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• Session slides will be circulated on email to ALL attendees.
• Annual Consultative Meeting (ACM) will commence at 11.45pm.
• Lunch will be served at 1.00pm.

IMPORTANT - Housekeeping Notice:

1) Fire Alarms / Fire Exit 2) Toilets 3) Please turn Mobile Phones to SILENT

Welcome

1) End of Year Review 2014 / 2015 2) Actuarial Valuation 2016 3) Ceasing of National Insurance (N.I.) Rebate 4) Auto Enrolment (Re-enrolment) 5) LGPS Regulation Update 6) Administration Issues 7) My Pension Online (MPO)

Content

End of Year Review - 2014 / 2015

• Introduction of new Career Average scheme brought about significant

changes to the requirements of the Annual Benefit Statements and the End of Year (EOY) process. 1) Contpost (NEWCTD) Interface file 2) Career Average Revalued Earnings (CARE) Interface file 3) Additional Pension Contributions (APC) file

• 25th September 2014 (3 files & notes of guidance)
• 14th November 2014 (updated notes of guidance)
• 9th March 2015 (deadline given - 17th April 2015)
• 27th March 2015 (further guidance)
• EOY information circulated via email on:

End of Year Review - 2014 / 2015

• In preparation for the EOY process, request made on 25th September

2014 to submit a dummy CARE file (File 2) for the period from 1st April 2014 to 30th September 2014 by 31st October 2014.

• Very few files were returned by the ACTUAL deadline:

17th April 2015!

• Fewer than 20% of Employers participated!
• Majority of files were returned AFTER 30th April 2015!
• Data quality was poor; as most files contained Errors!
• Causing significant delays in the process!

End of Year Review - 2014 / 2015

• Statutory requirement to issue Annual Benefit Statements by 31st August 2015.

The Pensions Regulator (TPR) has been formally notified of this breach. TPR decided NOT to impose any Financial Penalty this year, as it is the first EOY return following the introduction of the New Scheme on 1st April 2014.

• Data was due to be sent to the Printer on 31th July 2015, whereas it was

eventually sent on 21st August 2015!

• Statements uploaded to My Pension Online on 28th August 2015.
• Hard copies despatched to MPO non-users W/C 7th September 2015!

End of Year Review - 2014 / 2015

• Common Errors:

Pension Contributions Paid on File 1 (Column K) did not tally with the LGPS MAIN Pensionable Pay on File 2 (Column H) i.e. the actual pensionable pay received during the Scheme Year. TOTAL Pension Contributions paid on File 1 (Column K) did not balance with the TOTAL member contributions paid to the Dyfed Pension Fund from the 1st April 2014 to 31st March 2015. It is YOUR responsibility to ensure that this file is balanced before you submit.

End of Year Review - Common Errors

For Starters / Leavers during the Scheme Year, the ‘From Date / To Date’

• n File 2 (Columns F/G) did not match with the ‘date’ given on the Starter /

Termination form. Unless a member has opted in, the ‘From Date’ should to be the member’s date of commencement, NOT the Payroll period start date. For Leavers during the Scheme Year, some of the data provided did not match with that given on the Termination form i.e. the contributions, National Insurance (N.I.) earnings and actual pensionable pay (File 2). N.I. Earnings on File 1 (Column L) calculated incorrectly. (See Appendix 1). Pensionable Remuneration Amount on File 1 (Column AB) should ALSO include any additional elements of pensionable pay (Pre 2014 definition).

File 3 (APC) - a separate entry MUST be made per APC contract (mainly in respect of ‘lost pension’ cases). Multiple Employments. On both Files 1 & 2, separate entries should be made for EACH pensionable employment. Each pensionable employment should have its own ‘unique reference’. LGPS MAIN Pensionable Pay on File 2 (Column H) did NOT include Assumed Pensionable Pay (APP) for members on reduced pay, due to sickness or child related leave.

End of Year Review - Common Errors

Format of Files should NOT be changed, as the format is specifically set to the requirements of the ALTAIR pension administration system. ‘Empty Columns’ should NOT be deleted. NO use of ‘Symbols’, such as £ or % signs. DO NOT attach any ‘Comments’ to the cells within the files.

End of Year Review - Common Errors

Use of Assumed Pensionable Pay (APP)

• Where a member has received reduced / no pay during the Scheme Year

i.e. 1st April to 31st March, due to sickness or child related leave, the LGPS MAIN pensionable pay on FILE 2 (Column H) will be less as a result.

