Agenda item

The item was introduced by Lisa Eglesfield (Pension Administration Service Manager). She advised there had been no policy updates during the previous quarter. A full discretions document was being created with the help of colleagues in HR and Legal and this would be presented to the Board after it had been taken to the next Staff and Pensions Committee. Arising from the previous meeting, Lisa Eglesfield confirmed the Fund followed the six key processes that would ensure good governance.

Regulations had been updated to reflect changes relating to carers’ leave and the firefighters pension scheme. The payroll system had been amended to reflect these changes. Lisa Eglesfield told members there had been an error relating to revaluation orders for care pension pots, as projected figures had been used in 2021 and 2022 instead of the actual figures. The projected figures were too low, so there would be an increase to the size of pension pots. Administration changes to remedy this would be undertaken by the West Yorkshire Pension Fund on Warwickshire’s behalf. Lisa Eglesfield advised this was a national issue and not one that was unique to Warwickshire.

Regarding McCloud, Lisa Eglesfield said that since the time the report was written immediate choice and RSS had been put on hold while there were outstanding issues with HMRC around the treatment of interest. The interest rate for McCloud cases was set at eight per cent, but HMRC were questioning whether that was a commercial rate and cases relating to unauthorised payments had been put on hold while this was remedied. Cases where it had been established there was no chance of any unauthorised payment could be proceeded with however. There had been ten identified instances of unauthorised payments having been confirmed, of which four related to ill health cases. Members were told there is currently no regulatory provision to allow tax that has already been paid to offset tax which is due under the new calculation.

Lisa Eglesfield reminded members of the second retained exercise, which allowed members of the retained pension scheme to buy back service that previously they had only been able to purchase in the first modified exercise from 1 July 2000 onwards. Similar issues in the McCloud case relating to paying arrears, and whether payments had been authorised or not, were being worked on. The Pension Fund was relying on a calculator issued by the Local Government Association. The LGA had also published a guide to help work out payments related to three of the scenarios associated with the second retained exercise, but a total of 37 different scenarios had been identified. Lisa Eglesfield said strong internal controls needed to be established before any required additional payments were made.

Following a question, it was clarified that payments that could be ten years in arrears would be made in a single payment and there would only be one associated tax payment instead of ten. Helen Scargill (Client Relationship Manager, West Yorkshire Pension Fund) said HMRC would use their discretion and allow the tax rates for the ten years of the arrears payments to be adjusted. There would also be an element of potentialcompensation because a member shouldn't be in a worse position because of the delays. Helen Scargill said some payments to this effect had already been made. Lisa Eglesfield said 142 people had been identified as being in scope; of those, 57 had returned their forms and calculations had been completed on 52 of them. However because of issues relating to calculations and queries being raised by other pension funds, officers had not felt confident enough on any of those 52 cases to progress them all the way through to sending the options to the member. The plan was to send an update to all affected members within the next three months.

Responding to a question from David Vazquez about whether interim payments could be made, Lisa Eglesfield said this had been considered but rejected as an idea in case it later emerged there had been an error in the LGA calculator. She added there was a priority order that in relation to calculating the pensions. However the LGA and GAD calculator was more effective at working through the simpler cases rather than the more complex ones.

The funding position for the scheme evaluation had been set for the 2024/25 financial year. This included information on funding support for the increasing pension contributions, as well as noting additional one-off grants. Funds were no longer being asked to produce calculated estimates in relation to age discrimination and Matthews remedies as there were issues with calculating estimates of pension benefits.  This meant funding was being given to local authorities based on numbers of members in the funds in previous years. The finance team would provide quarterly updates on which benefits had been paid.

Regarding pension dashboards, Lisa Eglesfield said fire pension scheme members were being included in Warwickshire’s communication plans. Regulations stated the Fund must connect to the pensions dashboard by 31 October 2025.

The Pensions Regulator Code of Practice took effect from 28 March. A governance check to ensure the Fund was in compliance with the Code would be starting soon.

Lifetime allowance changes were made from 6 April, so a pension holder was now able to take out a higher lump sum but anything above the level amount was liable to be taxed. The level of the lump sum had not changed.