerns LPPA’s compliance with the Pensions Regulator’s Code of Practice 14, which deals with the governance and administration of public sector pension schemes. The presentation states that “[t]his report has provided assurances to our Clients that the services provided by LPPA are in compliance” with the Code.

The report also discusses LPPA’s adoption of the AAF 01/20 framework for pensions administration.

AAF 01/20 is the ‘de facto’ market standard. A number of award-winning pensions administrators use the AAF control framework including Mercer/JLT, Barnett Waddingham, Trafalgar House, and XPS.

The report states that the benefits of LPPA using this framework are to:

• Provide clients with independent assurance
• Reduce the number of audits performed on LPPA by its clients

The report summarises some of LPPA’s accreditations, including the ISO 27001³ standard and Cyber Essentials Plus⁴ accreditation.

The report pack also includes LPPA’s latest quarterly report on the performance of the Newham Pension Fund.

Newham Pension Fund Performance

The performance report for Q2 of 2024/25 highlights the fact that the overall performance of LPPA against the agreed Service Level Agreements (SLAs) is 97.8%.

In quarter 1, all cases except for estimates were above the 95% SLA target. Going into quarter 2, all cases are now above the target of 95% except for Retirements from Active status. This is 94.4%.

The report states that the average waiting time on the Contact Centre helpline is 2 minutes and 24 seconds.

Pensions Administration Strategy

The report pack contains the latest Newham Pension Fund’s Pensions Administration Strategy (PAS)⁵ and the associated Charging Strategy.

The report states that “[s]ince Newham Pension Fund originally introduced its PAS in 2023, our pensions administrators, LPPA, have changed how they accept data from employers.” The updated document reflects these changes.

The new requirements for employers in the PAS require them to:

• Submit joiner and leaver forms via LPPA’s online portal, Your Fund
• Submit monthly returns using Your Fund, detailing:
  • Each member’s pensionable pay
  • Normal and additional contributions
  • Changes to members’ working hours
  • Changes to members’ addresses
• Submit monthly returns of the total contributions made to the Fund to the administering authority

employers must still submit monthly returns of the amount of contributions paid into the pension fund to the administering authority so that the amounts in the pension fund account can be reconciled.

The PAS makes reference to Newham Council’s Charging Policy, which details the costs associated with being a scheme employer in the Newham Pension Fund.

The Charging Strategy details the costs that are involved in being an employing authority in the Newham Pension Fund and covers a range of costs that will be attributed to an employer, such as actuarial costs for accounting reports, along with the costs involved with an employer allowing early payment of pensions such as redundancy and ill-health retirements

The updated Charging Policy clarifies how an employer will be charged for:

• The late or non-submission of monthly returns to the administering authority
• The late or non-submission of monthly returns to LPPA
• Poor employer performance that results in the administering authority doing additional work.

Risk Register

The report pack also includes the latest risk register for the Fund, which covers the financial and administrative risks of running the Fund.

The Risk Register is a ‘live’ document and therefore all risks are reviewed quarterly by the Local Pension Board to ensure that they remain relevant and that appropriate controls are in place to manage risks where feasible.

The report states that the template of the risk register has been updated to include:

• The risk to the Fund if no mitigating controls were in place
• The current risk level
• The target risk level

The report lists some specific risks and how they will be mitigated:

• Risk 1: Those charged with the governance of the Fund are unable to fulfil their responsibilities effectively due to losing experienced members of the board, committees and officers. This risk will be mitigated by ensuring full compliance of board and committee members with the Barnett Waddingham Enlighten training system.
• Risk 6: Poor administration by the Fund, employers and payroll providers could lead to inaccurate data. This risk will be mitigated by increasing direct engagement with employers whose performance is poor.
• Risk 9: A lack of specialist knowledge held by officers could mean new legislation is not implemented correctly. This risk will be mitigated by ensuring compliance with the Barnett Waddingham Enlighten training system.
• Risk 14: Poor communication with stakeholders will be mitigated by updating the Communication Policy to increase direct engagement with employers.
• Risk 22: Delays in admitting new employers to the Fund will be mitigated by introducing standard guidance for employers on tendering processes.
• Risk 23: Full compliance with the General Code of Practice. This is a new risk to the register that will be mitigated by:
  • Reviewing the policies and processes of the Fund
  • Supporting officers to become compliant

The report lists a number of risks that are being mitigated through ongoing action, including:

• Risk 2: Assumptions made at the 2022 Triennial Valuation are not realised.
• Risk 3: Reduction to membership numbers leads to negative cashflow.
• Risk 4: Negative impact to employers due to major events such as pandemics and inflation.
• Risk 7: Negative impacts from decisions made by those contracted to manage the Fund.
• Risk 8: Overpayments made to individuals in receipt of pension benefits.
• Risk 11: Reputational risk from being invested in companies with poor ESG/SRI records.
• Risk 12: Poor investment performance arising from asset allocation.
• Risk 13: The Fund’s financial and external reporting does not meet legal requirements.
• Risk 17: LPPA implements a new administration system.
• Risk 18: Compulsory mergers of LGPS funds away from the Newham Pension Fund.
• Risk 19: Cyber security and managing fraud.
• Risk 20: Insufficient capacity to meet demands from changes to legislation and governance.
• Risk 21: Major economic and political events that may impact the Fund’s investments.