LPFA Practitioners Conference Monday 11 th February 2019 1 - - PowerPoint PPT Presentation

LPFA Practitioner’s Conference

Monday 11th February 2019

Pensions Administration Update

James Wilday

February 2019

LPP at a glance

employees pension fund members across LGPS, Police and Firefighter schemes assets under management via LPPI, a fully-owned subsidiary authorised and regulated by the Financial Conduct Authority Our vision is to be ‘a leading pension services business’ operating on a ‘not-for- profit’ philosophy and working in partnership with our clients and other customers.

Pension Administration – key topics

• Changes in the Operating Model
• Future service plans
• Engaging with the membership

and dealing with member queries

Pension Administration

Changes in pensions delivery

• New target operating model – April 2018
• Systems & technology implementation successful
• Contact centre expansion for calls and emails
• Anticipated benefits – improved member and employer

experience, greater resilience and a lower cost

Member and Employer Engagement Member services including contact centre Business Development

Pension Administration Staff: Preston 91 Romford 31 Hertford 29

Pension Administration

Challenges faced to date

• Scale of change was significant – additional testing

required

• Big bang approach was unwise in hindsight
• Distinction in service requirements between partners
• Underestimated staff training requirements
• Lacked contact centre management experience
• Timing
• Structure

Implications:

• Significant backlog – now 100% cleared
• SLA missed April – October for clients but now back on

track

• Customer experience unacceptable

Pension Administration

Update – where are we now?

• Stabilisation achieved – SLAs achieved, service levels improved, staffing levels

stable

• Training Manager recruited
• Service levels achieved
• Contact Centre customer experience improved – average 2 min wait time, 95%

calls answered and new emails responded to within max 5 days

• 35% of Contact Centre callers surveyed and 90% satisfied – expanding to

retirement survey and employer survey

• Annual Benefit Statements and Annual Allowance letters issued on time
• Service Improvement Plan in place
• Review of model and lessons learned underway. Next stage is to confirm how we

can use our scale to drive improvements in the member and employer experience.

Pension Administration

Service Improvement Plan Our plan aims to deliver the following during 2019 ✓ Case ownership ✓ Keeping members better informed ✓ Dedicated complaints handlers ✓ Improve the quality of written material ✓ Collate regular feedback via a satisfaction survey ✓ Explain how our SLAs work ✓ Reduce end to end processing time ✓ Review all our processes and make small changes ✓ Improve data quality in valuation year ✓ Reduce data breaches (currently less than 0.01%)

Pension Administration

Engaging with employers and members

• We aim to respond to all member email queries within 5

working days. Currently running at around 48 hours.

• When calling our contact centre - we will aim to resolve the

query over the phone and can give information on such things as: ✓ Scheme regulations ✓ Change of personal information ✓ Help navigating the website ✓ Talk through any of our processes ✓ Help complete documents over the phone

• Part of our service plan is to ensure more consistency in

responding to emails from employers

Pension Administration

Engaging with employers and members

• If we’re unable to resolve the query over the phone or

email, we will pass this onto the caseworker who manage the more complex queries.

• Caseworkers will keep the member informed throughout

the process and ensure timeframes are made clear.

• To ensure the member gets the information needed,

securely and efficiently, we suggest encouraging all members signing up online.

Pension Administration

Engaging with employers and members

• Customer Service Accreditation
• Data Management Accreditation & GDPR
• Annual employer visits
• Surgeries
• Website review planned for 2018-19
• Roll out of new member self service functionality (40%

active members using self service)

• Valuation 2019
• Customer Satisfaction Survey

Engagement

Julie Wigg

Engagement Manager February 2019

Engagement

“Occupy or attract (Someone's interest or attention)” “Participate or become involved in”

Involve Participate Engross Absorb Occupy

Employer Engagement

Activity

• Practitioners conference
• Employer Visits
• Training
• HR
• Payroll
• Yourfund
• Dedicated Mailbox
• Newsletters/Alerts

Member Engagement

Activity

• Pension Surgeries
• Presentations
• LGPS Scheme Basics
• Pre retirements
• Contact Centre
• Emails
• Calls
• Website
• Member Self Service facility
• Newsletters

Engagement

“ Helping you to help us”

Engagement

Practitioners Conference (February) Employer Visit (March 2019-February 2020) Member Surgeries (ABS/annual newsletter) Quarterly Newsletters Training Customer Service Excellence Accreditation Surveillance (July)

Engagement

What's on the Horizon………

• My Pension Online – Member Self Service Refresh
• New website
• Website videos
• Your Fund Portal

Optimising the Employer Portal

Allie Gilbert

February 2019

Your Fund Overview

Online Forms

• New joiner
• Change of hours
• Absence notification
• Leavers
• Employer estimate requests
• Ill health, redundancy, flexible retirement
• View status of previously submitted forms

Contacts

Employer contacts:

• Ensure that key contacts are up-to-date
• Check current status on Your Fund contact page
• Specify specialty areas/expertise

Member contacts:

• Submit member email addresses through Year End data
• Can access ABS instantly

Questions

• Q. If year end for previous years has already been

submitted, why do you still require information for the past three years?

