Our Pensions: What on earth is going on?
On Tuesday 26 March 2019, members of the Pension Fund Committee will discuss the latest debacle about the Pensions data.
I have sat in numerous Barnet Council meetings over the past few years reading and listening to senior officers and councillors discussing the failing Pension Administration Service currently provided by Capita out of their Darlington office.
“5.1.1 Employers will pay £48 million of contributions into the pension scheme in 2018/19. Changes in contribution rates can have a significant cashflow implication for employers and will impact on the Council’s ability to spend in other areas.”
5.2.1 There are no immediate financial implications from the report. However, higher deficits (particularly if sustained) may translate into higher contributions from the ouncil and other employers. Engaging with the Scheme Actuary in advance of the 2019 triennial valuation will enable the Committee to identify ways to stabilise future contribution rates.”
What are the risks?
- The Triannual valuation of the Pension Fund is being placed at risk due to ongoing systemic Pension data errors.
- The Employer may have to increase their contributions which will mean there is less money to spend on services.
- This could lead to some services reducing or stopping altogether.
- Could lead to redundancies
- Less money to invest and resulting in the Pension pot reducing.
There have been warnings
The Pension Regulator (TPR) has intervened twice here in Barnet
First in In 2017:
TPR issues first fine to a public service pension scheme
“The Pensions Regulator (TPR) has fined a public service pension scheme £1,000 for failing to submit basic information required by law…………
TPR issued a scheme return notice to Barnet Council 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.”
Then in 2018
Barnet in TPR breach as Capita misses payments
“The failure to produce 447 statements constitutes a breach of law and a report is being prepared for the Pensions Regulator that will identify the relevant non-compliant employers,” the minutes read.”
http://www.pensions-expert.com/DB-Derisking/Barnet-in-TPR-breach-as-Capita-misses-payments?ct=true
Three strikes and you are out.
“5.5.1 The accuracy of the valuation relies on the accuracy of the data provided to the actuaries. Any errors in the provision of the data could have a significant impact on the required contribution rates, particularly for the smaller scheduled and admitted bodies.”
Last week Barnet Council published Pension Fund Committee reports for the meeting on 26 March 2019.
The shocking news was that the critical errors had not been addressed and now the Triannual Valuation of our Pension Fund is now at risk.
In the Data Quality report it states:
“1.3 The quality of membership data is central to the valuation process. Should the quality of data not be to the standard required by Hymans Robertson then there could be delays to the valuation process. Also, inaccurate member data held could result in erroneous benefit statements being issued.
1.4 The results show a significant number of ‘critical errors’ that the administrator will be required to address before actuarial calculations can begin.”
https://barnet.moderngov.co.uk/documents/s51904/Data%20Quality%20Report.pdf
What is worrying is the pattern of behaviour. The issue of data quality is not new. It was raised two years ago.
Now, on the brink of the valuation there are still a “significant number of critical errors’”
The Pension Scheme is one of the most important Terms and Conditions for Barnet Council staff yet since the outsourcing of the service it has been beset with issues.
Barnet UNISON believes that the repeated failures of the Pension Administration service which now threatens in-house services must be brought back in-house along with Payroll in order to restore confidence and assurance both for members of the scheme and employers.
Barnet Council are currently reviewing both Capita contracts.
The Pension Administration service is in Phase Four which is 18 months away.
The service can’t wait that long it needs to come back in-house now.