SAB meeting minutes: 3 April 2023

Question 1

Welcome and apologies

Accepted Answer

1. The Chair welcomed members and apologies were received from David Kennedy (SPA).

Question 2

Minutes of the meeting of 13 January 2023

Accepted Answer

2. The minutes of the previous quarterly meeting was agreed. Action Point 1: Secretariat to publish finalised minutes of 13 January 2023 on webpage. (Completed)

Question 3

Action log of 13 January 2023

Accepted Answer

3. The Chair went through the action log of 13 January 2023, which has been updated in the light of discussion. Key points discussed were:

Action Point 2 - The Chair and the NPCC to work on communication to forces on any potential delays to the respective remedy timeline.
Action Point 4 - The Chair to set up a technical working group focused on the SAB consistency and processes.

4. The Chair explained that the action points 2 and 4 were on the agenda and would be covered later in the meeting.

Action Point 3 - The Chair to hold individual meetings with Clair Alcock (NPCC) and Frances Clark (HO) on the progress of the functioning of the SAB. The Chair said the future of the SAB agenda item was on the agenda and said she had held meetings with Clair Alcock (NPCC) and Joanne Livingstone (Chair of the Firefighters SAB) on the functioning of the SAB. The Chair introduced Alex Platts (HO) to members explaining he had succeeded Frances Clark (HO).
Action Point 5 - Frances Clark (HO) to ask HMT about how their plans for the tax consultation process and return to SAB with an update. Alex Platts (HO) explained that they had received correspondence from HMT that would be circulated that indicated further regulation is being worked on with no firm timeline.
Action Point 6 - Scheme Advisory Board to write to HMT to express the concern of wider issues outside of the HO control that then affects the timeline.
Action Point 7 - Scheme Advisory Board to extend invitation to the TPR to discuss Pension Dashboards.

5. The Chair said the action point 6 was completed and 7 would remain open.

Question 4

Matters arising: Lacunas

Accepted Answer

6. At the previous meeting, Shabir Hussain (CPOSA) raised the issue of lacunas and corrections of errors and omissions, citing the agreement in preparation for the 2006 regs. With agreement from the staff associations, John Gilbert proposed that to meet the parliamentary timelines, it would go through as was, and amendments would be made slowly utilising circulars and back-dated amendments.

7. Shabir Hussain (CPOSA) said Peter Spreadbury (HO) agreed to the same principle in 2012 for the 2015 regs. However, since then, the HO has stopped using circulars to anticipate future changes, and instead is amending regulations.

8. Shabir questioned the HO plan for dealing with lacunas, errors and remissions post-October. Helen Fisher (HO) felt it was a helpful question and stated that if anything came out before the next SAB meeting, HO would need to reflect on the correct route to examine it. She said she would input it into the HO project measurement document under forward governance and liaise with NPCC colleagues.

Question 5

NPCC Update: remedy preparation

Accepted Answer

Clair Alcock (NPCC) gave a short presentation to explain to members how NPCC had been engaging with scheme managers and how they work to provide various opportunities for information on remedy. NPCC explained how they worked with the Government concerning their role in remedy and then with the scheme managers regarding their role in implementation. The key points raised were:

9. The NPCC hosted a ‘pensions chat’, which was an hour’s session every fortnight attracting a range of stakeholders, including scheme managers. Clair Alcock (NPCC) said the NPCC was constantly working to provide information to people, such as a hub for scheme managers. A remedy working group had also been set up, and every force had a remedy lead. The group was scheduled to meet every six weeks for an hour and a half, at which the NPCC explained what was new, what ongoing work was required and any challenges. On Government focused work, NPCC attended various cross Whitehall meetings to gain an understanding of other public sector schemes for monitoring purposes. They were also part of a project management group that led by Helen Fisher (HO).

10. Clair Alcock (NPCC) explained they helped build confidence and knowledge amongst the scheme manager community, as well as providing various sessions for forces, such as refresher courses on ill health for Force Medical Advisors.

11. NCCC said they had undertaken this work because planning and holding knowledge would help forces plan appropriately for 1 October 2023. They would be able to engage properly with members and confidently deal with queries from members, such as when a member would receive their RSS.

12. Clair Alcock (NPCC) noted that, in particular, NPCC had done much work communicating the member choice, as it was about how members interacted with remedy. They needed to understand what they would be asked to do and when.

13. NPCC recognised that members had different needs concerning remedy, such as immediate choice members who needed to make choices quickly and other members who just required information as they would only be making their choice once they retired.

