Annual Report 2019-20 - Local Firefighter Pension Board Meeting

Local Firefighter Pension Annual Report 2019/20

Report of the Chief Fire Officer

Date:

Purpouse of Report:

To report to Members on the activities of the Local Firefighter Pension Board and Scheme Manager up to 31 March 2020.

Recommendations:

That Members take note of the activity of the Pension Board and Pension Scheme Manager during 2019/20.

Contact Officer 

Name: Beck Smeathers , Scheme Manager
Tel: 0115 967 0880
Email: becky.smeathers@notts-fire.gov.uk

Media Enquiries Contact: Vicky Brown, (0115) 967 0880, vicky.brown@notts-fire.gov.uk


  1. Background
    1. The Public Service Pensions Act 2013 introduced a framework for the governance and administration of public service pension schemes, including those pension schemes for fire and rescue workers. The governance arrangements in place for this Authority’s firefighter’s pension scheme are attached at Appendix A. The Act included the requirement for a Local Pension Board to be established by each responsible Authority.

    2. In April 2015, this Committee approved the creation of a Local Pension Board in respect of the firefighter pension schemes, in accordance with the requirements of the Public Services Pensions Act 2013 (the Act). This Board is known as the Local Firefighter Pension Board and has been operating ever since.

    3. The Fire Authority is the Scheme Manager for the firefighter pension schemes, which is a role defined by the Act. The role of Scheme Manager is delegated to the Head of Finance post and this report therefore serves to communicate to the Fire Authority about the activities of the Head of Finance and of the Local Firefighter Pension Board to date.

  1. Report
  2. Constitution

    1. A constitution for the Local Firefighter Pension Board was initially approved by the Policy and Strategy Committee at the time that the Board was created in 2015. It has since been updated to make necessary changes to improve the running of the board. The current constitution can be found at Appendix B.

    2. Format of meetings

    3. Normally a minimum of three meetings are held per year. However, the meeting on 16 March 2020 was cancelled at late notice due to it being the start of the Covid-19 pandemic. This was the day that Government guidance was updated to recommend that all workers who could work from home should do so. Papers had already been circulated to Pension Board members and the Scheme Manager was available to answer any queries regarding the reports

    4. The meeting held in June 2019 which was not quorate. The meeting still went ahead, and the notes of this meeting were formally approved at the October meeting. Clearly the meetings during the 2019/20 financial year did not follow normal protocol, but this is felt to be circumstantial rather than a cause for concern. The situation will be monitored during 2020/21.

    5. Meetings are held publicly and advertised on the Authority’s website. There have been no members of the public attending meetings to date. The meeting agenda and papers, together with the minutes of the previous meeting, are published on the Authority’s website one week prior to the meeting date.

    6. Board members are required to declare any potential conflicts of interest to the Scheme Manager prior to each meeting, in line with the Local Firefighter Pension Board’s Conflicts of Interest Policy.

    7. At the end of each meeting there is usually a training session for Board members on an aspect of pensions.

    8. Board Membership

    9. As set out in the constitution, there is an equal number of employer and employee representatives on the Board and there is now also one substitute member for each side. Substitute members are encouraged to attend meetings as observers, and they are able to act as Board members in the absence of one of the full members. Substitute members are also invited to attend training sessions as this helps to improve knowledge and understanding of pensions issues.

    10. The Chair of the Local Firefighter Pension Board is currently a representative from the employee side. The requirement to rotate the appointment of Chair is set out in the constitution (Appendix B).

    11. There are currently no vacancies on the Board
    12. Training

    13. The Pensions Regulator has published a Code of Practice for the governance and administration of public service pension schemes and this code sets out the requirement for Board members to achieve and maintain knowledge and understanding sufficient to enable them to carry out the role of Board member.

    14. There have been several training opportunities for the Board, including: the opportunity to attend the annual LGA Fire Pensions Conference; one to one training with the scheme manager; training presented by the Authority’s pension administrator and training at Board meetings. There is online training available on the Pension Regulator website which members of the Board are encouraged to complete.