• Due to the reduced pensionable pay, a member’s pension build will be less

for that year! I.e. 1/49th x reduced pensionable pay!

• In accordance with scheme regulations, a member’s pension should NOT

suffer any loss due to sickness / child related leave.

• APP figure should be used to calculate the pensionable pay during a period
• f reduced / no pay.
• APP is calculated by taking an average of the pensionable pay received in

the 3 complete months before the period of reduced / no pay.

APP Example (FILE 2)

Period Pensionable Pay 01.04.2014 to 30.06.2014 £30,000 ÷ 12 = £2,500 x 3 months = £7,500 01.07.2014 to 15.07.2014 £2,500 / 31 x 15 days = £1,209 16.07.2014 to 31.07.2014 (Half Pay) £2,500 / 31 x 16 days = £1,290 x 50% = £645 01.08.2014 to 31.12.2014 (Half Pay) £2,500 x 5 months = £12,500 x 50% = £6,250 01.01.2015 to 15.01.2015 (Half Pay) £2,500 / 31 x 15 days = £1,209 x 50% = £605 16.01.2015 to 31.01.2015 £2,500 / 31 x 16 days = £1,290 01.02.2015 to 31.03.2015 £2,500 x 2 months = £5,000 ACTUAL Pensionable Pay: £22,499 ( / 49 = £459)

Calculating the APP

• Due to the period of reduced pay, the APP must be calculated using the

3 complete months prior to commencement of half pay and then applied to the reduced pay period - 16.07.2014 to 15.01.2015.

• Pensionable Pay received between 01.04.2014 to 30.06.2014:
• £2,500 (April 2014)
• £2,500 (May 2014)
• £2,500 (June 2014)

£7,500 ÷ 3 months = £2,500 a month (APP)

Applying the APP (FILE 2)

Period Pensionable Pay 01.04.2014 to 30.06.2014 £30,000 ÷ 12 = £2,500 x 3 months = £7,500 01.07.2014 to 15.07.2014 £2,500 / 31 x 15 days = £1,209 16.07.2014 to 31.07.2014 (Half Pay) £2,500 (APP) / 31 x 16 days = £1,290 01.08.2014 to 31.12.2014 (Half Pay) £2,500 (APP) x 5 months = £12,500 01.01.2015 to 15.01.2015 (Half Pay) £2,500 (APP) / 31 x 15 days = £1,209 16.01.2015 to 31.01.2015 £2,500 / 31 x 16 days = £1,290 01.02.2015 to 31.03.2015 £2,500 x 2 months = £5,000 Pensionable Pay Inc. of APP (File 2): £30,000 CARE Pension build up: 1/49 x £30,000 = £612

Actuarial Valuation (as at 31st March 2016)

• Statutory requirement for a Valuation to be carried out every

3 years (as at 31 March).

• Undertaken by the Fund’s Actuary to determine (as at the valuation date):
• the expected cost of providing the benefits built up by members (the

liabilities) against the investment funds held by the Fund (the assets) - is there a surplus or deficit?

• an appropriate plan for making up the shortfall, if the Fund’s assets are

less than its liabilities;

• the contributions needed to cover the cost of the benefits that active

members will build up in the future and other costs incurred in the running of the Fund (employer rates and Past Service Deficit (PSD) payments).

Actuarial Valuation (as at 31st March 2016)

• Actuarial Valuation Report is normally released towards the end of

January (after 31st March) and will contain our funding level and your Employer rates / PSD payments, payable from 1st April 2018.

• Statutory Deadlines:

 Data to Government Actuary’s Department (GAD) by 30th June 2016  Data to the Actuary by 31st July 2016  Annual Benefit Statements to members by 31st August 2016

• Your data MUST be up to date and accurate, so that the Actuary is able

to make an accurate assessment of your liabilities.

Actuarial Valuation (as at 31st March 2016)

• Consequences of untimely, late submission of data:
• Preparation for End of Year exercise 2015 / 2016:

Late submission of data to Actuary. Late release of Actuarial Valuation Report. Late submission of ABS.