14. To gain consistency, NPCC was working with their procurement partner, Blue Light Commercial, to procure a template RSS so all forces could use them as a form of consistent communication.

15. The NPCC also recently engaged Isio to conduct a survey about the sector’s preparedness for remedy. The key finding was the Net Promoter score, which summarised the responses as minus 61 regarding confidence in implementing the McCloud remedy. Clair Alcock said there were various reasons for this, including challenges around contributions, interest and tax relief. NPCC acknowledged it was a problem, and that there remains a need to increase confidence and provide information to members.

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

16. Dan Murphy (PSA) asked what was the most significant potential point of failure. Clair Alcock (NPCC) felt the most prominent risk was processes, as everything, including delays, could be managed with good procedures.

17. Shabir Hussain (CPOSA) said the NPCC mocked up an RSS last year, and members were satisfied it was all-encompassing; he asked if the template would be based on the mock-up, as the regs did not insist on a tax and scheme pays.

18. Clair Alcock (NPCC) said NPCC had been informed that people cannot put scheme pays debits on the annual statement because of lack of confidence in the data. NPCC needed to understand the reasons before mandating it but reassured members that everybody would have this information when an RSS was received, as it wouldn’t make sense to make a decision without being told about the tax position.

Question 6

SMSG update

Accepted Answer

19. Daisanne Summerfield (SMSG) and Mark Payne (SMSG) introduced themselves as representatives of the Scheme Manager Steering Group and provided an overview of the group’s plans and what they hoped to achieve.

20. Mark Payne (SMSG) felt the SMSG was a great opportunity to identify the key issues, risks and seek actuarial advice for systematic problems. He explained that they had discussed abatement, the care revaluation from 23 April, how to pay for funding, how best to communicate about issues and how the SMSG planned to represent themselves at various NPCC committees.

21. Mark Payne (SMSG) and Daisanne Summerfield (SMSG) will be attending the SAB as representatives to provide two-way communication going forward between the SAB and the SMSG. The Chair said the SAB needs to think about how it engages with the SMSG and noted it was listed on page five of the SMSG terms of reference. (Secretariat note: Item 4B Circulated with the papers).

22. The Chair asked all members to take an action point to think practically about how the SAB works with the SMSG, noting over the next few months, there would be further discussions on the work plan of the SAB and resourcing.

Action Point 2: SAB members to provide thoughts to the Chair on how the SAB engages with the SMSG moving forwards.

Question 7

GAD update

Accepted Answer

23. Robert Fornear (GAD) said a key issue concerning government pensions was the SCAPE rate and the consultation response alongside it.

24. Robert Fornear (GAD) explained the consultation was on the methodology of the SCAPE rate. The Government decided to continue the current GDP measurement for SCAPE as they felt it best fit their goals to represent a fair reflection of the costs of pensions and also to support stability.

25. The second outcome of the consultation was that there was a slight change to the SCAPE rate review process. Instead of every five years, they would align with the valuations, and the SCAPE review would be conducted every four years. Robert Fornear (GAD) said GAD would imminently be providing new commutation factors for police. Peter Spreadbury (HO) asked this information not to be shared beyond the SAB meeting.

26. Clair Alcock (NPCC) noted that as a point of admin, further thought was needed on how GAD announcements communicated to the SAB, and it should be picked up as part of the future work plan item later on the agenda.

Question 8

Home Office consultation - SAB response

Accepted Answer

27. The Chair explained Individual members would be sending back detailed responses to the questions. But the SAB needed to focus its response at a high strategic level. The Chair wanted consensus on the starting point of the SAB response. Clair Alcock (NPCC) agreed a high-level approach was needed and felt there were five key areas the SAB may wish to focus on: member choices/timings, contribution adjustments, contingent decisions, compensation and scheme manager challenges.

28. The Chair questioned how the response would be formulated. Clair Alcock (NPCC) responded that the SMSG agreed to help with the response, and the purpose of this meeting was to agree the areas upon which the SAB would on the areas the SAB response would focus on. Then drafting would take place ahead of the 28 April 2023 meeting. The associations agreed with the adoption of a high-level and less technical approach from the SAB.

29. Dan Murphy (PSA) said the consultation questions did not ask if the process for RSS made sense. He referred to Clair Alcock’s (NPCC) earlier point about risk and processes stating that the regulations did not assist.

30. Clair Alcock (NPCC) agreed and felt that was an area the SAB should look to draw out in its response because while it was not for regulations to set processes, there was an issue if the process couldn’t be set because the regulations were too vague.