• A. This is an opportunity to check

whether the ‘best of the last 3 years’ rule is applicable. Required if member has had any reduction in pay.

Questions

• Q. Is it possible to mass upload leaver/starter

information? This would save us a great deal of time.

• A. You can bulk upload joiners to the system, but

unfortunately this is not currently possible for leavers.

Questions

• Q. Why is there still a contracted out earnings

section of the form when it is no longer applicable…can this be removed?

• A. This suggestion has been taken on is under review.

Likely to be removed shortly.

Questions

• Q. Can there be a function to

‘save’ a leaver form and return to it later?

• A. This has been raised with IT,

we will let you know

Questions

• Q. Currently there is no clearly defined process to

deal with employees whom are yet to receive an NI number. Could names and dates of birth be a secondary reference to create a record?

• A. The Pension Regulator states that we must hold 100%

common data. The members NI number is considered common data however names and date of birth are not.

Questions

• Q. Is the 30 days for employees to elect to buy back

lost pension discretionary?

• A. Employers have the

discretion to extend the 30 day deadline. However they must notify the member that they have lost pension and provide them with an opportunity to buy back at a shared cost within 30 days of returning to work.

Questions

• Q. Where can we find guidance on how to draft a

discretionary policy?

• A. We are currently

arranging some updates to the website that will cover this

• information. In the

meantime, we have a document that we can share upon request.

Questions

• Q. Do you have any sample letters for eligible job

holders/entitled workers/non-eligible job holders/postponement and re-enrolment?

• A. We do not, however our

advice would be to contact The Pensions Regulator who have a variety of templates on their website.

Questions

• Q. Is it mandatory that we notify the employee of

any contribution rate change and provide them with the appeals process?

• A. Yes it is mandatory to notify the employee of the new

deduction rate.

• Q. How do we inform LPFA of any change to

contribution rate?

• A. This is done through year-end submissions.

Questions

• Q. How do we notify you of a change of name? There

is no form for this purpose.

• A. You can email these

directly to the Ask Pensions account, along with relevant supporting documentation.

Feedback

LGPS Update

Neil Lewins Lead Technical Specialist

Contents

• 1. Local Government Pension Scheme (amendment) Regulations 2018 X 2

(DB into payment and walker)

• 2. FAIR Deal
• 3. 4 year Valuations
• 4. Cost cap amendments
• 5. GAD factors
• 6. Discretions
• 7. IDRP
• 8. Bits and bobs
• 9. Questions

Amendment regs (May 2018)

Headlines 1. DB into payment 55 for pre 2014 members 2. Use of AVC’s 3. APP 4. Minor amendments/corrections

Consultation ran: 27 May 2016 to 19 August 2016 Laid: 19 April 2018 Effective: 14 May 2018

Amendment regs (January 2019)

Headlines

• 1. Walker v Innospec

Common law or civil partners as if deceased member was male

• 2. Allows MHCLG to produce guidance for funds
• 3. Corrects 55-60 for pre 1998 leavers

Consultation ran: Laid: 18 December2018 Effective: 10 January 2019

Fair deal

Headlines Where an LGPS member is compulsory transferred, a new provider will be required to provide LGPS. And on subsequent merger or takeover with transfer of assets and liabilities.

Consultation ran: 10 January 2019 to 4 April 2019 Laid: Effective:

4 year valuations

Headlines Awaited 2019-2020-2024 (1-1-4) 2019-2022-2024 (1-3-2) 2019-2021-2024 (1-2-3)

Consultation ran: Laid: Effective:

Cost cap

Why Hutton arrangement Unfunded schemes- Funded different approach Amendments to bring costs within 2% not back to start position

Cost cap amendments

Cost cap broken (cheaper than expected) Scheme Advisory board planned changes But legal challenge by Firefighters and Judges Government have placed the changes on hold until clarity

Cost cap amendments

Expected Headlines

• Lower contributions for those under £22,500
• Minimum death grant £75,000
• Removal of tier 3 ill health
• Better early retirement factors

Consultation ran: Laid: Effective: 1 April 2019

Possible 2019/20 banding table

Band Range Member contribution rate 50:50 rate 1 Up to £14,400 5.5% 2.75% 2 £14,401 to £22,500 5.8% 2.9% 3 £22,501 to £36,500 6.5% 3.25% 4 £36,501 to £46,200 6.8% 3.4% 5 £46,201 to £64,600 8.5% 4.25% 6 £64,601 to £91,500 9.9% 4.95% 7 £91,501 to £107,700 10.5% 5.25% 8 £107,701 to £161,500 11.4% 5.7% 9 £161,501 or more 12.5% 6.5%

Expected 2019/20 banding table

Band Range Full 50/50 1 up to £12,850 2.75% 1.38% 2 £12,851 to £22,500 4.40% 2.20% 3 £22,501 to £36,500 6.50% 3.25% 4 £36,501 to £53,500 previously £45,200 6.80% 3.40% 5 £53,501 to £64,600 8.50% 4.25% 6 £64,601 to £91,500 9.90% 4.95% 7 £91,501 to £107,700 10.50% 5.25% 8 £107,701 to £161,500 11.40% 5.70% 9 £161,501 or more 12.50% 6.25%

