Annual Report and Accounts 2006

Scheme Administration

The Greater Manchester Pension Fund is the largest fund in the statutory Local Government Pension Scheme for England and Wales. Tameside MBC is the administering authority.

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 an admission agreement made between the body concerned and Tameside MBC. Local authority councillors may also be eligible to join the scheme.

Click here for Employer Contribution Rates (219 KB)

The Scheme is a traditional final salary scheme where we normally use years of membership and pay near to retirement to work out benefits. Statutory regulations define the benefits and they do not depend on investment performance or market conditions. Standard employee contributions are a fixed percentage of pay. Employers meet the balance of the cost of the Scheme through variable employer contributions. The Fund actuary normally sets employer contributions 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. Members of the Scheme are contracted-out of the State Second Pension (S2P) because the Scheme provides at least broadly equivalent benefits. Members and their employers pay lower National Insurance contributions as a result. The Scheme is also registered with Her Majesty’s Revenue and Customs, so has favourable tax treatment, including tax relief on employee contributions.

Although contributor numbers continue to grow, overall pensioner and deferred member numbers are growing faster. The number of contributors as a proportion of total membership at 46.6% is lower than at the same point last year. This continues the trend of growing maturity of membership that we have seen recently. It seems likely to continue for two reasons. The number of non-local authority employers which restrict access to the scheme grows and – thanks to the reduction in the vesting period to 3 months - more members become entitled to deferred benefits rather than refunds on leaving.

There has been a small reduction during 2005-06 in the number of employers contributing to the Fund. There have been four new scheme employers (Northwards Housing Limited, Six Town Housing, Stockport Homes Ltd and United Learning Trust [Salford Academy] ). And there have been three new admitted bodies (Irwell Valley Housing Association, Pure Innovations Limited and The Manchester Adoption Society). However, these new employers are more than offset by departing employers. Three scheme employers no longer contribute (North Area College, Oldham Business Management School, and Trafford Children & Young People’s Service). Five admitted bodies have also left the Fund.

These are: Bury College Enterprises Ltd, Deckers Restaurants Ltd, GMCP Limited, Positive Futures Ltd and Stockport Sharecare. These changes in employers mean that at 31 March 2006 there were 201 employers actively contributing to the Fund. These include the 10 local authorities in Greater Manchester, 55 schools and colleges, a further 27 Scheme employers, and 109 bodies which have made admission agreements.

Changes to scheme rules

The Local Government Pension Scheme (Amendment) Regulations 2005 [SI 2005 No 1903] were laid before Parliament on 13 July 2005 and came into force on 3 August 2005 though they were largely effective from 1 April 2005. Their main effect was to revoke The Local Government Pension Scheme (Amendment) (No 2) Regulations 2004 [SI 2004 No 3372] and to restore the 85 year rule into the Scheme.

The Local Government Pension Scheme and Management and Investment of Funds (Amendment)  Regulations 2005 [2005 No 2004] were laid before Parliament on 27 July 2005 and came into force on 17 August 2005. Their main effect is to increase the powers of administering authorities to make use of stock lending.

The Local Government Pension Scheme (Civil Partnership) (Amendment) (England and Wales) Regulations 2005 {SI 2005 No 3069] were laid before Parliament of 10 November 2005 and came into force on 5 December 2005. They enable surviving civil partners of LGPS members to have pensions based on the member’s post 5 April 1998 membership.

The Local Government Pension Scheme (Amendment) (No 2) Regulations 2005 [SI 2005 No 3199] were laid before Parliament on 23 November 2005 and came into force on 14 December 2005. They require administering authorities to produce policy statements on governance and communications. Both policy statements are available on the Fund’s main public website.

The Local Government Pension Scheme (Amendment) Regulations 2006 [SI 2006 No 966] were laid before Parliament on 30 March 2006 and come into force at dates ranging from 1 April 2006 to 1 October 2006.

They deal mainly with adapting the LGPS to reflect the new “simplified” HMRC tax regime for pensions which came into effect on 6 April 2006 and removing the 85 year rule which affects the way the amounts of voluntary early retirement pensions are calculated.

Further regulations are expected to remedy the deficiencies in SI 2006 No 966 and to reflect any agreed revisions to the protections available to existing members from the effects of removing the 85 year rule.

Pensioners

October saw us hosting the annual Pensioners Forum, with questionnaires revealing good levels of satisfaction. The mixture of presentations from Fund officers, coupled with changing guest speakers and a lively one stop information shop appears to be a winning formula. This year a presentation from a police officer regarding crime prevention was both informative and interesting.

A video of the highlights is also available:

Click here to see the Pensioners Forum 2005

Avoiding pension overpayments

The procedures for reporting the deaths of Scheme members generally works well. The Audit Commission through the National Fraud Initiative facilitates the comparison of pension payroll records with those held by the registrar of Births Marriages and Deaths. In addition weekly lists of local deaths are also being received. These are checked to see if any pensions in payment should be stopped. This is proving to be a worthwhile exercise.  

Employers

Quarterly meetings with local authority pensions officers have continued and are a routine but valuable part of the calendar of events. Meetings with other employers take place twice yearly. Our Pension Administration Strategy with employers continues in operation.

Best Value

Benchmarking has continued via our membership of the CIPFA club for administering authorities, with our costs being in the lowest quartile. The average annual cost per member regarding membership costs (ie. ignoring costs relating to investments), was £21.45; GMPF was £14.31. We also continue to meet with representatives from the other five metropolitan funds. 

Institute of Payroll and Pensions Management

There were successes during the year regarding professional qualifications, with John Carroll and Anita Higginson being awarded the IPPM Diploma. Eschelle Armstrong, Joanne Dempsey, Nicola Hughes, Joy Nelson and Marianne Walton all passed their IPPM Foundation examinations. 

Website

Our website continues to grow and has recently had a major revamp. It receives approximately 200 external visits a day, and is promoted in all of our literature. This annual report is one of an increasing number of documents that are now on-line. The employers’ section has also been expanded in response to comments received with items such as the Ill-Health Guidance Manual being present. 

Communications

The production of high quality Fund literature continued generally, with two Pension Powers, a Pensions Bulletin and a Pensions Grapevine being published. Deferred beneficiaries, as well as contributors, received both an annual benefit illustration and information about civil partners. That we were able to do so was in part the result, over several years, of a substantial amount of work done to bring the level of service provided to deferreds up to that provided to contributors and pensioners. This levelling up will also smooth the bringing into payment of deferred benefits, as people reach their retirement ages.

Other literature was also updated to keep it line with the Regulations, not least the employees guide to the Scheme. 

Governance & Communications Policies

New regulations required administering authorities to produce policy statements on governance and communications. Both these statements can be found on the Fund’s website.

Funding Strategy Statement

In 2005 the Fund published its first Funding Strategy Statement, following consultation with employers.
It includes guidance to the Actuary about the periods over which actuarial deficits should be spread and the phasing period for contributory increases.

The Statement will be reviewed in 2007 as part of the actuarial valuation process.
The Statement is published on the Fund’s website and is available in hardcopy form upon request.

Click here to view the Funding Strategy Statement (241 KB)
 
Performance Standards

Despite membership growing and changes in the Scheme’s rules, adherence to standards set by the Fund’s Management Panel was substantially achieved. All but one of them registered at 90% or more with ten being at 99% or over.

Awards

Finally, and by no means least, we won the IPPM Team of the Year Award. It was a particular delight to win this award as it recognised collectively everyone - councillors, trades union representatives, advisers, actuary, and officers - involved with administering the Fund.

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