The report of the Director, West Yorkshire Pension Fund (Document “X”) reminds Members that the role of The Pension Board, as defined by sections 5(1) and (2) of the Public Service Pensions Act 2013 is to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify. 

To be able to assist the Scheme Manager and meet the requirements of the Public Service Pensions Act 2013, Pension Board Members must be able to demonstrate suitable knowledge and skills of the LGPS to effectively scrutinise the decisions made by officers.

To assist Pension Board Members with their knowledge and skills a training presentation will be provided regarding Freedoms & Choice, Scams and Transfers

Recommended –

That the training presentation be noted.

(Matthew Mott - 07815 476877)

The report of the Director, West Yorkshire Pension Fund (Document “X”) reminded Members that the role of The Pension Board, as defined by sections 5(1) and (2) of the Public Service Pensions Act 2013 was to assist the Council as Scheme Manager in ensuring the effective and efficient governance and administration of the Local Government Pension Scheme (LGPS) including securing compliance with the LGPS regulations and any other legislation relating to the governance and administration of the LGPS; securing compliance with the requirements imposed in relation to the LGPS by the Pensions Regulator; and any other such matters as the LGPS regulations may specify. 

To be able to assist the Scheme Manager and meet the requirements of the Public Service Pensions Act 2013, Pension Board Members must be able to demonstrate suitable knowledge and skills of the LGPS to effectively scrutinise the decisions made by officers.

To assist Pension Board Members with their knowledge and skills a training presentation was provided regarding Freedoms & Choice, Scams and Transfers.

The presentation revealed that from April 2015 members of a defined contribution pension scheme could access all their pension pots at age 55.  Whilst WYPF was a defined benefit scheme and only 25% could be paid as a cash lump-sum a member could transfer to a defined contribution scheme and then access all their pension pot.

A very detailed presentation explaining the legislation; the pitfalls of the legislation including the potential for members to encounter Deliberate Deprivation Rules preventing them accessing future benefits they may require; the potential to fall victim to fraud and scams and the difficulties for the fund as they were unable to give financial advice when it was known that transferring the funds was to the detriment of the Member. 

Amendments to the scheme regulations in November 2021 had increased the risk and responsibilities of Pension Funds and included a requirement to warn members of the risks of scams; monitor and report suspicious activity and conduct due diligence.

Following the presentation a Member queried why any person would wish to transfer their pensions from reputable schemes.  In response it was acknowledged that it would be very difficult for any high street provider to meet the standards and performance of the WYPF whose benefits were as guaranteed as any could be and not at the mercy of stock markets.  There were some very limited exceptions and an examples of that included a single person without anyone to leave their funds to with a life limiting illness who wished to enjoy their funds whilst they remained well.

It was explained that a member had to identify the reason they wished to move funds to a defined pension scheme although it was understood that the lure of the transfer of large sums of money and ability to access funds prior to retirement age was the rationale.  The large figures involved attracted fraud and scams and even without that risk people could find, with expensive transfer costs, they could receive less than 50% of what their funds were worth.

It was reported that the Government took the risk of fraud and scams so seriously there were television adverts placed to make people aware.

The potential impact on the fund if large numbers of members transferred their pensions was questioned and it was explained that potentially very large numbers could impact on investments and employer contributions.

The Occupational and Personal Pension Scheme (Conditions for transfer) Regulations 2021 allowed funds to pause or prevent transfers under certain criteria and it was questioned how many transfers had been stopped.  In response it was explained that the regulations had only been in place since November 2021 and nine transfers had been paused for additional information to be provided.  It was explained that officers had witnessed a number of transfers that they would have paused prior to November if the regulations had been in place at that time.  It was agreed to provide additional information on the numbers after the meeting. 

Difficulties experienced were that even with genuine transfers there were delays incurred following the due diligence which had to be applied.   In addition, administrators did not have the investment expertise required if transfers were not straightforward.  Some funds were utilising a pool of experts or employed internal lawyers. 

The presentation revealed that people transferring over £30,000 must receive financial advice and in response to questions it was confirmed that this must be from a person registered to provide pensions advice.

Members were asked if they would like to receive training sessions on individual topics at future Pension Board meetings and it was acknowledged that it would be useful and would allow for a quick response to new legislation.  Potential topics suggested included an overview of the LGPS; a reminder of the McCloud journey over the previous four years and, as 45% of complaints received were about ill health retirement it felt it would be good for Members to more fully understand the IDRP process.  Members were asked to contact officers with additional topics they would like to be covered to supplement other training formats available to them and to enable them to demonstrate their knowledge and skills. 

In conclusion Members were advised that for the Fund to consider the TPR transfer pledge it must demonstrate that Members had completed the scams module on the TRP training tool kit.  Members were urged to complete that module and forward the completion certificate to officers before the end of April 2022.

Resolved –

That the training presentation be noted.

Action: Director, West Yorkshire Pension Fund