2018/19 contribution bands

Band Range Full 50/50 1 Up to £14,100 5.50% 2.75% 2 £14,101 to £22,000 5.80% 2.90% 3 £22,001 to £35,700 6.50% 3.25% 4 £35,701 to £45,200 6.80% 3.40% 5 £45,201 to £63,100 8.50% 4.25% 6 £63,101 to £89,400 9.90% 4.95% 7 £89,401 to £105,200 10.50% 5.25% 8 £105,201 to £157,800 11.40% 5.70% 9 £157,801 or more 12.50% 6.25%

Improved death grant

• Part time employee on

£20,000 actual pay

• Current death grant £60,000

(£20,000 x 3) payable to nominated beneficiary, next of kin

• Will be increased to £75,000
• Anyone on a salary in excess
• f £25,000 does not see any

improvement

Tier 3 ill health

From April 2019, if the IQMP agreed a member satisfies conditions for ill health retirement tier 2 would be awarded is the member did not fall into tier 1.

Enhanced early retirement factors

More attractive Early retirement factors to be released, however already changed from January 2019:

Years Early 2014-2018 Male 2014-2018 Female January 2019 April 2019 1 5.6% 5.2% 5.1% ? 2 10.8% 10.1% 9.9% ? 3 15.5% 14.6% 14.3% ? 4 20% 18.8% 18.4% ? 5 24% 22.7% 22.2% ?

AVC changes - before

Old AVC Rules Retirement Options

• 1. Lump sum
• 2. Top-up LGPS pension

(not deferreds)

• 3. Additional

membership (subject to conditions)

• 4. Annuity
• 5. Defer

Pay upon which AVCs deducted Pre April 14 definition Limit 50% Death grant Estate Applicable to AVCs entered into before 1 April 14 and councillors New AVC Rules Retirement Options

• 1. Lump sum
• 2. Top-up LGPS

pension

• 4. Annuity
• 5. Can’t defer (other

than flex retirement) Pay upon which AVCs deducted Post March 14 definition Limit No limit Death grant Fund discretion Applicable to AVCs entered on or after 1 April 14

AVC changes - after

Old AVC Rules

• Ret. Options
• 1. Lump sum
• 2. Top-up LGPS pension

(not deferreds)

• 3. Additional

membership (subject to conditions)

• 4. Annuity
• 5. Defer

Pay upon which AVCs deducted Not applicable Limit Not applicable Death grant Estate Applicable to Member left before 1 April 14 and councillors New AVC Rules Ret. Options

• 1. Lump sum
• 2. Top-up LGPS

pension

• 3. Additional

membership (subject to conditions)

• 4. Annuity
• 5. Can’t defer (other

than flex ret) Pay upon which AVCs deducted Post March 14 definition Limit No limit Death grant Fund discretion Applicable to All others

Employer actions

Review discretions Amend APP process and review past cases Ensure that you are deducting AVCs from correct pensionable pay

Discretions

What are discretions? This covers decisions made within the scheme

• Secretary of State
• Administration Authority
• Employer
• Fund Actuary

Employer discretions

Employer discretions Mandatory discretions 1. Whether to grant extra pension? 2. Whether to share the cost of purchasing additional pension (SCAPC)? 3. Whether to permit flexible retirement? 4. Whether to ‘switch on’ the 85 year rule upon the voluntary early payment of deferred benefits 5. Whether to waive upon voluntary early retirement any actuarial reductions?

Administration discretions

Admin discretions 1. Decide on who monies are paid to on death of member 2. When to merge concurrent records within same fund 3. When to charge employers for early retirement ‘up front’ 4. When to extend time limits on notice to draw benefits 5. When to trivially commute a small pension

Discretions default position

Default position If an employer has not established their discretions the default position is the main fund. However Actuary likely to assume most expensive scenario

Discretions

Need to review periodically If an employer does have a discretions policy it is recommended that these are reviewed ‘periodically’ to avoid any discretion to be seen as live if any appeal lodged.

IDRP member complaint route

Where a member challenges a decision made by the employer or the administration Authority in relation to the scheme they can request it is looked at again, this is under IDRP. Time limits apply (6 months of decision) Must be made in writing 2 stage process Further appeal to Pension Ombudsman available

IDRP

What is covered by potential appeals Can be any decision but most likely areas are Reason for leaving Ill health tier Pay treated as pensionable Delays in making payment Discretion used but employer or fund Member can get assistance from Pension Wise/TPAS/The Money Advise Service

Stage 1 (employer or other nominated party)

Review decision Inform parties of decision And if unsuccessful next stage available If successful, make corrective actions

Stage 2 (Admin Authority)

Within 6 months of decision under stage 1, member may lodge stage 2 appeal. Cannot be handled by person involved in first stage decision Review decision taken based on information available. Inform member of decision and options if unsuccessful Instruct correction if upheld Option to offer compensation is considered appropriate

Pension Ombudsman

The Ombudsman will review complaints on administration and management of personal and occupational pensions: Type of complaints it considers: Auto Enrolment Benefits (incorrect calculation/refusal/failure to pay) Fund switches Death benefits Failure to provide information to members Ill health Interpretation of scheme rules Pension Liberation

How key groups link together

A. Pension Wise/The Pension Advisory Service/The money advisory now Single Financial Guidance Body (SFGB) (to assist members) B. The Pension Regulator (to act as policeman) C. Pension Ombudsman (ultimate arbiter)

Bits and Bobs

Bits and bobs

• Update on exit payment reforms.