    15. Each Board member has completed a training needs analysis and the Board has a Training Policy. A record of all training is maintained by the Scheme Manager.

    16. Board Activity

    17. Since the Local Firefighter Pension Board was set up in 2015, the work of the Board has been shaped by the Board members and by Officers supporting the Board

    18. Some regular reports to the Board have been developed. These include:
      • updates on current pension issues;
      • the Pension Fund Risk Register;
      • a report from the Pension Administration Team;
      • annual updates on the financial position of the Pension Fund.

    19. Current Issues

    20. McCLoud -Transitional Protection / Treatment of Immediate Detriment Cases. Following an employment tribunal and subsequent appeals, the transitional protections related to the 2015 Firefighters’ Pension Scheme have been found to be age discriminatory.

    21. Formal consultation on the changes to the transitional arrangements to the 2015 schemes was released at the end of July 2020. It affects those members who were in service on or before 31 March 2012. The consultation proposes giving this group the option to choose between receiving legacy or the reformed (2015) scheme benefits in respect of their service during the period between 1 April 2015 and 31 March 2022. This would enable the members to choose which option would suit them best.

    22. The consultation seeks views on the proposal, and in particular, on which of two possible approaches should be taken to making this choice:
      • An immediate choice;
      • A deferred choice at the point at which a member retires.

    23. Both approaches would give members the same choice, but they differ in the point in time at which the decision is made by the member.

    24. It is likely that further legislation will need to go through Parliament to implement any changes. Until the remedy has been determined, current legislation remains in place.

    25. The Home Office issued a note direct to Fire and Rescue Services on 21 August regarding the treatment of immediate detriment cases in the age discrimination proceedings. However, at present this remains informal guidance. It does not constitute detailed guidance that administrators and FRAs would need in order to act upon and FRAs would still need to make their own interpretation. The service is awaiting further clarity from the LGA.

    26. Pension Scheme Administration. The contract with Leicestershire County Council (LCC) to provide the pension administration function for Nottinghamshire, Leicestershire and Derbyshire Fire Authorities is being terminated with effect from the 31 December 2020.

    27. A full OJEU procurement exercise has been undertaken and the contract has now been awarded to West Yorkshire Pension Fund who have a proven track record of providing this service to numerous other Fire Authorities. The implementation process is now well under way and progressing in line with the timetable. West Yorkshire Pension Fund will take over the contract in December 2020. The new contract will deliver savings in the region of £15k per year.

    28. The Joint Pension Board application to the Secretary of State has been put on hold pending the appointment of the new administrators.

    29. Scheme Manager Activity

    30. The role of the Scheme Manager is set out in the Governance Arrangements (Section 3, Appendix A). Much of the role of the Scheme Manager relates to ensuring that proper administrational and governance arrangements are in place. The effectiveness of current procedures was demonstrated by the Governance Audit and the Pension Audit undertaken in May 2017, both of which were judged to provide substantial assurance.

    31. Some of the Scheme Manger activity is undertaken by the Scheme Administrators. In May 2018, the Leicestershire County Council internal audit team undertook an audit on behalf of the three Fire Services it administers. The audit considered the validity and accuracy of payments and calculations. Again, the audit substantial assurance that correct procedures were in place. Further audits will take place following the transfer of the administration function to West Yorkshire Pension Fund.

    32. The scheme manager has responded to statutory and not statutory requests for information, including national surveys of the firefighter’s pension scheme by both The Pension Regulator and the Local Government Association. The results of these surveys are reviewed and provide the basis for making any necessary improvements.

    33. Both the scheme manager and Human Resources advisor to the pension board have attended a number of local and national events to ensure that their knowledge and understanding remain up to date.

