Transparency data

SAB meeting minutes: 29 June 2023

Updated 16 September 2024

Applies to England and Wales

30th Meeting, 29 June 2023, 14:00 – 17:00

Minutes

Members present:

Independent Chair

• Julia Mulligan

Secretariat 

• Chris Moore

Police Federation of England and Wales (PFEW) – Attending as Observers

• Mike Brown
• Gemma Lofts

Police Superintendents’ Association (PSA)

• Dan Murphy (SAB Member)
• Paul Griffiths

Association of Police and Crime Commissioners (APCC)

• Andy Tremayne (SAB Member)

Chief Police Officers’ Staff Association (CPOSA)

• Shabir Hussain (SAB Member)
• Gareth Wilson

National Police Chief’s Council (NPCC)

• Nicholas Barker (SAB Member)
• Kevin Courtney
• Clair Alcock

National Association of Retired Police Officers (NARPO)

• Alan Lees  

Home Office (HO)

• Sara Alderman
• Alex Platts
• Helen Fisher

Superintendent’s Association of Northern Ireland (SANI)

• Represented by PSA

Association of Scottish Police Superintendents (ASPS)

• Carle Stewart

Police Federation Northern Ireland (PFNI)

• Liam Kelly

Department of Justice, Northern Ireland (DoJNI)

• Antonia Hoskins 
• Victoria Elliott

Scottish Police Authority

• Alasdair Corfield
• Sharon Dalli

Scottish Police Federation (SPF)

• David Kennedy

Scheme Manager Steering Group (SMSG)

• Daisanne Summersfield
• Mark Payne

Government Actuary Department (GAD)

• Robert Fornear
• Samantha Watts
• Rachael Henry

Scottish Public Pensions Agency (SPPA) 

• Alan Wilkinson

First Actuarial

• Craig Moran

XPS

• Graeme Hall

Welcome and apologies 

1. The Chair welcomed members and apologies were received from Calum Macleod (PFEW).

Minutes of the meeting of 03 April 2023

2. The minutes of the previous quarterly meeting was agreed. Action Point 1: Secretariat to publish finalised minutes of 03 April 2023 on webpage. (Completed)

Action log of 03 April 2023

The Chair went through the action log of 03 April 2023, which has been updated in the light of discussion. Key points of all the actions discussed were: 

• Action Point 2 - SAB members to provide thoughts to the Chair on how the SAB engages with the SMSG moving forwards. -  The Chair thanked members for their input and closed the action.

• Action Point 3 - SAB to provide advice to scheme managers and local pension boards on Retirement and Re-joiner Guidance using data provided by NPCC. - The Chair said since the action was recorded there had been a meeting with the Minister scheduled and felt it was better to close the action and consider the position after the meeting prior to writing any letters.

• Action Point 4 - SAB to write a letter to the Police Minister requesting for Retirement and Re-joiner Guidance to become an entitlement for officers in the regulations. – The Chair again cited the upcoming meeting with the minister, as a reason for not moving forwards in correspondence and closed the action.

• Action Point 5 - SAB Chair to hold meeting with Shabir Hussain (CPOSA), Gemma Lofts (PFEW) and Clair Alcock (NPCC) on CPOSA request for pension input amount examples and to agree next steps. The Chair explained the meeting had taken place and the action was closed.

• Action Point 6 - The Chair to hold a meeting with Clair Alcock (NPCC) on SMSG’s potential funding of independent review of the scheme pays mechanism. The Chair held a meeting with Clair Alcock (NPCC) on 14 June. Clair Alcock (NPCC) explained that at the last meeting, the SAB agreed to put the request to the scheme managers to fund the review. It was approved and First Actuarial are providing an independent review that was being currently worked on. The findings of the report would be feedback to the SAB.