£95,000 cap Exit payment recovery Exit payment review

• LTA (19/20) – expected to be £1,055,000
• Annual Allowance (19/20) – expected to be £40,000.
• 2019 PI/CARE revaluation – expected to be 2.4%.

Lunch Break

Simplifying the customer journey through collaboration

Mairi Spiby Stakeholder Manager Local Pensions Partnership 11 February LPP offices 169 Union Street London

Key facts

The Pensions Ombudsman

Impartial Unique powers Unlimited redress Legally binding Funded from Pensions levy

Casework Structure

Stage 1: First contact First contact

Potential complaint enquiries Make an application enquiries

Stage 2: Pre and Early resolution Early resolution Pathway

Informal and Early resolutions Includes volunteer advisers Casework flow, jurisdiction

Stage 3: Informal resolution Adjudication

3 x multi-disciplinary teams

Stage 4: Determination Ombudsman

Ombudsman and Deputy Ombudsman

Stakeholder management Customer engagement

Casework function

The numbers: 2017/2018

• 72 staff
• handled 6,319 enquiries, up 5% from 2016/17
• plus approximately 6,000 phone enquiries
• accepted 1,676 new investigations, up 26% from

2016/2017

• completed 1,591 investigations, up 13% from

2016/2017

• 29% complaints determined by the Ombudsman were

upheld, at least in part in favour of the applicant

• 70% complaints now resolved informally
• Average time to close a case halved to 5 months on

average

Updated memorandum of understanding between TPO and FOS, December 2017

• The Pensions Ombudsman (TPO) – matters

that predominately concern administration and/or management of occupational and personal pension schemes.

• Financial Ombudsman Service (FOS) –

matters that predominately concern advice in respect of sales or marketing of individual pension arrangements.

Clearer signposting for dispute resolution, September 2018

• The Department for Work and Pensions and The

Pensions Regulator sign agreement clarifying signposting.

• The Pensions Advisory Service (TPAS) deals

with guidance requests and The Pensions Ombudsman (TPO) deals with all complaints and disputes.

• Customers using TPO’s Early Resolution Service

will not be expected to have first used a scheme’s internal dispute resolution procedure if the parties are in agreement.

LGPS complaint types

Closed investigations in 2016/17

LGPS statistics

Enquiries & investigations

Outcome ‘formal’ determined investigations 2016/17 2017/2018 Upheld 13% (5) 38% (15) Partially upheld 18% (7) 13% (5) Not upheld 69% (27) 49% (19) Total 39 (39) 39 (19) Year 2014/15 2015/16 2016/17 2017/2018 Investigations accepted 114 79 100 105 Investigations closed 77 102 98 98 Outcome ‘informal’ resolutions 2016/17 2017/18 Opinion accepted 34.7% (34) 25% (26) Resolution 25.5% (25) 30% (31) Total 60.2% (59) 55% (57)

.

Distress and inconvenience

• non financial injustice
• ‘Distress’ is things like concern, anxiety, anger,

disappointment that an applicant experiences.

• ‘Inconvenience’ is the time and effort spent by

the applicant in relation to the maladministration and in having to pursue their complaint.

Redress for non-financial injustice

No award Nominal non-financial injustice £500 Significant non-financial injustice £1,000 Serious non-financial injustice £2,000 Severe non-financial injustice Higher than £2,000 Exceptional non-financial injustice

Assisting the courts

• it affected the Ombudsman’s legal jurisdiction or our
• ffice procedures
• the decision may have a wider impact on the

industry

• there are a large number of same-issue cases

accepted for investigation

• there is a real and significant concern over access to

justice. Previous position – TPO only participated if: Now – TPO may also participate if, for example:

Stakeholder connections

Key achievements

The TPAS resolution function transferred to TPO. One place for customers to go for all complaints about

• ccupational and personal pension schemes

Process change so cases are resolved at the earliest

• point. Led to simpler and shorter customer journey,

with no loss of quality Stakeholder engagement, increase in collaborative working leading to better signposting, improved networking and sharing of good practice 70% of cases resolved informally and time taken halved to five months. Backlog of 730 cases cleared

The role of the Local Pension Board

LPP Practitioners’ Conference for LPFA Fund employers, Omolayo Sokoya – LPFA Local Pensions Board (LPB) 11 February 2019

What are the aims of the LPB?

• Established by Public Sector Pensions Act 2013
• Assist administering authority to:

− Secure compliance with Regulations, other legislation and governance, and Pension Regulator’s requirements − Ensure effective and efficient governance of the Scheme

Who is on the LPFA LPB?

• Independent Chair – William Bourne
• Four Employer representatives.
• Four Scheme Member Representatives

Name Date appointed Frank Smith 2015 Adrian Bloomfield 2017 Amy Selmon 2017 Sean Brosnan 2015 Name Date appointed Omolayo Sokoya 2015 Peter Scales 2015 vacant Appointment in progress vacant Appointment in progress

What does the LPB add?

