ITV’s coverage of the West Midlands Pension payment problem
I thought when I saw on ITV News that new pensioners at West Midlands weren’t getting paid was that this was linked to the bankruptcy of Birmingham. I’m sorry but that was what went through my mind and until my pension brain kicked in, I felt what I’m sure many viewers also felt, that the fund wasn’t paying pensions because it had run out of money. The story wasn’t “exclusive” as ITV claimed, the BBC ran the same story in December.
In the meantime we have been left with the impression that one of the largest pension schemes in the land can’t pay its pensions.
Of course this is not the case. West Midlands issued a briefing note to participating employers a couple of months back. This confirmed that the scheme had a fund behind it, that the fund had 40% more in it than was needed to pay the pensions and that employers would need to wait and see if the surplus would result in reduced contributions. (Incidentally, it is one of the least friendly “briefing notes” I have ever read).
The graphs show that while contributing employers are struggling to provide basic services, the fund is full to bursting. The message to employers is not so clear
The current surplus environment is relatively unprecedented reflecting the step change in market indicators and assumptions around future investment growth, for which it remains to be seen whether it will translate into practice.
If I was a participating employer of the West Midlands Pension Fund , I would be asking serious questions about the value I was getting for my money.
I’d also ask for future briefings to be written in plain English.
How a 40% funding surplus turns into a PR disaster
At no point in the ITV report was the fact that the scheme is currently 140% funded mentioned. Members who are waiting to get their pensions paid will read the following announcement from West Midlands with some concern
The apology to members on the West Midlands Pension Website https://www.wmpfonline.com/
The problem is being blamed on the new software that West Midlands implemented to administer pension rights and pay pensions in July last year. At the time this was hailed as a new “pension portal” with online access to a range of services. The bells and whistles seem to work for existing pensioners but the system was, according to the BBC , not paying 2,000 new pensioners , some of whom were reported borrowing money to pay for Christmas.
There is no reported detail on who the new software supplier and all at West Midlands Pensions questioned have been tight-lipped about the procurement. Except for one whistle blower.
The anonymous former fund employee told the BBC: “From what I witnessed, the new software seemed to be chosen without thorough scrutiny of its suitability.
“This system is usually used by smaller pension funds, not one of this size.”
Sell the sausage not the sizzle
I am sure that all those in the know about LGPS pension administration procurement will know the software supplier as will its rivals. The NDAs in place will protect that supplier’s reputation and it’s not for me to throw stones at faulty software or poor procurement, these things happen and my heart goes out to Rachel Brothwood and her team who are getting the heat from the BBC, ITV and the local press.
Rachel made this statement to local website Express and Star
“While we have continued to pay pensions regularly and on time to over 116,000 members, we are sorry that some members including those recently retired are experiencing delays in accessing information about their pensions as we transition to our new Pensions Administration System.”
“We have made cases in which people are awaiting payments our biggest priority, have been in regular contact with those affected with updates and to signpost support, and are reducing the time members are waiting for payments.
“We have re-distributed our resources and continue to increase allocation and capacity to focus on supporting all priority cases and reduce delays
“Our software provider has increased their own resourcing to ensure the system meets our specifications and members’ needs.
“We have also setup additional payment runs, now twice a week, so that when members can confirm the information we need they can receive payments faster, rather than waiting till the end of each month”
Despite this, non payment of pensions remains national news, two months after the BBC’s report.
So what are the public takeaways?
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Big pension fund sells the sausage not the sizzle putting portals above payments. “Portals for show , payments for dough”.
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Pension Scheme with 40% more money than it needs, short-changes 2,000 new pensioners over Christmas .
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Skint employers asked to stump up un-reduced contributions despite the surplus and poor service
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ITV and BBC run stories of pensioners not getting paid pensions funded by skint employers
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People assume there is no money in the pension fund when there’s actually 40% more than needed,
Pensions have to be paid, that is the first duty of any pension schemes, there is no duty to provide portals.
LGPS pensions have to be funded and participating employers have no option “not to pay” contributions in full.
Pensions are deferred pay, debacles like this bring pensions into disrepute. The basics matter and it’s vital that the West Midlands Pension Fund supports its members , employers and the reputation of pensions properly.
It should ditch the fancy slogans and focus on the basics.
Why does the industry protect suppliers and providers who fail
to deliver? Last week it was 57 day turn around service now untested software launched on the members.
With RPI running at 4.9% and an economy going backwards that 40% buffer will be required
“The Industry” !?
Most schemes, even LGPS, don’t have the quality of people to run them, and they have allowed themselves to become so beholding to their advisers that they have so little ability to think for themselves or challenge. In reality the advisers run most schemes, they see Trustees as a necessary evil (someone to take the fall), and they rarely criticise other advisers least they get excluded from the next pitch.
The 2004 act forced a wedge between employers and schemes, with the resultant talent tap turned off. Prior to that Trustee Boards benefitted from main Board support and alignment. Consultant led regulation to increase the role of the consultants has led to poor alignment and the position we are now faced with.
Surely someone at Birmingham council will ask why the fund is 40% overfunded ? That’s money taken from employees and local employers unnecessarily .
And to add insult to injury, that money extracted from the Birmingham economy will mostly have made its way to the money managers in London ( who take their cut ) and are investing it anywhere but Birmingham.
What is the 40%? £8bn or so – I’m
sure that surplus (excess, not needed) could do a lot to fund local services and kickstart that local economy!
Pension funds should form part of an integrated invested economy, not be sucking the life out of them.
Can someone from WMP please explain why it has taken 2 years to transfer my pension from another LGPS. I send emails after emails and I still
recieve no information apart from the same scripted message, it has been escalated.
My next move will be to complain to the ombudsman.
Regards
Dave