Agenda

The Convener will checkto ensure a quorum is in attendance to ensure the meeting can proceed.

Including any notices of motion and any other items of business submitted as urgent for consideration at the meeting.

Members of the Committee and members of the Pensions Board should declare anyfinancial and non?financial interests they have in the items of business for consideration,identifying the relevant agenda item and the nature of their interest.

If any

Minute of Pensions Committee of 24 June 2020 - submitted for approval as a correct record

Recommendations from Pensions Audit Sub-Committee

By John Anzani – Appointment of Representative to the Local Authority Pension Funds Forum

“The Pensions Cttee agrees to nominate John Anzani for election to the Executive Committee of the Local Authority Pension Funds Forum [LAPFF] for the period 2020/21 (as defined by LAPFF Constitution).”

By John Anzani – Funding Strategy Statement

“The Committee notes:

1.           The Pension Cttee passed a revised Funding Strategy Statement at its meeting of 24th June 2020.  The main thrust of the report concerned the adoption of a “risk based” approach to employer covenant and provisions to replace the previous “Small employer pool”.

2.           Employer exit is not mentioned in the Executive Summary.  The Background section of the report confirms that the “coverage” of the statement includes “employers leaving the fund”.

3.           The Main report has a subsection on “Employer exits” of only two clauses of the Statement [4.9 & 4.10] [Pages numbered as 402/3 or page 382/3 of pdf copy].  Neither mentions the potential of any refund of a “surplus” from the fund.

4.           The possibility of such a refund has only existed since May 2018.  The fund has only had one instance since the introduction the provision and a repayment was made to an exiting employer in 2019.  The fund is aware that other funds may also have made such repayment[s].

5.           Appendix C of the Statement gives the detail of the “Policy on Employers leaving the Fund”.  Section 2.2 [436 or page 416 of pdf copy] contains the sentence “Where an exit valuation identifies that an employer is in surplus, this surplus will be returned to the employer”.

6.           This is the only mention of how the surplus is to be repaid, or to whom, in the entire Strategy and Appendices.

7.           The issue of this aspect was not covered in the introduction to the report at committee nor in any of the comments/contributions made during the debate on the item.

The Committee further notes:

1.           Payments to the fund on behalf of active members are drawn from two separate sources: a. The Employee’s contribution deducted from the wages of the employee b. The Employer’s contribution paid from the resources of the employer

2.           The fact that the Employer organises these payments does not alter the fact that two different tributaries feed the cashflow.

3.           Depending on the nature of the payments the element deriving from deductions from wages could be in the region of 20% of the total payments made.  The payment made by the fund referred to above was close to £550,000.

The Committee believes as a point of principle and equity that refunds should flow back to all the sources of the original payments into the fund.

The Committee resolves to add to Section 2.2 of Appendix C the following text immediately after the sentence quoted in Notes 5 of this motion.

i.            “That all exit agreements where a surplus is to be repaid should include clause[s] requiring the employer to use their best offices in good faith to pass on the relevant element of the surplus to all of those whose contributions made up part of the payments into the fund.

ii.           Such agreements as made in line with clause [i] above should include provision for reports from the employer after  ...  view the full agenda text for item 7.2

The Committee is requested under Section 50(A)(4) of the Local Government (Scotland) Act 1973, to exclude the public from the meeting for the following items of business on the grounds that they would involve the disclosure of exempt information as defined in Paragraphs 6 and 9 of Part 1 of Schedule 7A of the Act.