Agenda item
Amendments to the Council's policy for Admission Agreements
Under the One Council initiative the Council has launched a range of projects designed to achieve significant cost savings and deliver quality services. One aim is to ensure better procurement of services from external organisations. As some procurements require the transfer of staff it is timely that there is consolidation of the Council’s approach to Admission Agreements that allow transferring staff continued access to the Local Government Pension Scheme (LGPS).
Minutes:
Duncan McLeod (Director of Finance and Corporate Resources) introduced the report which set out the amendments to the Council’s policy for Admission Agreements. He explained that to ensure the better procurement of services from external organisations, which was one of the aims of the One Council initiative, a consolidation of the Council’s approach to Admission Agreements, that allowed transferring staff continued access to the Local Government Pension Scheme (LGPS), was required.
Duncan McLeod explained that Members were being asked to note that the criteria for Admission Agreements for Community Admission Bodies, detailed in Appendix A of the report, was to remain unchanged. He noted that whilst regulation 5 of the Local Government Pension Scheme stated that charitable and not for profit organisations were entitled to request access to the Local Government Pension Scheme, due to the economic climate it was unlikely that these types of organisations would apply for access to the scheme due to its expense.
Duncan McLeod stated that Regulation 6 (2) of the Local Government Pension Scheme Regulations had empowered the Council to allow organisations, other than community admission bodies, which provided its service or assets, access to the Local Government Pension Scheme. He drew the committee’s attention to the proposed new criteria for non-community bodies, as detailed in Appendix A of the report, which Members were being asked to agree. The main difference in the criteria, he explained, related to the use of risk share agreements. A risk share agreement, he stated, was when the contractor agrees to take on the risks which it would have some control over or those which would be manageable, such as excessive pay rises and early and ill health retirements, and the Council takes on other risks, such as the investment risk, basis risk, and increases associated with changes in legislation.
Duncan McLeod informed the committee as to why officers believed that a risk share agreement often represented a pragmatic way of achieving best value. He explained that a risk share agreement could help provide the necessary assurance to a contractor, thus enabling them to make a more competitive bid. This, he added, might then encourage bids from quality organisations that might have been disinclined to bid because of the pension risk. The new criteria, he explained, would allow the Director of Finance and Corporate Resources to agree to enter into a risk share agreement if satisfied that the pension fund would be no worse off than if the transferring staff had remained in their current employment and if assured that the risk share agreement would achieve best value. He added that the current criteria, for admission agreements for non-community bodies as set out in paragraph 3.16, did not allow for a risk share agreement to be entered into without the matter being referred to the General Purposes Committee for consideration.
In the discussion which followed, it was noted that the Council’s policy for admission agreements related to members of staff who were transferring under TUPE as a result of the outsourcing and did not relate to brand new staff who would be providing a new service. In response to a question regarding whether a risk share agreement would pose a risk to the individual, Andrew Gray (Pensions Manager) explained that since 30 September 2007, following a directive by the Secretary of State, a contract with a third party provider must require the contractor to ensure pension protection for council employees who transfer under TUPE as a result of the outsourcing. He added that the risk in a risk share agreement would be shared between the Council and the third party provider. The only risk, he explained, that an individual would face, which would be the same for all council staff on the Local Government Pension Scheme, would be if Central Government changed the Local Government Pension Scheme because it was no longer affordable.
In recognition of the potential impact on the bid price, it was asked whether it would be made known to all bidders before they place a bid that a risk share agreement was possible. In response, Andrew Gray explained that it was important that the Pensions Manager, procurement and legal services be involved with the process at the earliest possible opportunity and that an assessment takes place to decide whether a risk share agreement would be appropriate. He added that if it was decided that it was appropriate, it would be necessary to then provide all the bidders with the same information before they made their bid.
RESOLVED:-
i) that the new process and criteria for non community admission bodies, detailed in Appendix A, be agreed;
ii) that it be noted that the criteria for community admission bodies, detailed in Appendix A, has remained unchanged.
Supporting documents: