| Number | Risk | Level | Impact | Risk Score | Existing Controls | Revised Level | Revised Impact | Revised Score | Further Controls Required | Risk Owner |
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Operational Risks | | | | | | | | | |
| 1 | Transfer to new administration provider. Risk of reduced service during transfer period. Risk of errors in transfer of information. Risk of project not being completed by 31 December 2020. | 4 | 5 | 20VH | Planning already underway. Joint exercise being undertaken with Leicestershire and Derbyshire Fire Services. Involvement of all key staff across 3 organisations and current suppliers. Project manager appointed to project.
West Yorkshire Pension Fund (WYPF) have been awarded the contract.
Project Plan in place. Regular project meetings in place. | 4 | 5 | 20VH | Ongoing monitoring of risks and progress against timelines. Effective performance monitoring to form part of contract. Specific arrangements to be agreed for those retiring close to cut over date. | Scheme Manager |
| 2 | McCloud Transitional Protection Arrangements discrimination case. New administrators unable to cope with workload; Internal staff unable to cope with workload Lack of national advice / direction; Unable to provide timely/ accurate advice to members; Over complexity of new arrangements | 4 | 5 | 20VH | Membership of Local Pension Board Effectiveness Committee – to gain knowledge and ability to influence national picture. Attendance at relevant training events. New administrators have understanding and awareness of situation. | 4 | 5 | 20VH | Continued engagement at national level – both LGA and Fire Finance Network. Ensure new administrators have adequate plans, including ability of software suppliers to adapt to new regulations.
Consideration being given to procuring additional resources to assist with pension scheme management across Nottinghamshire / Leicestershire and Derbyshire Fire Services. | Scheme Manager |
| 3 | Member data and records incomplete or inaccurate. | 3 | 4 | 12VH | Full review of records undertaken post transfer of pension administration from NCC to LCC. Pension benefit statements issued on annual basis. Errors in records rectified and identified. Reconciliation to HMRC records 2017. Reconciliation between payroll and Administrator records. Internal Pension Audits. | 3 | 4 | 12VH | Introduction of monthly returns from NFRS (Iconnect) to reduce risk of data errors or missing data and reduce impact of year end work. This is being progressed. Improved recording of data within ITrent. Will need reviewing once new administrator in place. Complete Data Audit with new admin supplier. Implement Data Improvement Plan once data audit complete. Data cleansing can be undertaken as part of transfer to new administration supplier. | Scheme Manager |
| 4 | Administration process failure/ maladministration. Risk with new Administrators once new contract commences. | 3 | 4 | 12VH | Regional quarterly client meetings to discuss current pension issues. National advice and guidance from Pensions Adviser at the Local Government Association. Review of pension administration by internal auditors in March 2018 provided substantial assurance. Quarterly meeting with NFRS and Service pension administrators. Completion and feedback from TPR Scheme Return. Pension Governance Audit judged as Substantial Assurance.
Formal agreement in place with administrator to include SLA and performance indicators against defined criteria. | 3 | 4 | 12VH | Will require reviewing once new administrator in place. | LCC Pensions ManagerScheme Manage |
| 5 | Termination given by new administrators due to workload / risk etc | 2 | 5 | 10H | New administrators fully aware of additional workload resulting from current legal challenges. Have knowledge and experience to assess risks. | 2 | 5 | 10H | Build adequate securities into contract. Keep under review following commencement of new contract. | Scheme Manager |
| 6 | Pension software supplier disruption. | 2 | 5 | 10H | Software suppliers involved with McCloud discussions. | 2 | 5 | 10H | | Scheme Manager |
| 7 | Incorrectly applied Tax Rules, including incorrect advice given to members. | 3 | 3 | 9H | Periodic national pension training organised by scheme advisory board. Attendance at training / conference events. Keeping up to date with information provided through circulars. | 3 | 3 | 9H | Scheme Advisory Board looking at developing common list of benefits to be included in pensionable pay. | Scheme Manager |
| 8 | Impact of O’Brien case on Modified Scheme (judged that periods of service prior to the coming into effect of Part Time Workers Directive should be taken into account in calculating the amount of pension to be paid upon retirement) | 3 | 3 | 9H | Awaiting guidance on any impact on the Modified 1992 Scheme. | 3 | 3 | 9H | | Scheme Manager |