• A voice for Scheme Members and Employers - As the body is made up of

member and employer representatives, it is able to bring useful and different perspectives to bear, particularly in improving communication and engagement.

• Expertise: e.g. pensions administration, risk management, auditing,

governance, good understanding of pension fund management, LGPS knowledge and issues facing the LGPS.

• Extra leverage to help Pension Fund Committee to achieve its objectives

‘A second pair of eyes leads to better decisions’

What have we been involved in?

Meetings

• Meetings take place on a quarterly basis in London and members of the LPB

attend induction/training sessions. Topics that we have been involved in: Creation of the LPP -

• The LPP, the entity created with Lancashire County Pension Fund to manage

assets, liabilities, and administration, we wanted reassurance that it is working for your benefit.

• To that end we have encouraged an independent review of its cost-

effectiveness. 84

What have we been involved in?

Communications

• To improve the communications between the fund and its members and
• employers. We have made recommendations to LPP’s engagement team, and

are providing feedback via a working party. ✓ Enhancing the member website ✓ Newsletter to members and employers ✓ Customer survey ✓ Pension surgeries ✓ Pre-retirement courses ✓ Employer meetings ✓ Member conferences ✓ Annual Benefit Statement - Members would have received a more user friendly and descriptive ABS for their benefit. Issued in August 2018 a clearer informative document with notes of guidance including a quick guide to your benefit statement with links to how to improve your pension benefits 85

How can employer assist further?

• Employers can assist further on this area by supplying the LPP their staff’s

email addresses so they can communicate directly with members

• Remind staff what a significant benefit being a member of the LGPS is by

communicating with staff directly and reminding them of the excellent pension scheme that they are in at a cost of X% employer contribution.

• Employer can carry out some testing with their members. Key questions

thought to be: ➢ Do you understand how your pension works? ➢ Do you know where to access more information? ➢ Have you used LPFA website/ written information to understand more in the last 12 months? ➢ If so how useful did you find it. Etc. 86

Challenges the LPB faces

• Tension between oversight and assistance roles
• Limited powers
• No template for the role – we have had to forge our own

Thank you

Omolayo Sokoya Senior Finance Manager London Fire Brigade

88

LPFA Practitioners Conference 169 Union Street, London Rebecca Woodley Industry liaison manager 11 February 2019

Public Service Pension

Employers

E

• Our role, responsibilities and powers
• Your role and responsibilities
• Our expectations
• Lessons from the 2017 survey - the importance of good data
• Lessons from casework
• Scheme returns
• Data related initiatives
• The need for cyber resilience

E Agenda

• Our role is to protect workplace pensions
• We are being clearer, quicker and tougher
• We are changing in five key areas:

− clarifying our identity − setting clear expectations − improving our regulatory oversight − using a wider range of regulatory interventions − being more efficient and effective

The evolving Pensions Regulator

Efficient and effective Intervention Regulatory oversight Clear expectations Identity and engagement

• One-to-one supervision is part of our evolving approach to protecting

and regulating pensions

• In addition to the process for authorisation and supervision of

authorised master trusts, supervision is being introduced for other workplace DB and DC schemes in both the public and private sectors ➢ www.tpr.gov.uk/en/about-us/how-we-regulate-and-enforce/one-to-one- supervision

Driving compliance through supervision

Landscape

£1.5 trillion

assets

6,050

DB / Hybrid schemes

11m

members

1.4m active member

16.7m

members 447 Public

31,940

Occupational DC schemes

12.6m

members

7.4m

active members

£48bn

assets £16bn assets

9.9m

members

6m active

member

Master Trusts 81

MTs

9.9m

employees enrolled

AE

1.3m

Source: Corporate Plan 2018 - 2021 www.tpr.gov.uk/doc-library/corporate-plans.aspx

Participation in workplace pensions by sector

Balance of membership in public service schemes

Source: www.tpr.gov.uk/-/media/thepensionsregulator/files/import/pdf/db-pensions-landscape-2018.ashx

• We regulate the governance and administration of public service pension

schemes, which provide pensions for civil servants, the judiciary, local government, teachers, health service workers, members of fire and rescue services, members of police forces and members of the armed forces

• Our Code of Practice 14 sets out the standards of conduct and practice we expect

Introduction

• We regulate compliance with the Governance and Administration requirements

introduced by the Public Service Pensions Act 2013: – we engage mainly with scheme managers and pension boards – investment: not the what (compliance with investment regulations) but the how (investment governance) - LGPS only ➢ www.tpr.gov.uk/guidance/db-investment.aspx

• To educate and enable:

– codes, toolkit, news-by-email ➢ www.tpr.gov.uk/doc-library/codes.aspx ➢ https://trusteetoolkit.thepensionsregulator.gov.uk/ ➢ https://forms.thepensionsregulator.gov.uk/news-by-email/subscribe

• To enforce:

