Borough Pension Fund Administration 'Not Fit for Purpose'

Council hires consultant to review scheme after catalogue of errors discovered

Hammersmith Town Hall. Picture: Google Streetview

Serious errors have come to light in the administration of Hammersmith & Fulham’s pension scheme

Since 2014, the borough is one of four local authorities in London who have hired Surrey County Council to administer their fund. The others are Westminster, Kensington and Chelsea and Hillingdon.

All of them have reported serious problems with Surrey in recent years.

A source from one of the affected councils said of Surrey, “There are fundamental issues with how the organisation is structured that makes it not fit for purpose. This is putting aside the fact that senior leadership seem at best disinterested in resolving the problems.”

Problems at Hammersmith and Fulham Council surfaced in March 2019. An Audit and Pensions Committee report from the time reads: “Recent performance reviews… indicate that data that should be held by Surrey County Council for active and deferred [pension scheme] members does not meet required standards… It has therefore been noted as an emerging risk area, notably the due diligence and data quality processes of our current pension administration and payment provider, Surrey County Council.”

A Hammersmith and Fulham Council spokesperson said it has since hired an independent consultant to “look into” the problems.

The spokesperson added: “Our Local Government Pension Scheme members should know that these issues do not relate to the security of their funds. We continue to work closely with Surrey County Council.”

It recently came to light that Kensington and Chelsea Council (K&C) will cut its ties with Surrey in April 2021, and take administration of its pension scheme back in-house. This was after discovering a catalogue of errors with the way that data about its pension scheme members have been falsely recorded.

A spokesperson for Surrey said they had reached an “amicable way forward” with K&C.

A Kensington and Chelsea spokesperson said of the decision to ditch Surrey, “We are confident that Surrey County Council met its statutory responsibilities when administering our pension scheme but we have taken the decision to bring the scheme back in house from April 2021 to deal with individual casework faster for our members.”

However, a report from K&C’s director of HR in March 2019 tells of how “736 potential undecided leaver cases” were discovered during a data validation exercise. This meant that Surrey failed to record 736 occasions when K&C’s staff had left the organisation.

It is understood that none of the errors reported by Surrey’s clients have resulted in issues with payments.

Westminster Council’s troubles with the scheme became public in January this year. The authority’s Pension Fund Committee was presented with a report which said 2,373 “failures” had been discovered in the data of its current and past pension scheme members.

Westminster Council has since said many of these “failures” are in fact “anomalies”.

Its deputy leader and cabinet member for finance, Melvyn Caplan, said the quality of the data had been “steadily improving” thanks to a Data Improvement Plan.

“We constantly monitor the performance of this plan and seek ongoing improvements on these scores,” said Mr Caplan. “We are satisfied with the performance of the Surrey pension administration service and intend to continue working with them.”

Hillingdon Council, like Hammersmith and Fulham, has not revealed figures that show the extent of the problems it has had.

But a report from October last year reads: “Staff shortages [at Surrey] and legacy data integrity issues had a negative impact on the performance indicators shown above. However, there have been no delays in processing pension payments and no impact on the accuracy of final calculations made.”

A Hillingdon Council spokesperson said: “Both Hillingdon and Surrey aim to continuously improve service delivery and data quality. There are a number of initiatives in place to achieve this, such as a data improvement plan. Further information can be found in the Pension Committee minutes.”

The Surrey County Council spokesperson said: “We took on operating these services in 2014 and while overall there have been some successes, there were equally some legacy issues that have been difficult to resolve. We have therefore reached an amicable way forward with Kensington and Chelsea taking their services in-house.

“Work with Hammersmith and Fulham, and Hillingdon and Westminster is continuing.”

Owen Sheppard - Local Democracy Reporter

June 19, 2020