The Local Pension Board met on Monday 11 March 2024 to discuss the Pensions Regulator's new General Code of Practice, the Pension Fund Risk Register, and the external audit update. Key decisions included noting the progress on correcting member data and the historical leaver exercise, and acknowledging the administration performance levels of the West Yorkshire Pension Fund.

The Pensions Regulator's New General Code of Practice

The Board received an update on the new General Code of Practice published by The Pensions Regulator (TPR), which consolidates existing codes and sets out expectations for scheme governance and administration. This new code, expected to come into force on 27 March 2024, provides greater clarity on the roles of governing bodies within public sector schemes, including the Scheme Manager, Local Pensions Board, and Pension Fund Committee. The LBB Pensions Team will review the code to ensure compliance and identify any associated risks, with a report on these findings to be presented at a future meeting. Training on the new code will also be arranged for the Board and the Pension Fund Committee.

Pension Fund Risk Register

The Board reviewed the updated Pension Fund Risk Registers, noting that the Non-Administration Risk Register has been revised to align with the format of the Pensions Administration Risk Register. Several risks have had their lowest possible risk scores assigned, indicating that no further mitigation actions can be taken beyond current practices. Two new risks have been identified: Employer unable to pay contributions and Business Continuity for the LBB Pensions Team. The Board discussed Risk ADM06, Failure of non-public sector employers, and noted that from April 2024, new admissions with fewer than 100 members will no longer require a bond or guarantee, a change that will primarily affect schools and academies. The Council will continue to absorb these risks for maintained schools.

External Audit Update

The Board received an update on the external audits for the Pension Fund. The 2020/21 audit report remains outstanding, with BDO advising that the Pension Fund Accounts are ready for sign-off once the Council Accounts are finalised. The Department for Levelling Up, Housing and Communities (DLUHC) has proposed a backstop date of 30 September 2024 for all outstanding audits. If agreed, BDO is unlikely to conduct further fieldwork for the 2021/22, 2022/23, and 2023/24 annual accounts, potentially leading to a modified or disclaimed opinion. The Board raised concerns about the fees paid to BDO, given the limited fieldwork, and requested feedback on any fee reductions sought by the Council due to poor contractual performance. The Board also noted that a whistleblowing complaint being investigated by BDO had contributed to audit delays and requested updates on its management. Grant Thornton PLC has been appointed as the external auditor for the 2023/24 audit, with discussions underway for completion by September 2024.

Data Improvement Plan and Historical Leavers

The Board was updated on the ongoing data correction efforts. The West Yorkshire Pension Fund (WYPF) has reduced the number of data items requiring correction from approximately 28,500 to around 6,580. Work on Guaranteed Minimum Pensions (GMPs) is expected to be completed by May 2024, addressing nearly 2,000 data items. A bulk address-tracing exercise will be conducted in the summer to update approximately 950 members' records with missing or incorrect addresses. TPR data scores have shown improvement, with common data scores meeting acceptable levels, and efforts are underway to increase conditional data scores. The historical leavers exercise continues, with the number of outstanding cases significantly reduced through ongoing work with WYPF and employers.

Administration Performance Report and Update on Other Administration and Legislative Matters

The Board noted that WYPF's performance in completing cases within Key Performance Indicator (KPI) targets remains consistent, averaging around 88.79% in January 2024, with a target of 95%. Performance has been affected by the processing of backlog cases, including those related to the McCloud judgement and transfers. Officers advised that delays in obtaining updated actuarial factors from the Government Actuaries have impacted WYPF's programming. The number of member registrations for the WYPF My Pension portal continues to increase, with a target of 50% for active members by the end of March 2024. The LBB Pensions Team is actively encouraging registrations through various outreach methods, including drop-in sessions. The finalised London Borough of Barnet Pension Fund Communication and Engagement Policy aims to improve engagement with all stakeholders. The Board was also informed about the upcoming changes to employee contribution bands effective from 1 April 2024, and updates on new actuarial guidance from DLUHC concerning the McCloud remedy.

Decisions Made by the Pension Fund Committee

The Board reviewed recent decisions made by the Pension Fund Committee, focusing on the Council's request to review pension contributions. Following legal advice, the Council's policy was reviewed and amended after a consultation period. An Extraordinary Pensions Committee meeting on 1 February 2024 agreed to change contribution rates and an adjustment certificate, broadly reflecting the actuary's 2022 valuation. Officers confirmed that these revisions would not affect current or future scheme members' benefits, which are statutory obligations. The Board noted that the funding position remains over 100%.

Knowledge and Understanding

The Board was reminded of their regulatory duty to maintain up-to-date knowledge and understanding of pensions. A paper outlining mandatory and recommended training opportunities was presented, including the TPR Trustee toolkit and Hymans' LGPS Online Learning Academy (LOLA). The LBB Pensions Team will continue to monitor training undertaken by Board members and will present a paper on the training strategy for both the Committee and the Board, including budgets, at a future meeting.

Committee Work Programme

The Board noted the committee work programme for 2023 to 2024.