Agenda item

An update from the Chief Finance Officer on the Wiltshire Pension Fund Risk Register is circulated for Members’ consideration.

The Head of the Pension Fund, David Anthony, summarised his report, and outlined the key changes in the risk register since the last meeting of the committee, as follows:

PEN001 – Failure to process pension payments and lump sums on time

This risk increased from green to amber as a result of access issues experienced by some pension fund staff. The planned rollout of new laptops to the team would ameliorate this risk in the future.

PEN006b / PEN007b: Significant rises in employer contributions for non-secure employers due to increases in liabilities / Significant raises in employer contributions for non-secure employers due to poor/negative investment returns

This risk decreased from amber to green as a result of the agreement of rates for the 2010 Valuation with all employers. 

PEN013: Failure to communicate properly with stakeholders

This risk remained at amber but a number of different issues have arisen, it was explained.  The change in pension tax relief has been communicated to all members although the ability to provide the tax liability information next year (October 2012) still requires developing. The impact of National Employers Savings Trust (NEST) and the responsibilities of individual employers also need to be communicated.  

A growing concern is the potential number of opt-outs following the Government’s implementation of Lord Hutton’s report into public sector pensions, which is expected to increase employee contribution rates by on average 3% from April 2012. Measures including reward statements are being considered to help retain existing members and efforts to make eligible non-members aware of the benefits they are missing out on will continue.

A typical reward statement would be a booklet constructed to emphasise the benefits of joining the pension scheme as part of a total remuneration offered by individual employers. The Pension Fund team were investigating the practicalities of this, as the information would form a part of the employers’ own communications with their employees.

Other actions to offset this risk were being considered and include:

v  Surgeries for members of the Local Government Pension Scheme

v  Further newsletters for active members of the scheme

v  Annual benefits letters to those who have opted-out – to show them the benefits they are missing out on.

The Independent Adviser re-iterated concerns about the effect of heightened contribution rates, and emphasised that evidence pointed to substantial drop-out rates, above the 1% suggested by Treasury as a consequence of the reforms. CIPFA would continue to question Central Government on the need for this and origins of the £900 million requirement that the increases were designed to fill. The opt-out estimates used by the Treasury were also based on historic numbers of participation in local government funds, which were likely to be inaccurate given the current round of job losses, retrenchment and general economic situation. The Interim Chief Finance Officer stated that he shared these concerns, and was looking to commission research into the likely effects and was also a high profile issue amongst the Society of County Treasurers.

Resolved:

To note Pension Fund Risk Register