Annual Report and Accounts 2007

Scheme Administration

GMPF 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.

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. GMPF’s actuary normally sets employer contributions following actuarial valuations held every three years. Employer contributions can rise or fall depending on the solvency of GMPF and the estimated cost of providing benefits for future membership.

Click here for Employer Contribution Rates (219 KB)

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.

Overall, scheme membership continues to grow and the total for all the categories shown is now 229,867. This excludes 12,015 former contributors who have retained a right to a refund of contributions or a transfer of pension benefits to another scheme.

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 45.3% 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 – as a result of the reduction in the vesting period to 3 months - more members become entitled to deferred benefits rather than refunds of contributions on leaving.

There has been a small increase during 2006-07 in the number of employers contributing to GMPF. There have been two new scheme employers (Broadoak School and Shaw & Crompton Parish Council). And there have been twelve new admitted bodies (Adactus Housing Association Limited, Housing 21, Manchester Working Limited, Mellors Catering Services Limited, NPS Stockport Limited, Operon, Parkway Green Housing Trust, Peak Valley Housing Association Limited, Solutions SK Limited, The Working Class Movement Library, TransLinc Limited, and Western Skills Centre Limited.

However, these new employers are partly offset by departing employers. Four schools are no longer treated as separate scheme employers (Crompton Fold Primary School, George Tomlinson School, St James’s School (all in Bolton), and St John Fisher Primary School (in Rochdale) whilst five admitted bodies have also left GMPF. These are: Bury Gateway Club, Contour Homes Limited, Manchester Minibus Agency, Manchester & Salford Family Service Unit and Rochdale Family Service Unit. These changes in employers mean that at 31 March 2007 there were 206 employers actively contributing to GMPF. These include the 10 local authorities in Greater Manchester, 52 schools and colleges, a further 28 scheme employers, and 116 bodies which have made admission agreements.

Changes to scheme rules

The Local Government Pension Scheme (Amendment) (No. 2) Regulations 2006 [SI 2006 No 2008] were laid before Parliament on 25 July 2006 and came into force on 1 October 2006. They made numerous changes to the scheme rules to reflect HMRC requirements and also provided for an extended form of protection for existing members against the removal from the scheme of the 85 year rule.

The Local Government Pension Scheme (Amendment) Regulations 2007 [SI 2007 No 228] were laid before Parliament on 8 February 2007 and came into force on 2 March 2007 although some provisions had effect from as early as 1 April 2001. They made minor changes to the employers participating in the pension scheme.

The Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 [SI 2007 No 1166] were laid before Parliament on 4 April 2007 and come into force on 1 April 2008. They describe the main features of a new-look pension scheme which will remain final salary but have an accrual rate of 60ths but with no automatic lump sum. Some other changes are new criteria for ill-health benefits and tiered employee contributions. Other parts of the regulatory framework for the new scheme, covering administrative arrangements and the transition from the current scheme have not yet been finalised. Some initial amendments to these “Benefits” regulations are contained in SI 2007 No 1488 – see below.

The Local Government Pension Scheme (Amendment) (No 2) Regulations 2007 [SI 2007 No 1488] were laid before Parliament on 24 May 2007 and came into force on 21 June 2007, although most provisions have retrospective effect. Further changes are made to the scheme to bring it into line with HMRC  requirements, to raise the upper limit for employers to augment membership  to 10 years, to introduce a limit for payment of additional voluntary contributions of 50% of remuneration. Also correcting amendments to the “Benefits” regulations have been made.

The Local Government Pension Scheme (Amendment) (No 3) Regulations 2007 [SI 2007 No 1561] were laid before Parliament on 6 June 2007 and come into force on 30 June 2007. They deal with the preparation of Governance Compliance Statements, Annual Reports and Pension Administration Strategies.

Overall, the numerous legislative changes and the new tax regime combined to generate a significant amount of work, with new processes having to be adopted. AXIS software also had to be updated as did literature, letters, forms and the website.

Pensioners October saw us hosting the annual Pensioners Forum, with questionnaires revealing good levels of satisfaction. The mixture of presentations from officers regarding the finances of GMPF along with information about the pensioners themselves, coupled with changing guest speakers, appears to be a winning formula. This year we were pleased to hear from the Rt Hon James Purnell – a Greater Manchester MP - who at the time was Minister of State for Pensions Reform.

On the admin front, we receive weekly lists of local deaths, and use these to check whether any pensions in payment should be stopped. These have provided the first notification of deaths in over 200 instances.   

Every two years we take part in the National Fraud Initiative, in the past this helped us to find out about pensioners that had died so that their pensions could be stopped. This year 56 confirmed deaths have been identified. This time, for the first time, we also extended the check to identify deferred beneficiaries that had died, to identify where benefits are now due. This has led to 96 deaths being reported, each of which will at least lead to a death grant being paid, and often dependants’ pensions too.

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 in 2005/2006 regarding membership costs (ie. ignoring costs relating to investments), was over £21; GMPF’s costs in 2006/2007 were £14.16. We also continue to meet with representatives from the other five metropolitan funds to exchange ideas on best practice.

Exam Successes The Institute of Payroll Professionals (IPP) also covers the LGPS and offers several related qualifications. There were successes during the year with Gillian Hamilton, Brenda Mottershead (who won the prize for the best tutor marked assignment) and Lisa Podmore being awarded the IPPM Diploma. Jessica Kelly, Neil Langstaff and Jonathan Walmsley all obtained the Foundation. We also had Lorraine Peart qualify as an Accounting Technician.

Information Technology AXIS, our computerised administration system, continued to function well with little down-time being experienced. The computer on which it ran was however no longer manufactured, providing concerns regarding its maintenance. It also had a processor that was materially slower than those now available. It was therefore replaced during the year with a much more powerful IBM “P” server. AXIS’s Task Management and document imaging facilities remain integral to much of what we do.  We also installed new telephony software to obtain a lot more data about calls to the Helpline. This also helped us to establish a separate helpline for employers.

A variety of independent computerised checks continued to be made on pensions, including an expanded one that looks at pensions increase (PI). All pensioners are now having a review of the amount of PI in payment twice yearly, and all pensions on Payroll are compared monthly to the amounts of benefits held on the membership side of AXIS to ensure correct payments are made.

Communications

The production of high quality GMPF literature continued generally, with separate newsletters being produced for contributors, deferred beneficiaries and pensioners. Deferred beneficiaries, as well as contributors, also received an annual benefit illustration. Roadshows for contributors also continued, with representatives from the Prudential presenting around the County about Scheme AVCs.

Other literature was also updated to keep it line with the Regulations, not least the employees guide to the Scheme. The in-house guide to the Scheme – being particularly useful to employers – was also revised and re-issued.

Awards At the Professional Pensions Pension Scheme of the Year Awards 2006 GMPF won the awards for Pensioner Communications (Public) and DB Communications (Schemes Over £2.5bn).

Performance Standards

Despite membership growing and changes in the Scheme’s rules, adherence to standards set by GMPF’s Management Panel was substantially achieved. All but two of them registered at 90% or more, with four being at 100%.

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