• Notes of Guidance
• Meetings / Workshops
• ANY SUGGESTIONS?
• Data Validation / Matching exercise:

(Starters / Leavers / Changes / Absences)

End Of Year (EOY) 2015 / 2016

 Remember NOT to amend the format or layout of the Files.  Validate your Data NOW:

• Starters / Leavers
• Change of Circumstance information
• Reduced / No Pay absences

 Ensure that member’s Contributions on File 1 agree with the LGPS MAIN

pensionable pay on File 2.

 Balance TOTAL Contributions on File 1 against your annual Remittance

and submit the new Contribution Reconciliation Declaration form.

 Perform EOY exercise immediately after payroll year-end?

Ceasing of National Insurance (N.I.) Rebate

• From 6th April 2016, the Government will introduce a new State Pension

to replace the current multi-tier arrangement for NEW pensioners.

• Currently, the Basic State Pension is supplemented by either the

Additional State Pension (State Second Pension, S2P) paid for by N.I. contributions; or by occupational 'contracted-out' pension schemes.

• In return for the Employer providing a ‘contracted-out’ occupational

pension scheme, both employers and employees currently receive a rebate on their N.I. contributions between certain pay thresholds:

• Employers 3.4%
• LGPS Members 1.4%

Implications of Cessation of N.I. Rebate

• Due to the introduction of the new State Pension, there is no requirement

for an alternative to the Additional State Pension. As a result, the 'contracted-out' status will come to an end and the N.I. rebate stops!

• ALL Employers with employees that are members of the LGPS, Police

and Fire Schemes are therefore affected and will face an increase in their N.I. contribution!

• NO affect to a member’s LGPS benefits, but they will be paying more in

N.I. contributions from 6th April 2016.

• Member newsletter will be released before the end of the year.
• LGA have released an Employer Q&A factsheet:

http://www.lgpsregs.org/index.php/resources/comms-resources

Implications of Cessation of N.I. Rebate

• Defined benefit (DB) schemes are required to reconcile their member data

with that held by HM Revenue & Customs (HMRC).

• Contracted-out membership from 06.04.1978 to 05.04.1997 to be

reconciled, as it forms the basis for the calculation of a member’s Guaranteed Minimum Pension (GMP).

• Pension Funds are required to eliminate all potential discrepancies in order

to ensure that the correct level of benefits are being paid to pensioners; that transfer values correctly reflect the benefits due and that any future asset / liability modelling is as accurate as possible.

• Very labour intensive and time consuming exercise to be completed by

the end of April 2018!

Auto Enrolment (Re-enrolment)

• Under the Pensions Act 2008, it has become a statutory requirement that

ALL employers provide a qualifying pension arrangement for their employees (as of their Staging Date). Known as Automatic Enrolment.

• The LGPS is deemed to be a Qualifying Scheme.
• The requirements of Auto Enrolment affects the way in which you

administer those employees that have elected to Opt out of the Scheme.

• It is YOUR responsibility to ensure compliance.
• The Fund will provide you with the necessary support to steer you through

the process, but WE NEED TO KNOW YOUR STAGING DATE.

Auto Enrolment (Re-enrolment)

• The Re-enrolment date is the 3rd anniversary of an Employer’s staging

date, or such other date that the Employer has chosen within 3 months of their anniversary date (before or after).

• If an ‘optant out’ remains in continuous employment and is not an active

member on the re-enrolment date, but is an Eligible Jobholder (earning at least £10,000), they MUST be automatically re-enrolled.

• However, if the Eligible Jobholder has opted out within 12 months of the

re-enrolment date, there is NO requirement to re-enrol.

• Non-eligible Jobholders and Entitled Workers (earn less than £10,000).

There is no obligation to communicate with them, but there is nothing to prevent an Employer doing so; highlighting their right to opt back in.

Auto Enrolment (Re-enrolment)

• Note that the re-enrolment date is NOT an employee specific date

e.g. it is NOT 3 years on from the date the employee opted out.

• Further information can be found under pages 66 / 67 of the Auto

Enrolment guide created by the LGA: http://www.lgpsregs.org/index.php/guides/administration-guides-to-the- 2014-scheme

• The Pension Regulator (TPR) will not be drafting specific re-enrolment

letter templates, but the LGA are due to release further information shortly.

LGPS Regulation Update (LGA Circular 128)

Some changes were made following the introduction of the Local Government Pension Scheme (Amendment) Regulations 2015, which were laid on 17th March 2015 and came into force on the 11th April 2015.

