Capita Hartshead has claimed that UK local government pension schemes (LGPS) could make significant savings by joining up to a new framework which sees schemes sharing service providers for their administration.
Last week Pension Funds Insider reported that two London borough pension schemes had joined forces and appointed the same pension administrator in order to save costs. Steve Birks, pensions operations director at the chosen administration firm Capita Hartshead, said the framework could have a big impact on public sector pensions, especially since this is "a time of great change for public sector pensions".
The idea is that the two boroughs, those of Hammersmith and Fulham and the London Borough of
Brent, will see the benefit from sharing the firm reflected in their costs.
According to Capita Hartshead the two pilot boroughs have indicated a 20% and 39% saving against current costs.
"This is about maximising value for money by doing everything possible to reduce our pension administration costs, while maintaining a quality service," said Cllr Stephen Greenhalgh, from Hammersmith and Fulham.
The initiative, which will go live from next Monday, is open for more boroughs to join. Twenty nine London boroughs, in addition to other local authorities, are eligible to join the framework and some have already expressed their interest.
Birks says: "It is difficult to be specific about how much each authority will save without knowing the current costs and the scope of services they require. Further savings for all councils participating in the framework will be generated as adoption continues."
As Birks point out, cost-saving will be the main motivation in these times of austerity, though the initiative does not just save boroughs money but also time. Under the agreement, other London boroughs can join without needing to go through "a lengthy and costly procurement process".
Local governments have felt pressures in terms of cost saving for a while now and together with Lord Hutton's recommendation and the proposed changes to all public sector schemes, initiatives like these appear to be no more than what Birks calls "common sense".
According to Birks the service provider will not only provide administration services but will also be advising the two boroughs "on the impact of the current changes".
"The framework will bring a consistently high quality service to all of the councils under its umbrella through collaboration and sharing of best practice," says Birks. "In addition to the immediate cost savings, growth of the framework community triggers further cost savings for all."
"Also as Transfer of Undertakings (Protection of Employment) Regulations (TUPE) applies, Capita Hartshead subsumes all costs relating to transferring the staff."
Participants can choose to take 'full' administration services or choose from pension scheme administration, pensioner payroll and accounts facilities.
"While all of the above are real benefits," says Birks "the fact that the framework will deliver a service compliant with the outcome of the public sector pensions review could be the key factor for councils deciding whether to utilise the framework. Fees charged under the framework are inclusive of any future changes to the LGPS, including software costs, giving peace of mind in a significant time of change."
Birks also indicated the firm would work with the boroughs on their communications to increase member engagement, introducing member websites and even "onsite monthly pension surgeries".
First published: 29.09.2011
azeevalkink@wilmington.co.uk
