Agenda item

5.1      Diana McDonnell-Pascoe, Pension Project and Governance Lead, gave the Committee an overview of their report on the Guaranteed Minimum Pensions (GMP) rectification project. The Committee were notified that officers had received all of the required data from Mercer Ltd who had carried out a rectification exercise, correcting incorrect member records, resulting in an outline of members that required either an increase, a decrease, or no change to the GMP element of their pensions. Officers stated that it was their duty to not knowingly pay incorrect pensions and highlighted the need for the project to be implemented; however, it was for the Committee to decide upon the method by which the rectification project should be implemented. Members were also notified that the rectification data showed trends that the smallest pensions in payment would generally be subject to the most significant proportional reduction.

5.2       Officers elaborated on the four project implementation options available for the Committee to consider which were also outlined in the report, it was noted that there were implications associated with each option. It was also highlighted that the GMP project was a national issue concerning a multitude of Local Government Pension Scheme (LGPS) funds and that there was the possibility of garnering media attention which could lead to additional scrutiny of the decisions made with regard to implementation of the project. By way of information, it was noted that LGPS Scotland had legislated to implement the project but for funds to put in place a balancing shortfall payment which would ensure members continued to receive their payments as if nothing had changed, akin to option two in the officers' report.

5.3       The Committee sought to highlight that regardless of which option was chosen, they would not be recuperating historic overpayments because the erroneous pension payments were not due to any mistake made by the recipients. Officers confirmed that, universally, no funds were recuperating historic overpayments. With regard to option two, which incorporated balancing shortfall payments, it was clarified that should this option be chosen, the balancing payments would be born from the fund, not scheme members.

5.4       The Committee queried whether families of the deceased, who would be calculated as being owed money due to the rectification exercise, would receive the money. Officers confirmed that this would depend on any further analysis officers could make and the decision made by the Committee; it was highlighted that officer's analysis had concentrated on living members in receipt of their pension. Members noted that the rectification data showed that the vast majority of GMP elements would be reduced.

5.5      The Committee discussed the available implementation options, debating between the benefits of options three and four, whilst noting that it may be likely that a final decision would be made by the Committee at the following meeting. Members discussed the possibility of choosing option four with the caveat that those who made it known that they were in a difficult financial position could move to an option three scenario. There were concerns about the capability of scheme members, who would be affected by an option four scenario, in contacting the fund to express their need for an option three scenario. The Committee discussed a possible preference for option three as it resulted in no decrease to the amount received by scheme members whilst ceasing any future overpayment; however, it was understood that the final decision could be taken at the following meeting of the Committee.

5.6       It was noted that there was no clear option emerging from what other LGPS funds were doing and that officers had been informed by Hampshire Pension Services (HPS) that they had received legal advice that withholding pensions increases, akin to an option three scenario, may not be legally sound. HPS had paused their GMP rectification project and were continuing to pay incorrect payments at least until the next financial year. Members noted that some other funds had taken action but there was still time to analyse further and await the outcome of the Department for Levelling Up, Housing and Communities (DLUHC) consultation before making a decision. Officers confirmed that delaying the Committee’s decision to the next meeting was viable and gave an opportunity for further analysis to be carried out. The Committee were minded to delay the decision, so more cost analysis could be done around options three and four; additionally giving the Committee a more comprehensive background to the legality and practicality of options three and four. Officers also mentioned that Members could contact officers in the coming weeks should they require any specific analysis that could be incorporated into the following meeting’s report.

RESOLVED:

5.7      That the Pension Fund Committee deferred their decision on the implementation of the Guaranteed Minimum Pension rectification project to the following meeting.