| 9 | Common Data / Scheme Specific Data scorings for TPR survey – have dropped significantly | 2 | 3 | 6M | Quality of data is being maintained. Discussions held with Scheme Advisory Board regarding data specification. | 2 | 3 | 6M | Ongoing discussions with TPR / SAB and system providers | Pensions Admin Manager Scheme Manager |
| 10 | New General Data Protection Regulation (GDPR) | 2 | 3 | 6M | Staff being provided with appropriate training Covered within organisation’s wider GDPR controls. Working with other Regional Fire Authorities to ensure compliance. Privacy Notice in place | 2 | 3 | 6M | Will need to be reviewed once new administrator in place. | Scheme Manager |
| 11 | Risk of interruption of service due to COVID-19 | 2 | 3 | 6M | One Pension Board meeting cancelled in March. Remainder of meetings moved to virtual platforms. LGA training has been moved to virtual platform. Administration contract been successfully tendered for – meetings being held virtually. Internal functions and Pension Admin functions currently working well. | 2 | 3 | 6M | Continue to monitor situation | Scheme Manager |
| 12 | Operational disaster fire/flood for example. | 1 | 5 | 5M | Business continuity procedures in place for NFRS Pensions Administrator (LCC). Business continuity plans in place Finance and Payroll Team (NFRS). These were reviewed in
March 2020. Business Continuity Plans for the administrators are embedded in their corporate plans. | 2 | 3 | 6M | Continue to monitor situation | Scheme Manager |
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Financial Risks | | | | | | | | | |
| 13 | McCloud: Costs may escalate to fund additional resources for implementation and system development; Risk of fines / compensation if incorrect advice given due to complexity of the system. | 4 | 4 | 16VH | Membership of Local Pension Board Effectiveness Committee – to gain knowledge and ability to influence national picture. Attendance at relevant training events. | 4 | 4 | 16VH | Consideration being given to procuring additional resources to assist with scheme management. Exercise due to commence to identify those staff who may be affected and associated impact levels. | Scheme Manager |
| 14 | 4 Yearly Pension Scheme Valuation – Risk of increased contributions and affordability. | 4 | 4 | 16VH | LGA have sub group who work on behalf of authorities to challenge any assumptions made that will affect valuations. LGA have appointed independent Actuaries to verify figures and challenge GAD if necessary. Revised Firefighter Pension Employer rates announced 1 March 2019. Increases resulted in additional budget requirement of £2.6m, of which £2.3m is to be funded by grant. Funding continuing in 2020/21. | 4 | 4 | 16VH | Funding beyond 2020/21 still to be determined – will be included in spending review. The date of the next valuation is 31 March 2020. This may again have a major impact due to McCloud. The results may not be known for some time | Scheme Manager |
| 15 | Pension Fund Accounting mistakes | 3 | 4 | 12VH | Checks undertaken by accountancy and HR of ill health and injury charges which has shown they are charged to the Authority, not the Pension fund. GMP checks have highlighted prior year errors that have been corrected. Internal audit reports provide substantial assurance. | 2 | 4 | 8H | Keep under review using national guidance, audits and reconciliations. | Scheme Manager |
| 16 | Excessive charges by NFRS Pension Administrators. | 2 | 4 | 8H | New administrators appointed. Savings in region of £15k per year achieved through change in system providers. Costs could still escalate given additional McCloud work, although West Yorkshire Pension Fund represent several Fire Services, and costs will be spread across them all. | 2 | 4 | 8H | Monitor costs related to McCloud. Monitor risk of financial loss should maladministration occur. | Scheme Manager |
| 17 | Collection of Incorrect Employer Contributions | 2 | 3 | 6M | Ensure correct procedures in place – especially surrounding tapering between schemes. Received positive Internal Audit assessment. | 2 | 3 | 6M | Include in future audits. | Scheme Manager |
| 18 | Fraudulent behaviour, including members forgetting to provide updated information | 1 | 4 | 4M | NFRS Internal financial processes. Check incoming and outgoing scheme funds against schemes forecast – reconciliation process. Internal audit have reviewed processes as part of their pensions audit which was judged to provide substantial assurance. | 1 | 3 | 3M | Conduct regular fraud monitoring process of incoming contributions payments against the schedule of contributions. Consider periodic information check with retired members. | Scheme Manager |
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Governance, Regulatory and Compliance | | | | | | | | | |