31. NPCC said unless it was clear, there would be no power to set processes on issues like contributions.

32. Shabir Hussain (CPOSA) questioned whether the HO had acted upon feedback from the engagement sessions as it was not clear from anything in the regs. He felt the regs looked like they were drafted in real-time alongside the discussions. There was broad agreement that the regs came from generic drafting, rather than being specific to the police pension schemes.

33. Helen Fisher (HO) explained the consultation provided for what the HO legislate for, and that they cannot legislate for every hard and desired process. There would be some ‘sewing together’ of legislation said and processes. She said the consultation reflected the fact that the HO did not always receive clear answers to their questions, when they reviewed the minutes and sessions.

34. Helen Fisher (HO) acknowledged there would be some gaps in processes even after legislation. She stated that they shouldn’t take a scheme manager’s decision-making powers away by tightening the regulations to the point that there were none remaining.

35. The Chair summarised that SAB wanted to scrutinise the regulations to make sure that the policy intents were being delivered and to identify any remaining gaps. Also, that the SAB may need to find another route through which to raise matters not directly related to the consultation questions.

36. Clair noted everyone agreed the response should be a high-level and would focus on consistency in the first draft, with an opportunity to capture any other points later. The Chair said SAB would reconvene on 28 April 2023 to review the first draft at the SAB/HO Consultation meeting.

Question 9

Retirement and re-joiner guidance

Accepted Answer

37. Nicholas Barker (NPCC) explained the guidance was introduced in July last year as a tool to enable forces to retain experienced officers and focused on two areas: the ‘pensions trap’ and uplift. NPCC said there was inconsistent adaptation amongst forces, with the majority doing so to help uplift or to retain experienced officers in hard-to-fill positions. It was less effective in dealing with the pensions trap issue.

38. However, the policing minister had written to SAB members referencing the guidance as a practical way forward to help address the pensions trap issue. NPCC expressed concern that the guidance itself had various limitations. Firstly, that it was just guidance and therefore a ‘tool’ for forces to use. Secondly, it was not open to all ranks; chief constables couldn’t utilise it, it should not be seen as a full solution. Gareth Wilson (CPOSA) said they had responded to the letter from the policing minister pointing out the limitations for chief officers.

39. On another point, Gareth Wilson (CPOSA) explained the lifetime allowance issue had gone down well with Chief Officers in terms of retention. However, His Majesty’s opposition then stated they would revoke it. He said CPOSA planned to raise the issue of policy revocation with the minister.

40. Dan Murphy (PSA) said the fact that the Retirement and Re-joiner Guidance was not an entitlement, would increase the likelihood of a discrimination case and called for it to be regulated.

41. Clair Alcock (NPCC) suggested that the SAB uses its powers to provide advice to scheme managers and local pension boards.

42. The Chair agreed and asked for a summary of the information which Nick Barker (NPCC) said could be provided. SAB members were in agreement with the proposal on the basis of consistency.

43. Dan Murphy (PSA) then suggested a two-stage approach and suggested the SAB also respond to the Minister’s letter explaining the SAB had consensus on the issue and requested that it was turned into a regulation. The Chair agreed to the proposal.

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.
Action Point 4: SAB to write a letter to the policing minister requesting for it to become an entitlement for officers in the regulations.

Question 10

Technical query requests

Accepted Answer

Clair Alcock (NPCC) went through a short presentation to help the SAB develop its effectiveness on technical queries.

44. NPCC considered if a framework was needed, along with a form to help articulate the issue, the problems it caused and what the solution could be. This would help hold all the information in one place to allow the SAB to consider its response. Clair Alcock (NPCC) explained that, in theory, the SAB would consider the legislative remit and the resolution rather than just passing it on to NPCC or the Home Office pensions team. There were four current items for the SAB to consider.

Technical query requests: A) Weighted accrual pension input amount examples

45. The first item concerned the pension input amount, where the growth of the pension (in each scheme) must be calculated to arrive at the annual allowance. NPCC explained CPOSA had requested examples for those with weighted accrual, known as transition members.

46. CPOSA expanded their request to include the final salary link (and not just weighted accrual), noting that some people thought calculations only took place on the year of retirement when it should be part of the annual benefit statement. Shabir Hussain (CPOSA) said GAD provided examples for the legacy schemes, and he had been asking for an update to include both schemes since 2015. CPOSA said they had no preference on who was to provide examples, acknowledging it could come from experienced administrators.

