Agenda item

This paper provides a summary of activity in key areas of pension administration.

Eleanor Dennis presented the paper setting out the summary of updates on key areas of activity in the pension administration function, the headlines being progressed of the legacy backlog, the increasing wait times on the help desk and, in particular, it requested the approval of the 23/24 budget proposal. The budget would be increasing from £384,000 to £493,000. The main reason behind this significant increase from LPPA was primarily to retain and recruit staff as they had a 32% staff turnover.

They also wanted to establish some new roles to allow them to be compliant in regulatory forthcoming changes and associated with cleansing data. The reality was that the system was not performing as it should be, and it required more resource from their own team. They needed extra funds to bring in expertise resource to get the system performing well, and in the long-term it would provide some cost savings in terms of the cost of the pension service delivery.

Councillor Adrian Pascu-Tulbure noted that in the private sector if a service was failing to deliver to a client they should not ask the client for more money to get more staff to address those failings. He did not understand why LBHF was expected to subsidise failure.

Eleanor Dennis agreed that this would be the case in the private sector. The issue here was that they did not have a contract but had a discharge agreement whereby the costs were shared amongst all clients. As a non-profit organisation there was no option to withhold increasing costs.

Councillor Florian Chevoppe-Verdier noted that the report stated that tackling the backlog began on 9 of January and 198 cases had been tackled in two months. That meant there were 542 left that needed to be tackled in one month. At that current rate they would probably conclude by mid-May, therefore missing on the target.

In terms of the backlog, Eleanor Dennis explained that it was very difficult to quantify the run rate because every case was different and there might be some complex work that needed to be done before completing the case. As Iain Cassidy had mentioned, the change of administrators from Capita to Surrey to LPPA meant there were inherent data issues and some of those legacy issues were not resolved properly by previous administrators and must be fixed before they would be able to complete each case. Therefore it was difficult to predict a realistic run rate because more complicated cases could take a significant amount of time just to get the record right before the actual identified task cold be completed. She had recently heard that the backlog had been restricted further by a resources issue and she would update the committee outside of this meeting on the new timescale. LPPA had said that March was looking unlikely but had not given a realistic timeline.

ACTION: Eleanor Dennis

The Chair asked whether this would be a temporary administration increase with the anticipation that there would be future savings. He also asked what options could be considered and whether they could go back to the Administrator to voice the Committee concerns regarding this request for an increased budget. They could stress that any increase would need to be matched with corresponding increase in performance.

Eleanor Dennis agreed that the right course of action was to send LPPA a formal letter outlining expectations on the understanding that the budget was approved based on performance being as agreed in the service agreement.  And probably the only realistic one given the arrangement with the organisation.

The Chair expressed his frustration that their only two options were to either accept this increase or to accept it and then issue a letter. He asked about the nature of the discharge agreement with LPPA, and whether there were opportunities for it to be reviewed.

Eleanor Dennis replied that unfortunately, unless this contract was terminated, there would be no option to review the terms. The omission of a clause to recompense the Fund or fine for poor performance was highlighted by the legal team at LBHF  prior to the signing of the documents but because there are shared , not for profit service Lancashire lawyers would not agree to such a clause being added. There was, however, a clause to protect the Fund if it incurred as a result of their poor service.

In view of no other option, the Chair proposed to accept this increase in budget stressing that it should be accompanied with a strong worded letter outlining the Committee’s expectations for increases in performance. And secondly for the Committee to set an internal deadline for performance improvement and if that was not achieved, to start looking at alternative options. In addition, to request interim reports outlining their performance but to stress on the letter that the Committee would not accept this being used as an excuse for declining performance.

ACTION: Eleanor Dennis

Eleanor Dennis added that LPPA had mentioned moving towards regular monthly updates, but so far no report had been received. Greg Smith had promised he would look at that. However, she agreed with Councillor Florian Chevoppe-Verdier point that they would use this as an excuse for poor performance, stating that it was time consuming. But her argument was that they already had the data in order to manage their performance and delivery, so they should already be recording it. In fact the help desk information used to be a daily overview that she received on a weekly basis but currently it was just a summary. Therefore, reporting and presenting their data was an issue which was not reflected in the KPIs. It would be a challenge even if they issued those interim reports as the information would be quite restricted.

The Chair asked for an additional line on the letter to state that LPPA had promised interim reports which so far had not been delivered. However, he added that the Committee should expect that more interim reports were likely to be less detailed, but the Committee should still insist on more granular data on specific areas already requested at previous meetings.

ACTION: Eleanor Dennis

The Chair stressed that the Committee was extremely supportive of Eleanor Dennis and her team and appreciated their hard work managing the Administrator and keen to offer any support necessary. He was looking forward to seeing the draft letter within a couple of weeks.

Peter Parkin echoed the Chair’s comment because, from the unions point of view, since Eleanor Dennis came on board Members were able to have direct access to her and her team and to receive a quick response regarding their pensions.

RESOLVED

The Committee noted the contents of this report and agreed the increase pension administration providers increased budget.