• Agenda

Minutes of Meeting of the Pensions Committee held in the Council Chamber, Council Headquarters, Glenurquhart Road, Inverness on Thursday 22 August 2013 at 10.00 am.

Present:

Mr D Fallows,Mr K MacLeod,Mrs H Carmichael,Mr N Donald,Mr J Ford,Mr R Laird

Non Member in attendance

Mr B Fernie,Mr C Macaulay,Mr A Mackinnon,Mr T Maclennan,Mr E Macniven,Ms L MacKay

Officials in attendance:

Mr D Robertson, Head of Accounting & Budgeting, Finance Service
Mr C MacCallum, Payroll & Pensions Manager, Finance Service
Mr B Porter, Finance Manager (Corporate Budgeting, Taxation and Treasury), Finance Service
Ms D Sutherland, Principal Auditor, Finance Service
Ms M Bruce, Senior Audit Manager, Audit Scotland
Mrs L Dunn, Principal Administrator, Chief Executive’s Service
Mr A MacInnes, Administrative Assistant, Chief Executive’s Service

An asterisk in the margin denotes a recommendation to the Council.  All decisions with no marking in the margin are delegated to the Committee.

1.  Apologies for Absence
Leisgeulan

Apologies for absence were intimated from Dr D Alston, Mrs C Wilson and Ms E Ward.

2.  Declarations of Interest
Foillseachaidhean Com-pàirt

There were no declarations of interest.

3.  Recess Powers
Cumhachdan Fosaidh

The Committee NOTED that the recess powers granted by the Council at its meeting on 27 June 2013 did not require to be exercised in relation to the business of the Pensions Committee.

4.  Pension Fund Statement of Internal Control 2012/13
Aithris air Smachd air an Taobh A-staigh a thaobh Maoin Pheinnsein  2012/13

There was circulated Report No. PC-10-13 (325kb pdf) by the Head of Internal Audit & Risk Management relating to an assessment of the adequacy, reliability and effectiveness of the Pension Fund’s system of internal financial control and provided information for the Fund’s Annual Statement of Accounts.

The report detailed the work undertaken by Internal Audit in order to support audit opinion. It was reported that the key systems operated in a sound manner and that there had been no fundamental breakdown in control resulting in material discrepancy.  It was the audit opinion that reasonable assurance could be placed upon the adequacy and effectiveness of the Pension Fund’s internal control systems for the year to 31 March 2013.

The Committee NOTED the content of the report and the audit opinion provided.

5.  Highland Council Pension Fund: Review of Internal Controls
Maoin Pheinnsein Chomhairle na Gàidhealtachd: Ath-bhreithneachadh air Smachd air an Taobh A-staigh

There was circulated Report No. PC-11-13 (293kb pdf) by Audit Scotland which contained findings from the reviews carried out as part of the audit of the Highland Council Pension Fund’s 2012/13 financial statements.

It was reported that the Pension Fund had a satisfactory level of internal control in place within the pension investments and pension administration systems to enable Audit Scotland to take planned assurances for the audit of the 2012/13 financial statements.

In terms of the follow up review of internal controls for 2011/12, three of the six planned actions had been fully implemented and the remainder had been partially implemented.  Details of Audit Scotland’s finding on these and revised implementation dates  were provided in an appendix to the report.

In response to a query, it was confirmed that the Finance Service was confident in meeting the revised target date of September 2013 for Action No. 6 in respect of complying with investment limits.

The Committee NOTED the terms of the report as circulated.

6.  Pension Fund Contributions and Administration
Tabhartasan agus Rianachd Maoin Peinnsein

There was circulated Report No. PC-12-13 (144kb pdf) by the Director of Finance which provided an update on the efficiency of administration and accuracy of pension contributions paid to the Highland Council Pension Fund, and it provided a final update on Auto Enrolment.

It was advised that pension contributions from scheme employers were all being received on time and all contributions were up-to-date. In terms of auto enrolment into the pension scheme, approximately 450 employees had been identified as falling into the category of being auto enrolled.  Of these 90 had opted out of the scheme with immediate effect and a further 53 opted out in the three month permissible window to June 2013 taking the final opt out rate to 31%.  At present 300 employees were now paying pension contributions resulting in an annual cost £676,000 and although provision had been made in the budget for £400,000 the Director of Finance was reviewing options for funding the additional pressure of £276,000, the outcome of which would be reported to Finance, Housing and Resources Committee.

The Committee welcomed the large uptake resulting from auto enrolment. In response to a query in relation to how the change to a single Police Service and Fire Service would affect the Pension Fund, it was advised that this was a matter of debate at national level, but it was anticipated that over the next two years there would be no change.  It was further clarified that uniformed members of the Police and Fire Service were not part of the pension fund but that there was admitted body status for support staff.

In terms of pension fund liabilities, the Investment Sub-Committee’s role was to ensure that pension fund investments would be enough to ensure the Fund could meet its future pension liabilities and this was an on-going process.

In terms of educating employees on the benefits of joining the Pension Fund, as part of the Council’s recruitment policy information relating to the benefits of the pension fund were issued to all those applying for jobs with the Council. The Council had also invested in a new website which gave detailed information on being a member of the scheme. Ways of accessing the website from mobile devices was also being looked at.  However, it was highlighted that auto enrolment was also an on-going process in order to encourage employees into the scheme.

The Committee NOTED the terms of the report as circulated and that the anticipated budget pressure of £676,000 as a result of auto enrolment which would be addressed through Finance, Housing and Resources Committee.

7.  Report to Those Charged with Governance on the 2012/13 Audit
Aithisg dhaibhsan le uallach Riaghlaidh a thaobh Sgrùdadh 2012/13

There was circulated Report No. PC-13-13 (342kb pdf) by Audit Scotland which set out for the Committee’s consideration the relevant matters arising from the audit of the pension fund’s financial statements for 2012/13 that required reporting under ISA 260 (ISA 260 required auditors to communicate matters relating to the audit of the financial statements to those charged with governance of a body in time to enable appropriate action).

It was reported that subject to the satisfactory conclusion of any outstanding matters and receipt of a revised set of financial statements or the final review, Audit Scotland anticipated being able to issue an unqualified auditor’s report on 6 September 2013.

The report detailed accounting and internal control systems that were reviewed as part of the audit and also significant findings from the audit. In particular reference was made to contributions  due to the Pension Fund accounts which included a debtor of £4.482m  for two months of contributions which had still to be received from Highland Council at the year end.  It was confirmed that these contributions had now been paid and continued to be paid on a monthly basis. However, Members requested that information on the delayed contributions and the amount of interest lost to the Pension Fund as a result, be reported to the next meeting of the Committee.

In the Annual Audit plan audited bodies had a responsibility for establishing arrangements to prevent and detect fraud and other irregularities.  The Auditor sought confirmation from Members who were charged with governance of any instances that had arisen that should be brought to the Auditor’s attention.  It was confirmed that no Member, in attendance, was aware of any instances of fraud relating to the Fund.

The Committee:-

i.  NOTED for the record that no Member, in attendance at the meeting, was
    aware of any instances of fraud relating to the Highland Council Pension
    Fund; and
ii. AGREED that information be provided to the next meeting of the
    Committee on the reasons for contributions due to the Pension Fund of
    £4.482m from the Highland Council being delayed for two months and the
    amount of interest that was lost as a result.

8.  Investment Sub Committee: Minutes of Meeting
Fo-chomataidh Tasgaidh: Geàrr-chunntas na Coinneimh

There was circulated Minutes of meeting of the Investment Sub-Committee held on 23 May 2013 (151kb pdf), the terms of which were APPROVED.