Agenda item

5.1      Diana McDonnell-Pascoe, Pension Project & Governance Lead, introduced their report noting that the focus for the coming financial year 2024/25 would be on reviewing and improving administration governance and compliance with The Pensions Regulator’s extensive new general code of practice which was published in January 2024. It was highlighted that administration of the Fund was in a strong position and the working relationship with Hampshire Pension Services (HPS) was positive.

5.2      Members were informed that the McCloud project was ongoing and officers noted that there were some stubborn data issues where employers had not yet provided relevant data. It was highlighted that HPS were no longer pro-actively chasing employers and had referred outstanding returns to officers to obtain; in the absence of data being received, it was noted that HPS would look to implement an interim solution based on informed estimates.

5.3      The Committee heard that the Guaranteed Minimum Pension (GMP) project was approaching its closing stages. It was noted that officers had commenced the process if paying arrears to the fifty-one members who had been underpaid. Since the previous Committee meeting officers had attended the LGPS Conference and spoken to other funds regarding how they were approaching the GMP project with regard to members who had been historically overpaid; it was noted that officers had also obtained legal advice. It was deemed that generally what other funds were choosing to do was to correct their records without any mitigation and should they be approached by pensioners claiming hardship due to the corrections, they would be dealt with on a case-by-case basis. Legal advice was that officers could not withhold pensions increases (PI) without speaking to the member affected first. Upon the legal advice and investigations of what other funds were doing, officers recommended that the Committee pursue unmitigated record correction (Option 4), and in the event of a complaint or an appeal of hardship, that this be dealt with on a case-by-case basis.

5.4      Members were also informed that, with regard to the GMP project, there were a number of cases that would require manual calculation as they were missing certain information. Officers highlighted that they would be reporting more detail on this at a future Committee meeting.

5.5      The Committee commended officers for investigating further what other LGPS funds were doing with regard to GMP, in addition to seeking legal advice to ensure that Members made an informed decision. Members were supportive of an Option 4 approach, with the ability to look at liaising with members who raise hardship concerns as to whether PI could be withheld. It was deemed that withholding PI was a longer term approach to recuperating the monies from a member that had been overpaid, this would take longer to eventually rectify than an unmitigated correction of pension payments. Officers noted that there needed to be an element of flexibility in terms of how they would approach those who raised hardship concerns.

5.6      It was understood that the law required officers to correct records but it was also agreed that these cases needed to be dealt with sensitively. The Committee queried whether treating members differently due to them raising hardship concerns could compromise the Fund legally; it was highlighted that the law allowed officers to reduce a member’s payments where they were previously being overpaid and it was emphasised that the members in question had benefitted significantly from overpayments for a number of years at this point.

5.7      Members questioned how those members affected by a correction on their record would be communicated with, as it was noted that these were complex changes and elderly members may find it difficult to understand. Officers highlighted that they had been working with HPS and had spoken to colleagues at Shropshire, who had been through the GMP process already, to devise a standard letter of communication. Officers noted that, once the Committee had made its decision, the letter template would be finalised.

5.8      Members queried whether any feedback had been received from those who had historically been underpaid and had now received rectification payments. Officers noted that those payments had only recently gone out so there had not yet been any feedback, however it was noted that should any come in, the Committee would be notified.

5.9      The Committee discussed how the current situation of having overpaid a number of members came to be. It was highlighted that this was not unique to Westminster and was indeed a national GMP project. Officers highlighted that attending the LGPS Conference in January 2024 was a very useful exercise in terms of understanding how other funds were approaching their GMP projects and that this had fed into officers recommendation for the Committee. The Committee’s preference was to go ahead with officers’ recommendation on the basis that the members affected had been overpaid for a number of years and the fund would not be recuperating any of the overpaid monies.

RESOLVED:

           That the Pension Fund Committee:

1)    Noted the contents of the report; and,

2)    Proceeded with Option 4 for the GMP project; unmitigated record correction and in the event of a complaint or an appeal of hardship, officers were to investigate on a case-by-case basis.