– improvement and third party notices, fines etc

Our roles and responsibilities

• Appoint a skilled person to assist the pension board
• Civil penalties – up to £5,000 to an individual or £50,000 to a corporate body
• Collect data through the scheme return
• Criminal prosecution
• Improvement notices and third party notices – require specific action to be

taken within a certain time

• Information – require any relevant person to produce any relevant document or

information

• Inspection – at own premises and/or premises of a third party
• Publish reports about a case (which might include naming those at fault)
• Recover unpaid contributions from employers on behalf of the scheme

manager

• Report misappropriation – notify the scheme manager about pension board

conflicts or misuse regarding assets

• Skilled person report – require scheme managers to provide a report made by

a skilled person nominated by the regulator

Our regulatory powers

• Ongoing risk assessment and intelligence gathering

➢ www.tpr.gov.uk/en/document-library/research-and-analysis

• 2018 survey issued at the end of last year:

– there are some additional questions (eg on the composition of pension boards, reviewing administration services, dealing with employers not providing data, cyber risk, common and scheme specific data, late ABS and breach reporting) – there is now a free-text box at the end of the survey which allows schemes to add extra notes in response to particular questions – it should be completed by scheme managers, or their representative, wherever possible (and we recommend other people, such as the pension board chair, are consulted) – responses are anonymous by default, but answers can be shared with us and/or the SAB if you wish

TPR focus 2018 - 2019

Regulation 80 of the LGPS (England and Wales) regulations 2013 states:

• A scheme employer ‘must give that authority such other information as it

requires for discharging its scheme functions’ and

• ‘Within three months of the end of each scheme year, each scheme

employer must give a statement to the appropriate administering authority giving the following details in respect of each employee who has been an active member during the scheme year’: – the employee's name, gender, date of birth, NI number, unique reference number relating to each employment – the dates of active membership – pensionable pay received and employee contribution deducted – any employer contribution in relation to the employee’s pensionable pay – any additional employee or employer contributions ➢ http://www.lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r80

Employer legal responsibilities – England and Wales

Two way engagement approach:

• Employers:

– required to provide information requested – have awareness of terms of employer agreements – abide by contract terms / obligations under regulations – manage HR / payroll systems – provide quality data (eg member joiner and leaver forms) – report a material breach of law

• Scheme managers:

– follow scheme regulations, rules and requirements – have awareness of terms of employer agreements – have clear, robust, published processes / deadlines / communications – designate a scheme contact point – follow through on non compliance – understand material breach of law reporting requirements

Our expectation - employer responsibilites E

Pension boards are responsible for assisting the scheme manager in securing compliance with: – scheme regulations – other governance and administration legislation – any requirements of The Pensions Regulator – additional matters, if specified by scheme regulations – pension boards need to have an equal number of employer representatives and member representatives (they may also have

• ther types of members, such as independent experts).
• For simple guides to pension boards:

➢ www.tpr.gov.uk/en/public-service-pension-schemes/further- resources/pension-guides#s18403

Local pension boards

• Good record keeping is a key part to the successful running of a scheme and

allows schemes to meet their legal obligations

• We know from engagement that standards vary widely, and some schemes do

not prioritise this appropriately, so TPR expects: – scheme managers to engage with administrators over service and security – assess data and put in place a plan to address issues

• Guidance on producing an improvement plan (scroll down to further guidance

section): ➢ www.tpr.gov.uk/en/public-service-pension-schemes/understanding-your- role/importance-of-good-governance

Record keeping

• Scheme managers should undertake an annual data review and put in place

an improvement plan where they identify issues - data improvement is a continuous process, not a one-off exercise

• Our quick guide (www.tpr.gov.uk/improve-data) can help you design a plan or

assess an existing one

• Poor data integrity has a real impact on members - accurate records are key

to ensuring: – the right members get the right benefits at the right time, – accurate valuations and calculation of the cost cap

• The data needed to run an efficient and effective scheme should be checked

regularly – both ‘common data’ (applicable to all schemes) and ‘conditional data’ (dependent on scheme type, structure and system design) (www.tpr.gov.uk/measure-data)

• Data should be well managed day to day to ensure it is accurate and complete
• Though administrators may look after records on a day to day basis, scheme

managers are still accountable

Improving your data

Identified issues 62% identified issues 25% no issues identified 3% don’t know if issues 10% not reviewed (inc. DK) Data improvement plans 19% data improvement plan 43% no data improvement plan 28% no issues identified (inc. DK) 10% not reviewed (inc. DK) Most schemes have conducted a data review in the last year Almost two-thirds identified issues in their latest review In most cases data rectification is in progress but not complete

Many schemes are doing an annual data review, but take up of data improvement plans is low. Decrease in LGPS carrying out a data review and employer data is a bigger concern than for other schemes.

Last data review 75% in last 12 months 15% longer ago 2% never 8% don’t know

Record keeping - survey results

In LGPS, the proportion of schemes that did NOT report that that at least 90% of their employers provided timely data was 49%* - and 59%* did NOT report 90%+ accurate and complete data (*includes 7% of LGPS schemes that didn’t know).