    34. The Local Firefighter Pension Board is now well established and has made good progress in improving the knowledge and understanding of the Board about pension issues, and in ensuring that governance and administration of pensions is carried out effectively. Work has also been undertaken to communicate with pension scheme members about pension issues and to raise the profile of this important subject. The Board will continue to ensure that good practice is maintained and ongoing improvements are made in line with advice from the Scheme Advisory Board and The Pension Regulator.

  3. Financial Implications
    1. The training of Board members is largely carried out in house at no direct cost, and national events such as the LGA conference have been free of charge so far. Where Board members are required to travel to attend training events this cost is contained within existing budgets

    2. The Authority continues to pay a levy to the Scheme Advisory Board and this will cover the cost of the national fire pensions technical advisor post and support the work of the SAB. The aim of the SAB in setting this levy is to help fire authorities to achieve cost savings by producing guidance and communications centrally for authorities to share. The cost in 2019/20 will be in the region of £5,100 and this has been provided for within the revenue budget.

  4. Human Resources and Learning and Development Implications
  5. There are no human resources or learning and development implications arising directly from this report. The members of the Board are required to achieve and maintain knowledge and understanding of pensions and this requirement is being managed and monitored by the Scheme Manager.

  6. Equality Impact Assessment
  7. An equality impact assessment has not been undertaken because this report is not associated with a policy, function or service.

  8. Crime and Disorder Implications
  9. There are no crime and disorder implications arising from this report.

  10. Legal Implications
  11. The Local Firefighter Pension Board was created to fulfil the requirements of the Public Service Pensions Act 2013.

  12. Risk Management Implications
  13. The risks associated with pension governance and administration are set out in the Board’s risk register, which is actively managed by the Scheme Manager and monitored by the Board.

  14. Collaboration implications
    1. Nottinghamshire, Leicestershire and Derbyshire Fire Authorities all share the same pension administrator and this has allowed for a number of collaborative activities associated with pensions. There have been several regional training events for Local Pension Boards and information events for firefighters. More are planned for the coming year. In addition, Officers from the Finance and Human Resources Departments attend quarterly regional pension administration meetings to keep up to date with pension issues and to share good practice.

  15. Recommendations
  16. That Members take note of the activity of the Pension Board and Pension Scheme Manager during 2019/20.

  17. Background papers for inspection (Other than published documents)
  18. None.


John Buckley
Chief Fire Officer

Appendix A

Governance Arrangements for Firefighter Pensions - Nottinghamshire and City of Nottingham Fire and Rescue Authority

  1. Introduction

    1. The purpose of this document is to set out the governance arrangements relating to all aspects of firefighter pensions. This document forms part of the overall corporate governance framework for the Authority.

    2. The various firefighter pension schemes fall within the remit of the Public Service Pensions Act 2013. The Pensions Regulator has produced a code of practice for the governance and administration of public service pension schemes and this document is based upon the recommendations in this code of practice.


  2. Overview of Roles and Definitions

    1. The Public Service Pensions Act 2013 identifies a number of roles in relation to public service pension schemes. These are explained below and interpreted in the context of the Nottinghamshire and City of Nottingham Fire and Rescue Authority:

      1. Responsible Authority. The responsible authority has the power to make pension scheme regulations. The Act identifies Secretaries of State as responsible authorities, so for the firefighter schemes this would be the Secretary of State for Communities and Local Government.

      2. Scheme Manager. For locally administered schemes such as the firefighter schemes the scheme manager may be the local administering authority or a person representing an Authority. The Combined Fire Authority is therefore deemed to be the Scheme Manager, with the day to day responsibilities of the Scheme Manager delegated to the Head of Finance

      3. Pension Board. The Local Pension Board is responsible for assisting the Scheme Manager to comply with the scheme regulations and other legislation relating to the governance and administration of the firefighter schemes. Scheme regulations and the Scheme Manager will determine what the Pension Board’s role and responsibilities will be and for this Authority these are set out in the Constitution of the Local Pension Board.

