Annual Report and Accounts 2004

Scheme Administration

Introduction

The Local Government Pension Scheme for England and Wales is administered mainly on a county basis. Tameside MBC is the administering authority for the Greater Manchester area. The Greater Manchester Pension Fund is the largest fund in the Scheme.

Employees (apart from teachers, police officers and fire fighters) of all the local and joint authorities in the Greater Manchester area and of many other public bodies have automatic access to the Scheme. Employees of a wide range of other bodies providing public services can join the Scheme if covered by a relevant resolution or by means of admission agreements made between the body concerned and Tameside MBC. Local authority councillors may also be eligible to join the scheme. A list of the employers contributing to the Fund at 31 March 2004 is shown at Appendix A.

The Scheme is a traditional final salary scheme where benefits are generally related to years of membership and pay near to retirement. Benefits are defined by statutory regulations and do not depend on investment performance or market conditions. An outline of the main benefits offered by the Scheme is shown at Appendix B.

Standard employee contributions are a fixed percentage of pay. Employers meet the balance of the cost of the Scheme through employer contributions which are normally set by the Fund actuary following actuarial valuations held every three years. Employer contributions can rise or fall depending on the solvency of the Fund and the estimated cost of providing benefits for future membership. The contribution rates for 2003-04, resulting from the valuation as at 31 March 2001, are shown at Appendix A. The rates for 2002-03 are shown also for comparative purposes.

Members of the Scheme are contracted-out of the State Second Pension (S2P) (previously known as the State Earnings Related Pension Scheme (SERPS)) because the Scheme has been judged to provide at least broadly equivalent benefits. Members and their employers pay lower National Insurance contributions as a result. The Scheme is also "exempt approved" by the Inland Revenue, so benefiting from favourable tax treatment, including tax relief on employee contributions.

Overall, scheme membership continues to grow and the total of the categories shown now exceeds 207,900. Although the numbers of contributors continues to grow, overall the numbers of pensioners and deferred members are growing at a faster rate so that contributor numbers as a proportion of total membership at 48.7% is lower than at the same point last year. A trend of growing maturity of membership has now become established and seems likely to continue as the number of non-local authority employers which restrict access to the scheme grows and more members become entitled to deferred benefits on leaving.

2003-04 has again seen a large number of new employers joining the Fund. Admission agreements were made with Bolton Community Leisure Limited, Dawn Construction Limited, Eastlands Homes Partnership Limited, Group 4 Total Security Limited, Manchester and District Housing Association Limited, Portico Housing Association Limited, Proco NW Limited, Salford Community Leisure Limited, The Villages Housing Association Limited, Trafford Community Leisure Trust, Wigan Leisure and Culture Trust and Wythenshawe Forum Trust. United Learning Trust has become a Scheme employer in respect of Manchester Academy. In each case, the employer's participation in the Fund enables employees transferred from local authorities to remain scheme members. These changes in employers mean that at 31 March 2003 there were 211 employers whose employees contribute to the Fund. These include the 10 local authorities in Greater Manchester, a further 30 Scheme employers, 56 schools and colleges and 115 bodies which have made admission agreements.

Excludes former contributors who have retained a right to a refund of contributions or a transfer of pension benefits to another scheme (12,557). However, unlike in previous years, the contributors figure now includes casual employee members.

Annual Pensioners’ Forum

This year's forum was held on 24 October 2002 at New Century Hall in Manchester. It again proved a very popular event, enabling around 400 Fund pensioners to enjoy the usual mix of information stands, presentations from inside and outside the Fund, and of course the chance to catch up with old colleagues over lunch. New organisations offering help and advice to our guests included the EAGA Partnership, who administer the Government’s Warm Front heating grant, and the social and campaigning organisation for seniors, ARP050 - who gave a lively and well received presentation.

The Local Government Pension Scheme and Discretionary Compensation (Local Authority  Members in England) Regulations 2003 [SI 2003 No 1022] were laid before Parliament on 7 April 2003 and came into force on 1 May 2003. They allow councils to make some or all councillors eligible for membership of the Scheme having received the advice of independent remuneration panels. For councillors, the Scheme will work on a revalued career average salary basis rather than as a final salary scheme.

The Local Government Pension Scheme (Amendment) Regulations 2003 [SI 2003 No 2249] were laid before Parliament on 8 September 2003 and came into force on 1 October 2003. Their main purpose is to update the Scheme's provisions on absences to cover adoption and paternity leave.

The Local Government Pension Scheme (Amendment) (No 2) Regulations 2003 [SI 2003 No 3004] were laid before Parliament on 28 November 2003 and came into force on 19 December 2003. They rewrite the Scheme's provisions relating to making admission agreements. In particular, in the case of agreements made to allow Scheme members transferred to contractors to remain in the Scheme, they place the onus for deciding what if any level of insurance cover is required on the former employer.