• Action Point 7- Clair Alcock (NPCC) to discuss Legacy scheme opt-outs with SMSG forum and then update the SAB. Clair Alcock (NPCC) explained it was still ongoing. A paper would be sent to the Scheme Manager Steering Group forum to alert them to the issues requiring the SMSG to consider it and return the SAB with a scheme manager view. Clair Alcock (NPCC) felt it could be considered by the SMSG in time for the 5th October SAB meeting.

• Action Point 8- The Chair to hold meetings with NPCC on future work plans and resourcing. The Chair noted AP8 had been discussed at the 14th June meeting and was on the agenda so the AP could be closed.

All outstanding actions from previous meetings have been closed. Please see the action log for further details. 

Matters Arising: 

3. Shabir Hussain (CPOSA) raised that the Chair had yet to receive a response from the Treasury from previous correspondence on the indexation question. The Chair said she would chase a reply and asked that it be recorded as an action.

Action Point 1: The Chair is to request a follow-up letter from HMT regarding previous correspondence to them sent on 06/03/2023.

Remedy Preparation, XPS

Clair Alcock (NPCC) introduced Graeme Hall (XPS), The Head of Public Sector Relations for XPS, and stated he was in attendance to present their implementation progress for remedy. XPS represents 32 of the forces. NPCC had been working very closely with XPS, as they represent the largest area of policing. The key points raised in Graeme Hall (XPS) were summarised below: 

4. Graeme Hall (XPS) explained that XPS aim to deliver the remedy to all 32 police forces by implementing system changes and rolling back members into the legacy schemes on 1st October 2023. They also planned to issue remedial service statements to all relevant members within an 18-month window.

5. The presentation addressed two perspectives: pensions administration and retrospective work. From a pensions administration perspective, XPS reviewed processes, documentation, and guidance to ensure accurate information was provided to members before October 1st. They had also started work on identifying new reporting requirements.

6. Regarding retrospective work, XPS must provide retrospective penalty calculations and remedial service statements to all relevant members, including those on deferred choice arrangements. That would involve calculating both legacy scheme and remedial scheme options for members with service between 2015 and 2022.

7. Graeme Hall (XPS) outlined their current setup, which included an admin team, projects team, services group, and business services group. Each team had specific responsibilities for system testing, documentation, technical input, calculations, and system updates. The overall goal was to adhere to the project timetable, with a potential completion date by the end of March 2026.

8. Graeme Hall (XPS) emphasised XPS’s involvement in discussions over the years to understand the required changes and explained that they had formed a team dedicated to McCloud. Regular meetings with relevant stakeholders, including NPCC, Home Office, HMT, and the software provider Heywood Pension Technologies were held. XPS also produce a McCloud newsletter to keep the police forces informed about legislation updates and requirements.

9. Graeme Hall (XPS) also mentioned their experience in handling private schemes alongside public sector ones. XPS was developing an out-of-system calculation process to address recalculations efficiently, ensuring the timeline aligns with the 18-month window for information dissemination.

10. On remedial Service Statements, Graeme Hall (XPS) noted that it provided information on the two schemes and the impact of choices, such as additional tax charges and contribution differences, which was a significant part of the implementation. Data collection exercises were being conducted.

11. Graeme Hall (XPS) highlighted the dependency on accurate and correct data for providing benefits. There were challenges in obtaining data from employers as, technically, they only had to hold the information for short periods. Which may impact the ability to provide the required remedy by the targeted date of 1st October.

12. The final legislation was anticipated in September 2023, but the specific date was still being determined. Administrators need time to review, which could affect the calculation processes. Manual interventions might be required for October and November retirements, focusing on minimising disruptions.

13. Graeme Hall (XPS) briefly touched on divorce cases, indicating the need to review divorces between 1 April 2015 and 31 March 2022. This would mean recalculating the Cash Equivalent Transfer Value (CEV) for members of the legacy scheme or the reformed scheme.

A question-and-answer session took place after the slides. 

14. Shabir Hussain (CPOSA) asked about the calculation method for determining the benefits before automating the process. Graeme Hall (XPS) responded that they were developing the calculation process, which still needed to be put in place.