      4. Scheme Advisory Board. Each defined benefit public service pension scheme set up under section 1 of the 2013 Act has a Scheme Advisory Board with responsibility for providing advice to the Responsible Authority on the desirability of changes to the scheme when requested to do so. The Department for Housing Communities and Local Government has set up a Scheme Advisory Board for the Firefighter Pension Scheme 2015.

    2. Other roles which are not necessarily defined by the Act, but which are relevant to firefighter pension schemes are:

      1. Employer. The employer is the Combined Fire Authority, with day to day employer responsibilities delegated to the Chief Fire Officer.

      2. Scheme Administrator. This role deals with day to day pension administration of firefighter pensions including the keeping of pension records and the calculation of pension benefits. This function is outsourced, currently to Leicestershire County Council.

      3. Scheme Advisers. Advisers and service providers can help those governing and administering schemes to make informed decisions. In practice a range of people and bodies act as Scheme Advisers including the Scheme Administrator, the Chief Fire Officer and other Officers within the Service, the Local Government Association, the Scheme Advisory Board and the Department for Communities and Local Government.

    3. Roles and Responsibilities

      Scheme Manager:
      1. The Scheme Manager is responsible for providing certain information, including:
        • Annual benefits information to scheme members
        • Certain information to scheme members (and others in certain circumstances) on request including: basic scheme information, significant changes to schemes, information about future benefits

      2. The Scheme Manager is responsible for publishing information about the Local Pension Board, including who the board members are, representation on the board, matters for which the board is responsible, terms of reference, the appointment process, the employment and job title and any other relevant position held by board members, any specific responsibilities of board members. Consideration should be given to publishing Local Pension Board agendas, papers and minutes.

      3. The Scheme Manager is responsible for publishing any other specific information as directed by the Responsible Authority or other Government department.

      4. The Scheme Manager is responsible for keeping records of member and beneficiary information and transactions. The Scheme Manager is responsible for ensuring that record keeping processes are effective, that member data is regularly reviewed and evaluated and that data is held for an appropriate length of time. In practice certain records are held by the Service and others are held by the Scheme Administrator.

      5. The Scheme Manager is responsible for arranging Local Pension Board meetings in accordance with the constitution for the Local Pension Board.This will include preparing agendas and ensuring that reports are provided to board meetings as required.

      6. The Scheme Manager is responsible for keeping records of pension board meetings and decisions. This must include the date, time and place of the meeting; the names of all pension board members invited to the meeting; the name of any person attending and in what capacity; the minutes of the meeting and any decisions made at the meeting.

      7. The Scheme Manager is responsible for ensuring that pension board members do not have conflicts of interest and for managing any potential conflicts of interest.

      8. The Scheme Manager is responsible for establishing and operating adequate internal controls to manage risks relating to the schemes. This will include having a process to identify, evaluate and manage risks as well as monitor controls.

      9. The Scheme Manager is responsible for ensuring that pension contributions are paid into schemes on time and in full. This will include having a process to monitor payments and identify and resolve contribution payment failures. The Scheme manager must report significant contribution payment failures to the Pensions Regulator within 10 working days.

      10. The Scheme Manager is responsible for making and implementing arrangements which comply with legal requirements for resolving internal disputes with members and others, and for regularly checking that the arrangements work effectively. This responsibility is delegated to the Head of HR Services.

      11. Some of the responsibilities of the Scheme Manager are carried out by the Scheme Administrator on the Scheme Manager’s behalf.

      12. Local Pensions Board
      13. The Local Pension Board is responsible for assisting the Scheme Manager in securing compliance with scheme regulations, governance and administration legislation and any requirements of the Pensions Regulator.

      14. The Local Pension Board is responsible for establishing and maintaining a training and development policy and framework to address the legal requirement for board members to have sufficient knowledge and understanding to carry out their role.

      15. Members of the Local Pension Board are responsible for the appointment of a Chair to the board in accordance with the constitution of the Local Pension Board.