Record keeping - overview

• We consider 90% of employers providing good quality data to be an

important threshold

• 62% of all schemes reported that that at least 90% of their employers

provided timely data

• And 55% of all schemes reported that at least 90% of their employers

provided accurate and complete data

All respondents (Base, Don’t know, Did not answer question) - Schemes (191, 9-12%, 2%), Memberships (191, 2- 14%, 0%), Other (11, 0-18%, 0%), Fire (49, 20-22%, 2%), LG (88, 6-7%, 0%), Police (43, 7-9%, 7%)

• From 2018 will be asked to report on:

– when scheme last measured common data – common data score – when scheme last measured scheme specific (conditional) data – scheme specific data score

• This will help us understand and segment the landscape and target

interventions / track progress

• Common data = data used to identify members (eg DOB, NINO, name)
• Scheme specific data = other data needed to run the scheme:

– in public service schemes this includes data required by the regulations, data needed for valuation, compliance with scheme regulations etc

• For more information on the scheme return www.tpr.gov.uk/public-service-

schemes/reporting-duties.aspx

Scheme return requirements 2018

• Legal duty to report a breach of the law that is likely of material significance to

TPR for: – scheme manager – pension board member – professional advisers – employers – administrators and others providing advice to the manager

• Reporters to determine if a breach has occurred based on reasonable cause and

not a mere suspicion

• TPR provides example scenarios and RAG system for assessing scale of

materiality by way of: – cause – effect – reaction – wider implications ➢ www.tpr.gov.uk/en/public-service-pension-schemes/scheme- management/reporting-breaches-of-the-law

Reporting breaches of law

• 2 breach of law reports were received in 2016 from an administrator
• 43 employers were failing to submit their End of Year Certificates (EOYCs) to

the scheme manager by the legal deadline

• The administrator had made multiple contacts with each employer
• Our engagement:

– we engaged with the non-compliant employers – the engagement identified a lack of knowledge and understanding by employers on EOYC submissions – all but one employer is now compliant – the scheme manager removed the final employer from the scheme (the employer has now gone insolvent)

• For more detail:

➢ www.tpr.gov.uk/en/document-library/enforcement-activity/regulatory- intervention-reports

Breaches of law - Teachers’ Pension Scheme

• Scheme managers have a legal obligation to maintain certain data
• Employers provide most of the data needed
• Both employers and scheme managers must ensure they are meeting their

legal obligations to the scheme: – employers must ensure they understand their obligations to the scheme – scheme managers must have robust processes to ensure accurate data is provided on time

• TPR can, and has, intervened where these actions don’t resolve the issues:

– a range of powers at our disposal, including the issuing of an improvement notice and / or third party compliance notice and associated fines

Key issues

• We issued a £1,000 fine against the London Borough of Barnet scheme

manager for failing to submit its 2016 scheme return: – we issued a scheme return notice to the scheme manager on 9 July 2016, requesting the scheme return be submitted by 12 August – the return was not received and further communications from TPR not replied to – so the matter was referred to TPR’s Determinations Panel on 24 February 2017 – the penalty notice was issued to the scheme manager on 13 April and paid on 9 June

Public service pension scheme fined £1000

• Outsourcing does not reduce or remove a scheme

manager’s responsibility or accountability.

• It is the legal responsibility of managers to submit a

scheme return by the specified deadline: – failure to submit may signal further governance and administration problems within the scheme – good scheme governance is a key factor to achieving positive outcomes for members

• The £1,000 fine against the scheme manager took

into account: – size of scheme (23,000 members) – governance and administration being a priority for TPR

Key lessons

• In 2018, we used a number of different powers for the first time
• Production orders - require institutions to hand over evidentially admissible

financial information on individuals or organisations under the Proceeds of Crime Act 2002, were used successfully as part of an investigation into pension fraud: – we required a bank to hand over statements and other details of the accounts linked to the trustees of a pension scheme

• We fined a trustee that failed to complete a valuation on its DB pension scheme,

using our power under section 10 of the Pensions Act 1995: – the trustee was ordered to pay a £25,000 fine after it twice failed to have the scheme valuation completed (required every three years)

• And we prosecuted a recruitment company, its directors and a number of its

senior staff after they worked together to illegally opt-out workers who had been automatically enrolled into a workplace pension scheme – we criminally prosecuted under the Computer Misuse Act 1990

Different use of powers - update

• Enhanced requirements:

– increased reporting requirements – pensions dashboard – cyber security

What are the challenges facing pension schemes?

• Scheme participation

expected to be mandatory with some exceptions

• Public sector pension

schemes account for over 30% of total workplace memberships

• Currently pensioner income

is 50% state and 50% private pension (source Pensions Policy Institute)

• DWP consultation paper:

https://www.gov.uk/government/ consultations/pensions- dashboards-feasibility-report- and-consultation

Pensions dashboard

Be ScamSmart

The FCA and TPR have launched a joint TV advertising campaign to raise awareness of pension scams and the most common tactics used by fraudsters. New statistics show that pension scam victims lose over £90,000 each on average. A cold calling ban is in force Print out and include the pension scams guide in your user documents (eg annual member statements and transfer packs). Find out more at: www.tpr.gov.uk/pension-scams