15. Alan Lees (NARPO) noted that Equinity was offering a helpline as of 1 July 2023 for dealing with issues concerning McCloud and remedy. He questioned if XPS had similar plans. Graeme Hall (XPS) explained there were recruitment plans for teams to be in place to deal with McCloud queries by October. A ring-fenced team would deal with calls, and a specific email address would be made available.

16. Dan Murphy (PSA) was concerned about the issue of honorariums and its impact on pension calculations for retiring members. He asked if there would be a mechanism to ensure those retiring after 1st October 2023 would receive the correct pension.

17. Clair Alcock (NPCC) noted it was the employer’s responsibility to make contingent decisions regarding honorariums and pensionable pay. The police forces have been asked to identify individuals with temporary promotions or pensionable pay related to honorariums. They have been provided with a self-assessment tool to help with this process. Dan Murphy (PSA) expressed his willingness to work with the NPCC to communicate the process to retiring members jointly.

Action Point 2: Clair Alcock (NPCC) will work with PSA regarding comms to retiring members on honorariums and pensionable pay.

18. In the consultation response, Dan Murphy (PSA) said that PSA raised the issue of contributions and interest and expressed concerns about potential discriminatory consequences and the need for a solution to avoid legal challenges. He said younger people would owe more contributions over a longer time and, therefore, would pay more interest. PSA had flagged the matter previously and requested a solution. If it wasn’t forthcoming, they would likely challenge it legally.

Valuation 2024 - Scheme specific assumptions. GAD

Robert Fornear (GAD) introduced his colleague Rachael Henry (GAD) from the Fire and Police team at GAD. He explained that the presentation was a summary of the key points from the GAD Draft Assumptions Report circulated to SAB members on 26 June 2023. Please check the report for further details. 

19. Robert Fornear (GAD) shared the slide deck and explained the process of setting assumptions for the valuation.

20. He elaborated that the process included analysis, data gathering, discussions with the Home Office, board discussions, and feedback before finalisation by the Home Secretary.

21. Robert Fornear (GAD) said assumptions were divided into financial and demographic categories, with scheme set and treasury-directed responsibilities. He moved on to the police-specific assumptions and said questions could be asked at the end of each assumption set.

22. Robert Fornear (GAD) explained the process for setting scheme set assumptions, involving data gathering, analysis, comparing expected vs. actual outcomes, and said there was a blending of new data with existing assumptions.

23. Robert Fornear (GAD) introduced the first assumption, which was mortality. He explained that mortality consisted of scheme sets and future improvement parts. The scheme set part showed a slight increase in life expectancy, leading to slightly higher costs. Proposed assumptions for different member types were presented in a table, showing minor changes compared to the 2016 assumptions.

24. Robert Fornear (GAD) displayed a chart demonstrating the impact of the new assumptions on life expectancy influenced by COVID-related effects. Due to data limitations, he clarified that COVID’s impact needed to be fully captured in the scheme-specific experience at the next valuation.

25. Commutation was the next scheme set assumption introduced by Rachael Henry (GAD). The assumption related to commutation of pension benefits, which determined how much of a member’s pension they would forego to receive a lump sum payment.

26. A table was presented showing the various schemes. The recommendation for the 1987 and 2006 schemes was to retain the 2016 assumption as commutation factors are actuarially equivalent and cost neutral.

27. For the 2015 scheme, further analysis was conducted using a wider dataset, including other public sector schemes, and it was found that members commuted approximately 20% of their pension for cash in 2020. The recommendation was to update the assumption accordingly. Mixed benefits, which involve both legacy and reformed schemes, were also analysed. It was observed that members with mixed benefits tend to commute approximately 12% of their pension for cash, which is about 60% of the rate for the 2015 scheme only.

28. Craig Moran (First Actuarial) asked if adopting a 20% commutation rate was consistent with other schemes. Rachael Henry (GAD) confirmed that multiple schemes outside fire and police used the 20% rate.