47. Other members agreed with Shabir that the information should be on the annual benefit statement, and the SAB could review an example from an administrator. The Chair noted there were several different scheme administrators, and SAB may need to go to each one for examples and could not recall when the SAB had written to the scheme administrators directly. The Chair said the next step would follow up with Shabir Hussain (CPOSA), Gemma Lofts (PFEW) and Clair Alcock (NPCC).

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.

Technical query requests: B) Scheme pays mechanism

48. The second item the SAB wanted to consider was the scheme pays mechanism. NPCC explained within the Finance Act itself there was a requirement for the consequential benefit adjustment, (the scheme pays mechanism) to be reasonable. Where the scheme administrator satisfied a liability (again was the scheme pays), the consequential adjustment must be made and on the basis that it was just and reasonable, having regard to normal actuarial practice.

49. NPCC had asked for a quote from First Actuarial to provide an independent review of this question, which would cost £2,000. CPOSA asked that the SAB consider providing advice to scheme managers whether that guidance was still just and reasonable, or whether any changes occurred. They called for a fair and reasonable equation backed up by normal actuarial practice.

50. Shabir Hussain (CPOSA) explained since GAD created the equation back in 2006, there have been several changes. To create the equation, one of those rational assumptions should have been ordinary pay increases. If the current scheme pays equation was kept, a greater percentage of someone’s pension would be taken away to pay for an AA tax charge. If, in the worst-case scenario, there were no more pay increases for the next 10 years, some scheme pays could bear a disproportionate amount compared to when it was first created.

51. It was agreed in principle among SAB members that they would ask the SMSG for funding. The Chair noted it they would need to know the level of detail that the SMSG might need in terms of making a decision and took an action point to further discuss the issue with Clair Alcock (NPCC).

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.

Technical query requests: C) Timing of scheme pays adjustment for pension input amount calculation

52. NPCC introduced the third item and explained it was an update, rather than a question for SAB to consider. It focused on technical calculation about when you calculate the pension input amount. For example, do you account for scheme pays if you’ve had scheme pays from a previous year in the pension input amount?

53. Clair Alcock (NPCC) said there are inconsistencies and that it could only be calculated with certainty when somebody retired. Before then, there were factors linked to when someone might retire, not when they had retired, and the adjustment was only applied at the point of retirement.

54. NPCC said administrators applied different approaches for adjusting for scheme pays; some adjust within the pension input amount, and others don’t. NPCC had previously taken the issue to the technical group to get a consensus but had not been successful.

55. NPCC had held discussions with HMRC and GAD to understand how the issue could be moved along. Clair Alcock (NPCC) said she would hold a meeting with GAD in May to look at it further, to examine the existing guidance and if it was fit for purpose. She intended to return to SAB with an update at the next meeting.

Technical query requests: D) Legacy scheme opt-outs

56. The last item for consideration was how opt-outs worked for legacy scheme members. Clair Alcock (NPCC) explained historically, members in the legacy schemes couldn’t opt out of the scheme without penalty, which carried through even if they were transitional members of the 2015 scheme. Other public sector schemes did not have that restriction.

57. CPOSA said they originally raised the issue years ago but were told the Treasury would not allow it. However, the contingent decision PDD written by the Treasury said a member could do a partial opt-out. CPOSA asked that the SAB support a request to allow the 1987 transitional members to opt out without any form of penalty when they re-join, which was called a partial opt-out. They requested that the SAB support this proposal as an addendum to the draft regulations.

58. The Chair asked Clair Alcock (NPCC) if there were any subtleties to consider from an employer’s point of view. Clair Alcock (NPCC) responded that it should be sighted by the SMSG forum to consider before receiving the employer vote. CPOSA agreed to this suggestion.

Action Point 7: Clair Alcock (NPCC) to discuss Legacy scheme opt-outs with SMSG forum and then update the SAB.

Question 11

NPCC police pensions future review

Accepted Answer

59. Clair Alcock (NPCC) noted many issues circled back to 43 ways of working, and the current principle of individual managers needing to make individual decisions. NPCC asked if there would be a better way of working, to which scheme managers would agree?

60. NPCC had commissioned an independent review of the current administration, management, and governance of police pensions. The final report would be sent to Chief’s Council with recommendations, initial findings stated there was nobody with overall accountability for the scheme operating effectively as a whole and there was confusion over the purpose and role of the different bodies. There was no regular monitoring in place for key issues, such as opt-outs, or common understanding of the data. There was a misconception over who should provide guidance. Lastly, the current model did not lend itself to consistency.