      16. Members of the Local Pension Board are responsible for declaring any potential conflict of interest arising as a result of their position on the board to the Chief Fire Officer.

      17. Members of the Local Pension Board are responsible for participating in training and development as required to achieve sufficient knowledge and understanding to carry out their role.

      18. Employer
      19. The Employer is responsible for paying contributions into pension schemes and keeping and providing data to the Scheme Manager and / or the Scheme Administrator. This responsibility is delegated to the Head of Finance

      20. The Employer is responsible for dealing with disputes. This responsibility is delegated to the Head of HR Services.

      21. The Employer is responsible for the administration of firefighter pensions. This activity is outsourced and responsibility for managing the contract is delegated to the Head of Finance.

      22. All Roles
      23. The Scheme Manager, members of the Local Pension Board, the Scheme Administrator and any Scheme Adviser are all responsible for reporting breaches of the law to the Pensions Regulator where that breach is likely to be of material significance.


Reviewed May 2019
Becky Smeathers
Scheme Manager

Appendix B

Constitution - Local Firefighters Pension Board of Nottinghamshire and City of Nottingham Fire Authority

  1. Statement of Purpose
  2. The purpose of the Board is to assist Nottinghamshire and City of Nottingham Fire and Rescue Authority (The Fire Authority) in its role as the Scheme Manager of the Fire Fighters Pension Schemes (1992, 2006, 2015 and Retained Modified). Such assistance is to:

    1. secure compliance with the Scheme’s regulations, any other legislation relating to the governance and administration of the Scheme, and requirements imposed by the Pensions Regulator in relation to the Scheme.

    2. ensure the effective and efficient governance and administration of the Scheme

  3. Duties of the Board
  4. The Board should at all times act in a reasonable manner in the conduct of its purpose. In support of this duty Board Members:

    1. should act always in the interests of the Scheme and not seek to promote the interests of any stakeholder group above another.

    2. should be subject to and abide by Fire Authority’s Codes of Conduct for Members and Employees.

  5. Membership
  6. The Board will comprise an equal number of employer and member representatives with a minimum requirement of no less than four in total.

  7. Scheme Member representatives
    1. 2 Scheme Member representatives shall be appointed to the Board by the 2 largest trades unions recognised by the Fire Authority who represent Scheme Members (i.e. FBU and FOA) but in default of any such appointments being made the Fire Authority shall invite expressions of interest from Scheme Members and appoint such Scheme Member representatives who it regards as best suited to the role of Board Member.

    2. Scheme Member representatives shall be current Scheme Members.

    3. Scheme Member representatives should be able to demonstrate their capacity to attend and complete the necessary preparation for meetings and participate in training as required.

  8. Employer Representatives
    1. 2 Employer representatives shall be appointed to the Board by the Fire Authority.

    2. Employer representatives shall be 1 Fire Authority Member and 1 Principal Officer provided that neither Officer nor Members exercise delegated responsibility for discharging the Scheme Manager function of the Fire Authority.

    3. Employer representatives should be able to demonstrate their capacity to attend and complete the necessary preparation for meetings and participate in training as required.

    4. Employer representatives shall be appointed by the Fire Authority in a manner which it considers best promotes the purpose of the Board.

  9. Appointment of Chair
    1. The Board shall appoint its own chair for a period of 12 months rotating the appointment between scheme member representatives and employer representatives.

    2. The duties of the Chair should be in accordance with the duties of a committee chair under the Fire Authority’s Constitution.

  10. Substitute Board Members
    1. The Board may appoint one substitute Scheme Member Representative and one substitute Employer Representative. Substitute representatives can take part in Board meetings only in the place of an appointed representative of the same group who cannot attend a meeting.

    2. A substitute representative may attend, and participate in, any training events for Board members

    3. A substitute representative may attend a Board meeting as an observer, if all representatives of the same group are attending that meeting. In this situation, the substitute representative must not participate in the business of the meeting.