| 19 | Communications with Members may not meet statutory requirements. | 4 | 4 | 16VH | The Annual Benefits Statement is one form of communication, and this is already shown as a separate issue on the risk register. Information is sent to those members who are breaching or close to breaching the Annual Tax Allowance. Communications to starters, leavers and those whose circumstances change are generally good, with processes embedded. | 3 | 4 | 12VH | Probably could have revised downwards due to continued high performance of existing administrators but left as will need reviewing after new administrators take over | Scheme Manager |
| 20 | Failure to interpret rules or legislation correctly. | 4 | 5 | 20VH | Regional quarterly client meetings to discuss current pension issues. National technical advice and guidance from Pensions Adviser at the Local Government Association and CLG. Attendance at national training events. Advice and guidance from pension regulator. Policies and procedures in place. Formal IDRP process in place for addressing individual pension disputes
LGA Bulletin to be reviewed by Pension Board. | 3 | 4 | 12VH | Will need to be reviewed once new administrators in place. | Scheme Manager |
| 21 | Training and understanding of members of the pension board | 4 | 4 | 16VH | National training provided by LGA Regional training on key topics. Training session undertaken as part 2 of each Pension Board Training Register kept up to date | 3 | 3 | 9H | Provide training to address knowledge gaps identified: on-going. Skills and knowledge audit of the Board and key staff | Scheme Manager |
| 22 | Annual Benefits Statements to be issued by statutory deadline | 2 | 4 | 8VH | Regular liaison between pension administrator and software supplier Data supplied by NFRS in accordance with template and subject to checking by pension administrator ABS statutory deadline achieved for last 4 years | 2 | 4 | 8H | Moving towards implementation of IConnect and monthly inputting. Will need to be monitored with new administrators. | Scheme Manager |
| 23 | National GMP Reconciliation – risk that exercise will not be completed by December 2018 and errors remain in the system. | 4 | 4 | 16VH | Progress on pensioner and deferred member cases has been good so far. Regional quarterly client meetings to discuss current pension issues will highlight any concerns at an early stage The Pensions Administrator has a dedicated resource working on this, and HMRC has outsourced some of the work to improve the timeliness of responses. | 2 | 4 | 8H | | Scheme Manager |
| 24 | Impact of Future Court Cases. Risk of increased potential work load and costs. | 2 | 4 | 8H | Monitoring of national situation via LGA updates and training. Liaison with Scheme Administrators. | 2 | 4 | 8H | Consideration being given to procuring additional resources to assist with scheme management | Scheme Manager |
| 25 | High turnover of Board members | 2 | 3 | 6M | Ensure initial training available to new members to maintain knowledge of Board | 2 | 3 | 6M | Will improve if Joint Board is set up successfully | Scheme Manager |
| 26 | Creation of Joint Pension Board – impact on scheme governance / reputational risk | 2 | 2 | 4L | Working closely with Derbyshire and Leicestershire Pension Boards to ensure governance of individual scheme is not weakened through creation of joint board | 2 | 2 | 4L | This is on hold pending appointment of new pension administrators. | Pension Board |
| 27 | System failures | 2 | 4 | 8H | Back up and Business Continuity plans | 1 | 4 | 4M | | Scheme Manager |
| 28 | Cyber Risk | 2 | 4 | 8H | Fire Walls / ICT processes / accreditation | 1 | 4 | 4M | Include in data audit | Scheme Manager |
| 29 | Restricting Exit Payments – the proposed new cap on exit payments to £95k will be insufficient to meet statutory pension payments. | 1 | 4 | 4M | Response to consultation exercise | 1 | 4 | 4M | | Scheme Manager |
| 30 | Classification of pensionable allowances | 2 | 4 | 8H | All allowances were reviewed against Blackburn principles when initially paid. Attendance at LGA training seminar July 19. Internal Review of pensionable allowances July 19. | 1 | 4 | 4M | | Scheme Manager |
| 31 | Potential conflict of interest for members of Pension Board. | 2 | 4 | 8H | Pension board members to declare any conflicts and potential conflicts of interest on appointment to the Board and on an ongoing basis. Pension Board conflict of interest register to be completed by Pension Board members. Members of Pension Board to declare any potential conflict of interest at Pension Board meetings. Conflict of interest policy has been adopted by the Board Forms part of Pension Regulator training Covered by Pension Governance Audit which provided substantial assurance. | 1 | 3 | 3M | Review and acceptance of reviewed Conflict of Interest Policy – October 2019 Board meeting. | Scheme Manager |