61. Clair Alcock (NPCC) reflected that the results of the review reflected previous views, but these had now been substantiated with evidence. The next steps were to understand the problem, examine the possible solutions and work through what they mean. NPCC promised to bring the final report findings back to the SAB.

Question 12

Update on the CARE 2015 annual allowances – read-out from meeting on 17/03/2023 and actions arising

Accepted Answer

62. Clair Alcock (NPCC) said that there was confusion about the status of the actions arising from the meeting on 17 March 2023 about annual allowances, and whether the discussion had constituted a formal request for advice from the SAB. The Chair believed there needed to be a documented methodology for such requests.

63. HO agreed the formal structures needed to be put in place. They were unsure whether they would receive a firm recommendation from the SAB at the 3 April meeting and as the new tax year was fast approaching they had sought advice from the Minister without SAB’s actual view.

64. Shabir noted one of the actions from the meeting was for him to write to the Chair with examples of back-dated amendments with a view to the next stage being a letter from the SAB to the minister stating the SAB supported the back-dated amendment. He noted Frances Clark (HO) had mentioned it could be a possible solution. He felt the door should be kept open for a considered review in the autumn. The Chair agreed that it should return in the autumn for further discussion.

Question 13

SAB – future work plan and resourcing

Accepted Answer

65. The Chair noted it was difficult to do much more than meet and discuss and record the conversations through minutes. The Chair felt the SAB was not effective and proposed that the next step was to move the levy forward as the permanent solution.

66. The Chair said she would hold an offline conversation with the NPCC on the next steps to move that forward. The Chair also suggested Clair Alcock (NPCC) and herself hold a meeting and try and develop a work plan to ensure that SAB agendas are less reactive and more proactive and that there was a proper plan going forwards around the work that needed to be considered at the meetings.

Action Point 8: The Chair to hold meetings with NPCC on future work plans and resourcing.

Question 14

Housekeeping: A) Technical submissions to SAB

Accepted Answer

67. Clair Alcock (NPCC) said she would circulate the technical submissions proforma to the SAB, but that it may well change as it developed. The Chair said she was aware of a lot of emails between the Home Office and SAB members and wanted to remind members that any relevant emails should be fed back into the SAB.

Question 15

Housekeeping: B) UKPPCF

Accepted Answer

68. A discussion took place about the UKPPCF element of the SAB. Shabir Hussain (CPOSA) explained he suggested the two meetings be joined. However, he felt the agenda needed to be split, and to state what was formal business for SAB members only, so when decisions are made they are clearly identified. Non-SAB members were free to observe and comment, but it should be clear when business is formally that of the SAB, rather than the consultative forum which allows all to raise issues.

69. It was noted that in the past, there was lots of value in seeking updates and comments from colleagues in Scotland and Northern Ireland on issues which could help feed into SAB discussions and decisions.

70. The Chair said she would give some thought on how to be more inclusive across the UK and said she might pick up with Shabir Hussain (CPOSA) on how to shape the next agenda.

Question 16

Housekeeping: C) Future Agenda Protocol

Accepted Answer

71. Clair Alcock (NPCC) explained the agenda protocol, which was linked to the work plan. Whereby previously, it had been reactive and ad hoc asking for contributions. In the future, it would be more strategic and linked to the work plan, ensuring there would be standard items on the agenda that would always be there for updates making the SAB more proactive. Issues for discussion would instead be raised through the technical group with the aim of making the SAB more streamlined.

Question 17

AOB/Date of next meeting

Accepted Answer

72. Following a request, the Chair agreed that the revised terms of reference for the SAB would go on the agenda for the next PAB meeting.

73. The date of the next meeting was scheduled for 29 June 2023.

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Minutes

Independent Chair

Secretariat

Police Federation of England and Wales (PFEW) – attending as observers

Police Superintendents’ Association (PSA)

Association of Police and Crime Commissioners (APCC)

Chief Police Officers’ Staff Association (CPOSA)

National Police Chief’s Council (NPCC)

National Association of Retired Police Officers (NARPO)

Home Office (HO)

Superintendent’s Association of Northern Ireland (SANI)

Association of Scottish Police Superintendents (ASPS)

Police Federation Northern Ireland (PFNI)

Department of Justice, Northern Ireland (DoJNI)

Scottish Police Authority

Scheme Manager Steering Group (SMSG)

Northern Ireland Policing Board (NIPD)

Government Actuary Department (GAD)

Scottish Public Pensions Agency (SPPA)