Agenda item

To consider the report and approve increase in expenditure on Pension Unit staff by 2022/23.

·         To accept and note the information

·         To approve the £137,929 increase in expenditure on Pension Unit staff by 2022/23:

Ø  Create four new posts

Pensions Officer (to support the AVS's work) and three Pensions Assistants (two-year contract for the McCloud project - with a possibility of an extension should the work last more than two years)

(total annual costs £121,135)

Ø  Increase the salary of six Pensions Assistants from GS3 to GS4

(total annual costs £16,794)

Submitted – the report of the Pensions Manager seeking the Pensions Committee's approval for additional resources that would enable the Pensions Administration Unit to respond to increasing work pressures and cope effectively with the level of work now required. To improve the efficiency of the Pensions Administration Unit, adjustments were proposed to the existing structure and it was highlighted that it was the Pensions Committee's responsibility to determine the budget to ensure sufficient resources to implement this.

It was explained there had been an increase in the need for a deeper understanding of the pension fund's complex regulations, and the Pension Assistant posts had been evaluated and the grade increased from GS3 (£19,312 - £19,698 salary range) to grade GS4 (£20,092 - £21,748). When added to the employer overheads this would be an increase of £2,799 for each of the 6 posts (at the top of the scale) and the cost of funding the increase would be £16,794 per year.

It was noted that Gwynedd Council and Conwy County Borough Council had submitted an attractive option for Salary Sacrifice Voluntary Contributions (AVCs) and consequently a major increase in the use of this scheme was anticipated, as the Councils promoted the scheme. To address the increase in work administrating the scheme, it was proposed to employ a new S2 grade Pensions Officer (£24,982 - £27, 041).  When added to the employer overheads, at the top of the scale, the cost of funding the new post would be £35,704. It was reiterated that the Fund's major employers were realising significant savings by reducing national insurance contributions with the AVCs Scheme - savings that were much greater than the cost of funding the Pensions Officer post.  Therefore, in principle, given the employers' budgets and the budget of the Pensions Fund, there would be no increase in the net budget.

Additionally, in response to the Court of Appeal's ruling in the 'McCloud' case against the UK Government, it was reported that the Government had now confirmed that there would be changes to all major public sector schemes, including the Local Government Pension Scheme, to eliminate age discrimination. In response to implementing the changes (known as the McCloud Project), there was a need to collect information on hours worked, and details of service breaks for all eligible employees covering the period 1 April 2014 to 31 March 2022. In addition to updating the records, there was a need to recalculate the death benefits, retirement benefits, and deferred benefits of the members who had left during the past 8 years. This would involve revisiting facts and recalculating thousands of member records. Although the McCloud project would involve significant work for the Unit, it was likely that only a very small number of members would see the value of their benefits increase at the end of the project.

It was reported that a number of other pension funds of a similar size to us had commissioned external companies to undertake this work, but this was an expensive option as opposed to keeping the work in-house. Several members agreed that the Fund would minimise costs by employing three additional temporary Pensions Assistants for a two-year period (with the possibility of extending the contract should the work continue beyond two years) to carry out the McCloud Project work.

The Fund Director reiterated that the recommendations had been challenged by the Finance Department and that they were reasonable and unavoidable recommendations. He also noted that although the Fund's major employers would realise significant savings by reducing national insurance contributions with the AVCs scheme, these would be savings for the employers and not savings for the Fund.

Thanks were expressed for the report.

During the ensuing discussion, the following observations were noted:

·         That staff efficiency was crucial to the scheme.

·         That the option of keeping the work in-house was to be welcomed.

·         That the £85k (McCloud Project) was a one-off amount - we had to accept there were costs to ensure that the work could be done correctly.

·         It was not possible to avoid the additional work - the recommendations were a means to move on in a realistic manner.

·         The recommendations were cost effective and offered opportunities to staff.

A member of the Pensions Board reiterated that the Fund's administration was a priority area that required expertise and professionalism. He was confident that the Pensions Board would support the recommendations.

RESOLVED:

·         To accept and note the information

·         To approve the £137,929 increase in expenditure on Pension Unit staff by 2022/23:

§  Create four new posts

Pensions Officer (to support the AVCs work) and three Pensions Assistants (two-year contract for the McCloud project - with a possibility of an extension should the work last more than two years)

(total annual costs £121,135)

§  Increase the salary of six Pensions Assistants from GS3 to GS4

(total annual costs £16,794)