The Local Government Pension Scheme (Amendment) Regulations 2004 [SI 2004 No 573]were laid before Parliament on 10 March 2004 and take effect from 1 April 2004 and 1 June 2004. The main changes to the scheme are reducing the qualification period for benefits to three months, requiring annual benefit statements to be issued to all members, requiring administering authorities to produce funding strategy statements and changing the Internal Dispute Resolution Procedure to give greater responsibility to employers and reduce the role of the Secretary of State. Significant changes are also made to scheme members' ability to transfer membership between jobs or combine pensions on retirement.

In March 2004, the Local Government Pensions Committee (part of the Employers Organisation) published details of the terms agreed at national level between employer and trade union representatives to allow part time employees excluded from the Scheme in the past to pay contributions to allow them retrospective access to the Scheme. Where employers are willing to settle cases that have been brought before Employment Tribunals, they will be notifying the people concerned of the potential costs and benefits, and making arrangements to allow those wishing to go ahead to do so. Tameside MBC, as administering authority, will have only a limited involvement in this exercise.

Since July 2001, the Office of the Deputy Prime Minister has been conducting a  "stocktake" review of the Local Government Pension Scheme to ensure that the Scheme is operating effectively, efficiently and continues to provide value for money. Following on from this review, major changes to the Scheme are proposed to take effect from April 2005, designed to reduce cost to employers. Suggested changes include moving the Scheme's normal retirement date to age 65 for all members, raising the minimum age for retirement in normal health to age 55, and phasing out the so-called 85 year rule.

The Chancellor of the Exchequer confirmed in his March 2004 Budget that a radical overhaul of the tax rules affecting pension schemes will come into force in April 2006. In particular, there will be a single regime of annual and lifetime limits on benefits from pension schemes. This new regime should allow most Scheme members to make greater tax-favoured savings in this or other pension schemes.

The Fund's website continued to develop through the years with the employers' section being redesigned. A successful pilot scheme was also run that allowed pensioners to see some of their own computerised pension records, including pay history, via the Internet using a PIN for access. The website now holds so much information that many member enquiries can be answered online for those that have access to the Internet. Newsletters and other publications therefore increasingly refer to information available at the press of a button. The most popular page accessed is usually the online benefits calculator!

Axis is the Pensions Office's main computerised administration system and has continued to run reliably through the year. A successful pilot was undertaken of an employer providing information of new part-time hours for various contributors via a computerised file, rather than by individual notifications. This new method is now available for all large employers (who are being encouraged to use it).

The pilot of the back-record conversion of microfilmed images to digitised ones went badly and the would-be contractor for the full job has now been replaced.

Although document imaging rather than microfilming has proved to be a boon, it ran slowly on older PCs. These were all replaced.

Two releases of AXIS software were loaded during the year (a general one plus one for pensions for councillors), all implemented to original timetables.  

Business continuity was also improved with a contract being agreed for emergency accommodation and computing to be made available in Trafford Park, should disaster strike. The Head of Information Technology has affirmed that AXIS is now the most resilient system in the Borough. The Pensions Office's mezzanine was also wired-up for PCs to assist with interim business continuity and to provide a bolt hole for Ashton based colleagues, should the need arise.

Despite membership growing and changes in the Scheme's rules, adherence to standards set by the Fund's Management Panel improved. For the first year since the standards were introduced (in 1995), performance for all of them was over 90%, with six being at 100%. Our adherence to performance standards was one of the items commended in November when we won the Public Treasurer's Quality of Service Award.

A major item during the year was the undertaking of the Pension Office's first Best Value review.

This was done with the help of critical friends from within the Borough, West Yorkshire Pension Fund, and also Diageo Pension Fund to provide a private sector viewpoint.

Generally we came out very well but the review identified a number of areas where we could improve, especially relating to the transmission of data from employers to ourselves. Action points have been incorporated into the Business Plan for 2004/5.

A local performance indicator is that our unit cost per member should be in the cheapest quartile for LGPS funds. This is consistently the case, despite providing an award winning service. During 2003/4 our unit cost per member was £14.50. The 2003 LGPS average reported by the CIPFA Pensions Benchmarking Club was £21.

The service members receive at the point of retirement is one of the most important areas of work for the Pensions Office. To inform what we do a survey of a large sample of new pensioners is undertaken every two years. This year a questionnaire was sent to all of the 198 new pensioners who received their first pension payment during November 2003.

The results of the survey confirmed that our retirement documentation (forms, letters and Notes for Guidance) were comprehensive and (as importantly) understandable. On a scale of one (poor) to 10 (excellent), the average rating was 9. Another item of note was that 97% of those that responded had received payments when they had expected them, if not sooner.

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