29. Robert Fornear (GAD) discussed various assumptions related to retirement analysis, withdrawals, promotional pay increases, ill-health retirement, and family statistics. There needed to be more evidence for the 2006 and 2015 schemes to update the retirement analysis assumptions as there were few members near retirement age. The assumptions for retirement patterns in the schemes were proposed to remain unchanged. In the case of the 1987 scheme, protected members were expected to retire based on their 1987 service, while unprotected members with less 1987 service were assumed to retire at age 55 to maximize their 2015 benefits. The proposal was to retain these assumptions for protected members but allow unprotected members to take their 1987 pension when it becomes available and restart their 2015 pension at age 55. Withdrawal rates were found to be higher than previously assumed based on the analysis of data from 2012 to 2020. The proposal was to double the withdrawal rates to match the eight-year experience.

30. Rachael Henry (GAD) explained that promotional pay increase assumptions were recommended to be retained based on the analysis of the last four years’ experience, which showed slightly higher increases than the 2016 assumption. Assumptions regarding ill-health retirement rates and the split between upper and lower retirement tiers were proposed to be maintained at the 2016 levels, which was that 50% of members retire on the upper tier and 50% retire in the lower tier. For family statistics, including the probability of an eligible member existing at death and the age of the member’s partner, the analysis showed that the 2016 assumptions were broadly in line with expectations. No changes were recommended for the 2020 valuation. Overall, the assumptions had a small impact on the valuation results, and any significant changes in membership numbers or other factors would be considered in future valuations.

31. Shabir Hussain (CPOSA) asked about the potential impact of the unions winning their case at the High Court regarding the previous valuation. Robert Fornear (GAD) explained that in such a scenario, the case would affect benefit improvements for the 2015 scheme; it may change the cost figures for the scheme but not necessarily the assumptions. He clarified that assumptions for the 2015 scheme are future-predictive and not based on experience. Craig Moran (First Actuarial) asked about the deadline for responding to the assumptions. Helen Fisher (HO) stated that the deadline was approximately five weeks from the current date, as mentioned in the assumptions email. The presentation concluded with thanks from the Chair who invited the GAD colleagues to stay for the next roundtable discussion.

Round table with Minister Philp – Agenda Discussion

32. Helen Fisher (HO) explained that the HO had engaged with the Minister on pension-related matters. The Minister will host a round table with some police stakeholders. HO requested the support of the SAB in shaping the agenda to ensure it reflected all members’ views and aligned with the SAB’s work. The Chair asked for an indication of the timings of the round table and said that it would be useful for it to be before the conference recess.

33. The Chair and Helen Fisher (HO) agreed there was a need to prepare a focused agenda for the meeting to ensure it was effective, considering the limited time with the Minister. Helen Fisher (HO) said the Minister was keen on a future look, rather than discussing historical issues.

34. Clair Alcock (NPCC) stressed the importance of using the limited time with the Minister wisely and demonstrating that there was a plan to put policing first. NPCC suggested discussing how pensions impact police officers in the labour market and its overall effectiveness. She proposed exploring the potential for centralisation and roles and responsibilities going forward rather than reflecting on past experiences.

35. The Chair agreed and explained that the Minister would invite specific individuals to the meeting as it was his meeting.

36. Dan Murphy (PSA) raised the concern about the agenda focussing solely on the future of pensions as it would fail to address current issues, especially the implementation of remedy and the concerns about timescales, administrative processes, and tax-related matters. Shabir Hussain (CPOSA) supported this view, to include current implementation issues in the discussions and ensuring the Minister was aware of the challenges.

37. The Chair acknowledged the importance of addressing current challenges and suggested having a follow-up meeting to discuss how to approach the round table discussion to make it as productive as possible. The Chair emphasised that the agenda should be clear about what they are asking from the Minister and be realistic about the influence he can exert in certain areas.

38. Helen Fisher (HO) said SAB members should consider that central government pension policy was outside the policing minister’s direct control. However, she agreed that evidence of current challenges and past experiences would help shape the discussions and illustrate the need for improvements in the future model.

