Contact: David Wilson, ext 7407

1 Introduction

1.1 This report:

· Reviews the appointments of the employee and pensioner representatives to this Panel.

· Looks again at the current arrangements for representation for the other employers in the Fund.

1.2 It concludes that the current arrangements are working well, and recommends that they should remain in place until March 2004, if the representatives are prepared to continue in their roles.

1 The employee and pensioner representatives

1.1 Derek Offord and E. W. Hughes were appointed to the Pension Fund Panel as employee and pensioner representative respectively with effect from April 1994. Derek Offord was nominated by UNISON following a consultation with the staff side unions. All pensioners were invited to apply for the pensioner representative post. A number of applications were received and E. W. Hughes was appointed after interview by the Panel. No fixed maximum period of appointment was set.

1.2 Both appointments were reviewed by the Panel in April 1997. The Panel agreed that the appointments had been successful and both were happy to continue in their roles. It was agreed that they should remain in post and this was ratified by the Policy and Resources Committee. Again, no maximum period of appointment was specified.

1.3 In April 2000, following a request from Derek Offord, the Panel appointed a deputy employee representative, Phillip Reynolds, who was also nominated by UNISON.

1.4 It is suggested that, if the appointees are happy to continue in post, these appointments should be allowed to run on until March 2004, seven years since the last formal review in April 1997. This would make the appointments comparable with the normal seven-year appointments of the fund managers.

2 Representation and consultation with other employers in the Fund

2.1 The issue of representation of the city unitary authorities, district councils and other member employers on the Pension Fund Panel was last considered in October 1999.

2.2 The Local Government (Committees and Political Groups) (Amendment) Regulations 1998 had come into effect in September 1998 giving local government pension scheme administering authorities discretion to appoint voting representatives from both the unitary and district councils to their pension fund panels.

2.3 The Local Government Pension Committee's circular "Principles of Good Practice for the Management of Local Government Pension Schemes" had been published in December 1997 and remains in place. This stated:

"Administering authorities should work with employing authorities in their area to reach agreement on local arrangements which suit their particular situation and relationships which are practicable. Consideration will need to be given as to how employing authorities, and other large employers, can become more involved in the work of the decision-making committee."

2.4 However the circular also acknowledged the difficulties and risk of creating unwieldy decision-making arrangements and suggests, for example, that representation should be allowed to all employing authorities above a certain size, to be agreed locally. A cut-off point would need to be agreed.

2.5 After consideration, the Panel decided in October 1999 not to exercise its discretion to allow membership to representatives of other employers in the Fund. It took the view that, as responsibility for the Fund remained with the County Council as administering authority, the decision-making Panel should comprise County Council members only. The Annual General Meeting held in September of each year was sufficient to enable employers to express their views.

3 The current position

3.1 There has been very little pressure since 1999 from employers seeking Panel representation. However, informal enquiries about Panel membership were made recently by Southampton City Council, although these have not been pursued in response to setting out the current policy.

3.2 In March 2002 there were 40,075 contributors to the Hampshire Pension Fund in the following proportions:

	%
Hampshire County Council	43
Southampton City Council	14
Portsmouth City Council	12
District Councils	11
Hampshire Police Authority	4
Colleges	9
Other employers	7
Total	100

3.3 If the Panel were to decide to use its discretion and allow representation to other employers, a number of issues would need to be considered:

Size of Panel

3.4 There are currently nine Panel members plus two non-voting observers. Appointing more Panel members could mean that the Panel would become unwieldy. Allowing the unitary authorities one voting member each would almost certainly lead to pressure from the 11 districts for at least one voting representative, and other employers might then follow suit and request representation by what would be non-voting observers under the legislation. Potentially this could mean a total of at least 15 Panel members, including three observers. The Panel may feel that this would be too large, unless the number of County Council members were to be reduced.

3.5 An alternative would be to allow the unitary authorities one representative, plus one for the districts and other employers, making a total of 13. This would not be unreasonable bearing in mind contributor numbers.

Voting rights

3.6 The regulations allow administering authorities to give unitary and district representatives voting rights. Some administering authorities have also extended voting rights to employee and pensioner representatives, although there is currently no legal power to do this. The Department of Transport, Local Government and the Regions have given tacit encouragement to this by indicating that they would not raise any objection to such arrangements.

3.7 If voting rights were to be extended in this way, all Panel members would need to bear in mind that votes should be cast with the beneficial interests of all fund members in mind. They should not reflect political, ethical or, say, the interests of particular employers. It would be essential for the County Council, as administering authority, to retain majority control so that there is clear accountability.

Observer status

3.8 Panel representation could be extended to non-local authority employers without voting rights. This would mean that the administering authority would remain clearly accountable, and put other employers' representatives on the same footing as the employee and pensioner representatives.

Periods of office

3.9 It is preferable for Panel members to be appointed for terms long enough to become familiar with the issues involved particularly in the light of the requirements for expertise and training in the Myners principles dealt with in item 2 on this agenda. If appointments were made to represent other employers it is suggested that their terms should coincide as far as possible with the County Council's election period, although account would have be taken of the election cycles of the other local authority employers.

Selection

3.10 If it was agreed to allow Panel representation to other employers, the unitary and district councils would be able to decide on their selection procedures. Other employers would need to arrange for an election and/or interview procedure. The Panel may wish to consider whether representative(s) from other employers should be salaried officers, or elected/appointed board members or their equivalent eg a college governor, but to be consistent it is envisaged that the latter would be required.

4 Summary and conclusions

4.1 If the current employee and pensioner representatives are willing, their appointments should be allowed to run on until March 2004, seven years after their appointments were last reviewed in April 1997.

4.2 Previously the Panel has taken the view that the County Council, as administering authority, remained responsible for the Fund and that no representation for other employers was necessary. The Annual General Meeting was sufficient to enable them to express their views.

4.3 Since 1999 there has been little pressure from employers for Panel membership, although Southampton City Council did raise the matter informally recently.

4.4 If the Panel decides representation should be extended, it is suggested that there should be one representative for the unitary authorities and one for all the other employers. This would mean a total of 13 Panel members including the pensioner and contributor representatives.

4.5 The Panel also needs to decide whether any new representatives should be given voting rights or have observer status.

4.6 Terms of appointment for any new Panel members should coincide as far as possible with the County Council's election period, subject to the constraints imposed by other authorities own election cycles.

4.7 The other employers should be asked to determine their selection procedures. The Panel should consider whether they should be elected/appointed members or salaried officers.

Recommendations

1 That the appointments of E. W. Hughes, pensioner representative, Derek Offord, employee representative, and Phillip Reynolds, deputy employee representative, be extended to March 2004.

2 That the Panel's current policy on representation be reaffirmed so that the County Council, as administering authority, remains responsible for the Fund, but that the position on representation from other employers be reviewed periodically.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

None.

TITLE FILE