• Joining the Scheme – If an employee with a contract of employment for

less than 3 months elects to join, they should be brought into the scheme from the beginning of the next available pay period following the member’s election to join, rather than the date of election.

• 50/50 Section – Members contributing to the 50/50 section of the scheme

should be brought back into the MAIN section from the beginning of the first pay period after the member enters a period of NO PAY as a result of sickness or child related leave.

LGPS Regulation Update (LGA Circular 128)

• Buying back Lost Pension - You now have the discretion to extend the

30 day period within which a member must make an election to purchase the amount of Lost Pension during a period of authorised unpaid leave.

• Reductions in hours due to ill health - An amendment has been made to

ensure that if a member dies in service and the Independent Registered Medical Practitioner (IRMP) i.e. Fund Doctor, certifies that they had, due to the ill health that resulted in their death, reduced their contractual hours of work, the pay used to calculate the lump sum death grant and the enhancement added to a survivor’s pension is to be based on the pay they would have received, had they not reduced their contractual hours.

Administration Issues

• Completion of Forms:
• Most up to date forms to be used.
• ALL forms to be completed in FULL.
• Audit requirement that ALL forms to be Signed in accordance with your

Authorised Signatories.

• Retirements:
• Retirement letter - copy of letter MUST be attached to termination form.
• Flexible Retirement - Starter form to be completed for new period of

membership, NOT a Change of Circumstance form with change in hours.

• Estimate of Benefits - Every request should be submitted via the Estimate
• f Benefits form and NOT the Termination form.

Administration Issues

• Employer Contributions:
• During a period of member absence (reduced / no pay), your

Employer rate should be based on the Assumed Pensionable Pay (APP) figure for that period.

• Maternity Cases:
• Full details to be given via Change of Circumstance form

i.e. start date / end date and details of unpaid leave period.

• Declaration of Previous Pension Rights form:
• Employees MUST complete and return this form in ALL cases.

Administration Issues

Remittance of Contributions:

• Statutory requirement for Employer payments to be made NO later than

the 19th of the following month.

• If received later than 1 month after the end of the calendar month in

which contributions were deducted, interest should be levied at 1% above base rate on a day to day basis from the due date to the actual date of payment, and compounded with 3 monthly rests.

• Remittance Advice form should be returned to advise the Fund of your
• payment. It is essential that the Fund receives the timely return of this

form, as without it, the authority is unable to reconcile your payment (without the contribution breakdown).

My Pension Online (MPO)

• Given the ever increasing time constraints across ALL schemes, it is

crucial that together, we continue to promote the MPO service to increase the number of users, in order to improve service delivery, reduce printing / postage costs and the Fund’s Carbon Footprint. Scheme Active Membership

• No. of Users

% of Membership LGPS 18,022 6,887 38.21% Police 1,170 649 55.47% Fire 1,531 627 40.95% Totals

20,723 8,163 39.39%

Calculating N.I. Earnings at EOY (Appendix 1)

• The figure required under Column L of File 1 is the total of:
• Lower Earnings Level up to & including Primary Threshold;
• Earnings above Primary Threshold up to & including Upper Accrual Point;
• Earnings above Upper Accrual Point up to & including Upper Earnings

Limit.

• Where a member has Multiple employments, the total NI earnings must be

entered against the Main employment.

• Useful to refer to the online HMRC calculator:

http://nicecalculator.hmrc.gov.uk/Class1NICs1.aspx

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Key Themes of the Year

• Performance
• Membership
• Collaboration
• Pension Boards
• LGPS 2014

Performance

• Value at 31 March - £1,908m
• Fund Return – 15.2% (best since 2009/10)
• Outperformed Average return on LGPS

funds by 2%

• Fund Ranking 17% Percentile

Fund Split between Managers at year end

Allocation of Assets at Year End

Membership Statistics

Fund Performance v Benchmark

2014/2015 Total Completed Benchmark (%) Performance (%) New Starters (10 days) 1,176 95.00 97.87 Transfers into the Fund (5 days) 162 95.00 95.30 Retirement Quotes (10 days) 655 95.00 97.09 Payment of Retirement Benefits (next payroll run after retirement) 1,030 95.00 97.17