39. The Chair proposed setting up a sub-group to work on the agenda for the upcoming meeting with the Minister. The goal was to ensure that the agenda reflected the interests of all scheme members and aligned with the work of the Scheme Advisory Board (SAB) and other stakeholders. The SAB members agreed with this approach, and Helen Fisher (HO) also expressed support.

Action Point 3: The Chair to set up a sub-group to work on the agenda for the upcoming Round table with Minister Philp.

Consultation responses, SAB, NPCC and Staff associations

40. The Chair explained that the purpose of the agenda item to note in the minutes that SAB had submitted their consultation response and to formally thank Clair Alcock (NPCC) for the work and the support provided.  Clair Alcock (NPCC) took the opportunity to formally recognise the robust responses from other stakeholders to the Home Office consultation on rectification of age discrimination and the second HMRC tax consultation on the same subject.

SAB Future

41. On the SAB’s future work plan and resourcing, the Chair explained she had held a meeting with Clair Alcock (NPCC) and held a meeting with the HO. The Chair explained there was a plan for a formal paper to be provided at the next SAB meeting in October. Until then, there was some interim support in place.

42. Clair Alcock (NPCC) elaborated and said there was some support regarding the budget and noted the support for the response to the valuation assumptions through First Actuarial. NPCC had also commissioned First Actuarial to support NPCC, and they could engage that resource to support the SAB when necessary. Issues could also be taken to the Scheme Manager’s Steering Group to ensure that there is support from scheme managers and to help clarify the scheme manager’s view. NPCC also had an upcoming report that had identified the problems across the scheme with governance and the various administrators. Clair Alcock (NPCC) explained that NPCC was working with a small group of CFOs to make recommendations to chiefs on that issue.

43. The Chair said she would produce a draft paper over the course of the summer, which would be circulated outside of the committee for comments as she was keen to move forward ahead of the SAB meeting on 5th October.

Action Point 4: The Chair will write a paper on SAB’s future work plan and resourcing and circulate it to members over the summer.

Any other business

44. Dan Murphy (PSA) raised concerns about the compensation mechanism related to remedy and contingent decisions. He said the definition of contingent decisions had changed over time, leading to uncertainties regarding financial losses due to discrimination. PSA had hundreds of employment tribunals stayed until October, potentially due to Judges needing clarity on what would be provided for in the pension regulations regarding compensation.

45. Dan Murphy (PSA) stressed the importance of having a clear mechanism for compensation to avoid legal routes and ensure affected individuals were adequately compensated.

46. Helen Fisher (HO) said the obligation did not sit with the HO. But if the PSA felt that the powers provided by the act and the treasury directions did not cover everything within compensation, they were entitled to seek other avenues as the HO could not provide additional powers for compensation outside of the act or the treasury directions.

47. Clair Alcock (NPCC) said the policy decision taken by the HO was that each force had the authority to make compensation decisions individually. The NPCC has sought legal advice on this matter, and the opinion received was that a mechanism for compensation could be made. As things stand, the NPCC or scheme managers could provide guidance, but any decision made by individual scheme managers could be subject to challenge by others. That meant there would not be a uniform mechanism across all 43 schemes, and each would have the discretion to decide how to handle compensation claims. The NPCC had covered the topic in their consultation response.

48. Shabir Hussain (CPOSA) requested the  Scheme Advisory Board started issuing circulars. The SAB circular would be a formal communication from the board, addressing important matters and providing guidance to scheme managers and other relevant parties. Shabir believed the circular would be crucial to inform and advise local forces on specific issues, especially when Home Office pension circulars were not promptly issued.

49. The Chair acknowledged the importance of SAB circulars but explained that there was currently limited resources to produce circulars. She suggested incorporating this issue into making the Scheme Advisory Board more effective and structured and reiterated that she would be in contact over the summer period before the next SAB meeting on 5 October regarding producing a paper for the SAB.