Be ScamSmart

• Pension schemes are potentially valuable targets for fraudsters as they

hold large amounts of personal information

• Scheme managers are responsible for putting in place controls to ensure

the security of data and assets

• TPR CEO has said that cyber security should be on risk registers
• Not just an administrator problem – (eg what controls are around the data

shared with the scheme actuary, legal advisors and pension board)

• Not just about cyber ‘defence’ but cyber resilience:

– look at systems, processes and people to reduce the risk – prepare for when things go wrong

Cyber resilience in pension schemes

• Which, if any, of the following controls does your scheme have in place

to protect your data and assets from ‘cyber risk’*? – roles and responsibilities in respect of cyber resilience are clearly defined and documented – cyber risk is on the risk register and regularly reviewed – assessment of the vulnerability to a cyber incident of the key functions, systems, assets and parties involved in the running of the scheme – assessment of the likelihood of different types of breaches occurring in the scheme – access to specialist skills and expertise to understand and manage the risk – system controls (eg firewalls, anti-virus and anti-malware products and regular updates of software) – controls restricting access to systems and data – critical systems and data are regularly backed up – an incident response plan to deal with any incidents which occur

Cyber security controls

*By ‘cyber risk’ we mean the risk of loss, disruption or damage to a scheme or its members as a result of the failure of its information technology systems and processes.

• Which, if any, of the following controls does your scheme have in

place to protect your data and assets from ‘cyber risk’? – policies on the acceptable use of devices, passwords and other authentication, and on home and mobile working – policies on data access, protection, use and transmission which are in line with data protection legislation and guidance – the scheme manager and pension board receives regular updates on cyber risks, incidents and controls – the scheme manager has assured themselves of third party providers’ controls (including administrators)

Cyber security controls continued…

• Most cyber attacks exploit basic weaknesses in software and IT systems
• Our guidance to trustees and scheme managers on principles for

building cyber resilience: www.tpr.gov.uk/guidance/cyber-security-principles-for-pension- schemes.aspx

• Government estimates that 80% of breaches could be prevented by

following these 10 steps from the National Cyber Security Centre (part of GCHQ): www.ncsc.gov.uk/guidance/10-steps-executive-summary

• Cyber Essentials is a Government-backed, industry-supported scheme

to help organisations protect themselves against the most common threats found on the internet. It shows you how to fix basic weaknesses and get a good level of cyber security in place. www.cyberaware.gov.uk/cyberessentials

Mitigation against cyber threats

• Our key focus areas are record-keeping and data quality
• Employers must provide accurate and timely data for record keeping
• Data quality to be continuously reviewed:

– the reviews are sufficiently comprehensive – and robust data improvement plans are in place and progressed

• Good governance and administration - make sure there are appropriate

controls: – service level agreements are set up, even with in-house administrators – report breaches of the law when appropriate

• Additional scheme return requirements this year
• Scheme managers are responsible for having controls for cyber resilience
• Outsourcing does not reduce or remove a scheme manager’s responsibility
• r accountability

Summary

• Annual benefits statement - www.tpr.gov.uk/ps-annual-benefits

www.tpr.gov.uk/ps-member www.tpr.gov.uk/-/media/thepensionsregulator/files/import/pdf/public- service-annual-benefit-statements-guide.ashx

• Data measuring guidance - www.tpr.gov.uk/measure-data
• GDPR guidance - Information Commissioner’s Office (ICO) -

https://ico.org.uk/for-organisations/guide-to-the-general-data-protection- regulation-gdpr/

• Improvement plan guidance - www.tpr.gov.uk/improve-data
• Internal controls checklist - www.tpr.gov.uk/ps-internal-controls

Useful tools, checklists and guidance - (i)

• Public service - scheme self assessment toolkit -

www.tpr.gov.uk/public-service-schemes/assess-your-scheme.aspx

• Public service - personal self assessment tool -

https://education.thepensionsregulator.gov.uk/login/index.php ➢ Reporting a breach - www.tpr.gov.uk/en/public-service-pension-schemes/scheme- management/reporting-breaches-of-the-law ➢ Risk register example - www.tpr.gov.uk/ps-risk-register

• Scheme return -

www.tpr.gov.uk/public-service-schemes/reporting-duties.aspx

• Trustee Toolkit - https://trusteetoolkit.thepensionsregulator.gov.uk/

Useful tools, checklists and guidance - (ii)

• Our website - www.tpr.gov.uk/
• Codes - www.tpr.gov.uk/doc-library/codes.aspx
• Code of practice 14 - Governance and administration of public service

pension schemes - www.tpr.gov.uk/public-service-schemes/code-of- practice.aspx

• Governance - www.tpr.gov.uk/21c-trustee
• Latest research - www.tpr.gov.uk/en/document-library/research-and-analysis
• Pension scams - www.tpr.gov.uk/pension-scams.aspx
• Public service area - www.tpr.gov.uk/public-service-schemes.aspx
• TPR Future - www.tpr.gov.uk/about-us/protecting-workplace-pensions.aspx

Useful links

We are here to help! Request a guest speaker: https://secure.thepensionsregulator.gov.uk/speaker- request.aspx Contact us at: www.tpr.gov.uk/contact-us.aspx Subscribe to our news by email: https://forms.thepensionsregulator.gov.uk/subscribe.aspx

Thank you

Q&A