  11. Notification of Appointments
  12. On appointment to the Board the Fire Authority shall publish the name of the appointees, the process followed in the appointment together with the way in which the appointments support the effective delivery of the purpose of the Board.

  13. Conflicts on Interest
    1. All members of the Board must declare to the Chief Fire Officer on appointment and at any such time as their circumstances change any potential conflict of interest arising as a result of their position on the Board.

    2. On appointment to the Board and following any subsequent declaration of potential conflict the Chief Fire Officer shall ensure that any potential conflict is effectively managed in line with both the internal procedures of the Fire Authority and the requirements of the Pensions Regulators codes of practice on conflict of interest for Board members.

  14. Knowledge and understanding (including Training)
    1. Knowledge and understanding must be considered in light of the role of the Board to assist the Fire Authority in line with the requirements outlined in paragraph 2 above. The Board should establish and maintain a policy and framework to address the knowledge and understanding requirements that apply to Board Members. That policy and framework shall set out the degree of knowledge and understanding required as well as how knowledge and understanding is acquired, reviewed and updated.

    2. Board Members shall attend and participate in training arranged in order to meet and maintain the requirements set out in the Board's knowledge and understanding policy and framework.

    3. Board Members shall participate in such personal training needs analysis or other processes that are put in place in order to ensure that they maintain the required level of knowledge and understanding to carry out their role on the Board.

  15. Term of Office
    1. The term of office for Board Members shall be 2 Municipal Years and there shall be no restriction on reappointment at the expiry of a Board Member’s term.

    2. Board membership shall be terminated prior to the end of the term of office due to:

      1. A Scheme Member representative ceases to be a Scheme Member.

      2. An Employer representative ceases to be a Fire Authority Member.

    3. Board membership may be terminated prior to the end of the term of office by a resolution of the Fire Authority where the Board Member is no longer able to demonstrate their capacity to attend and prepare for meetings or to participate in required training.

  16. Meetings
    1. The Board shall as a minimum meet 3 times per year

    2. The Chair, with the consent of the other Board Members, may call additional meetings. Urgent business of the Board between meetings may, in exceptional circumstances, be conducted via communications between members of the Board including telephone conferencing and e-mails.

    3. Meetings shall be open to the public and shall be conducted in accordance with the Fire Authority’s constitution as regards to the attendance of the public at meetings. Meetings will be advertised on the Service website at least one week prior to the date of the meeting with a link to the agenda, papers and minutes of the previous meeting.

    4. If there are any reports or papers containing confidential matters these will not be published. In this case the Board meeting will consist of part one for all non-confidential items, open to the public, and part two for all confidential items, closed to the public. Matters will be deemed confidential by reference to the personal data provisions of the Data Protection Act.

  17. Quorum
  18. A meeting is only quorate when 4 members are present, 2 scheme member representatives and 2 employer representatives.

  19. Voting
    1. The Board shall as far as possible make any decisions by consensus but where this proves not to be possible the Board may vote upon an issue.

    2. Each Board Member shall have 1 vote and in the event of an equality of votes the Chair shall have a casting vote.

  20. Support to the Board
    1. The Chief Fire Officer shall provide such support to the Board as it requires to discharge its functions.

    2. The Board may request information from the Chief Fire Officer with regard to any aspect of the Scheme Manager function. Any such a request should be reasonably complied with in both scope and timing.

    3. The Board may make recommendations to the Chief Fire Officer which should be considered and a response made to the Board on the outcome within a reasonable period of time.

  21. Relationship with Firefighters Pension Scheme Advisory Board
    1. The national Scheme Advisory Board has been established in accordance with the Public Service Pensions Act 2013 and its objectives include the provision of advice to Local Pension Boards in relation to the effective and efficient administration of the pension scheme. Communications from the Scheme Advisory Board are likely to be made via the Chair of the Local Pension Board who must ensure that the Fire Authority, as Scheme Manager, is kept informed of any new requirements.
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