Collaboration

• In administration for many years
• Gaining momentum in Investments and

Governance – CIV and Passive

• All funds to submit collaboration and

efficiency proposals to DCLG

CARMARTHENSHIRE COUNTY COUNCIL (CCC) ADMINISTERING AUTHORITY DYFED PENSION FUND PANEL 3 CCC Elected Members 1 CCC Substitute Member SECTION 151 OFFICER LOCAL PENSION BOARD (No Decision Making Power) 3 Scheme Members 3 Employer Representatives 1 Independent Member / Chair PENSIONS ADMINISTRATION PENSION INVESTMENTS

Constitution Delegates Decision Making Scheme of Delegation Statutory Responsibility Oversight of Compliance

The Local Pension Board was established on 1 April 2015 under the requirements of the Public Service Pensions Act (PSPA) 2013. It has an oversight/assisting role with the Administering Authority in securing compliance with regulations and requirements and ensuring effective and efficient governance and administration of the Fund.

Pension Boards

LGPS 2014

• The scheme changed from a final salary scheme to

a Career Average Revalued Earnings (CARE) scheme

• Main provisions
• Benefit Accrual
• Tax free Lump Sum
• 50/50 Option
• Normal Pension Age

LGC – Awards

Investment Award for Communications – Received Nov 2014 Shortlisted for the Investment Awards 2015

• Fund of the Year Award over £750m
• Quality of Service Award

Thank You Chris Moore Director of Corporate Services

Dyfed Pension Fund Annual Consultative Meeting 21 October 2015 Eric Lambert Independent Investment Adviser

LGPS Restructure (E&W)

Rationale Costs (DCLG / Treasury) : Efficiency Consultation Collective Investment Vehicles (CIVs) (May 2014): Passive (all listed assets) Budget ‘Pool investments to significantly reduce costs, while (Summer 2015): maintaining overall performance’ Criteria Scale (c5-6 co-mingled asset pools) (Q1 2016?): Size (c£30Bn) Governance (local SAA, centralised implementation) Each LGPS fund – no exceptions – to demonstrate how it will meet the (yet to be announced) ‘criteria’ and quantify their cost savings!?

‘Net of Fees’ Returns

(= Gross returns less fees)

Return % pa Strategic Asset

Allocation (SAA)

SAA + Implementation

Strategy much more significant than implementation. Dyfed has a first class record on this vital activity.

Manager ‘added value’ less fees.

70.3 9.8 19.9

Dyfed Asset Allocation @ 31 March 2015

Equities Property Bonds (inc Cash) Alternatives

61.5 8.1 19.7 10.7

WM Average LGPS Asset Allocation @ 31 March 2015

Equities Property Bonds (inc Cash) Alternatives

At a high asset allocation level, Dyfed similar to the average LGPS fund.

Dyfed Performance (% pa) in Context

Years to 31/3/15 Dyfed Asset Benchmark Inflation (RPI) WM LA Average Rank (%) Liability B/M 3 11.8 12.0 2.2 11.0 27 8.9 5 9.5 9.8 3.1 8.7 27 10.8 10 8.3 8.6 3.0 7.9 27 8.6 20 8.6 8.5 2.8 7.8 5 8.5

Fund’s assets broadly meeting all expectations, except the valuation of liabilities!

Dyfed Pension Fund Annual Consultative Meeting 21 October 2015 John Jones Chair of Pension Board

Background

• New body set up from 1 April 2015. Requirement for all LGPS

Funds

• As part of the new requirements the creation of a National

Board to advise the Sec. of State and an oversight role for the Pensions Regulator

• Structure across LGPS varies. Dyfed opted for Independent

Chair and 3 Employer and 3 Member representatives. Other Funds have different models

• Appointments made by the Council after open advertisement

Independent Chair

• Long career in Local Government Finance and with Pension

Funds Director of Finance of 2 London Boroughs

• Wide experience of working with LGPS Pension funds on a

range of issues

• Grandfather came from Carmarthenshire

Role

• Role is to assist the Council in managing the Dyfed Fund and

delivering the service to Members

• Not a decision making body. The board is to advise, challenge

and support

• Helping to promote best practice
• Terms of Reference approved by the Council. At least 2

meetings held annually with more in the first 2 years

Progress so far

• First board meeting held on 23 July 2015

Second board meeting 9 November 2015

• Briefing on the Fund’s investment and administration

arrangements

• Discussion on Terms of Reference which will be kept under

review

• Training being undertaken in house and by the Fund’s

investment managers and consultants

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