Service Plan 2006-2009

Introduction

Why do we have a Service Plan?

This Service Plan explains how the Lothian Pension Fund intends to develop and improve its provision of the services. At a strategic level it enables the Fund to focus on achieving agreed targets, whilst also enabling staff to see how they contribute to the overall success of the Lothian Pension Fund.

Where are we now?

The City of Edinburgh Council is the administering authority for the Lothian Pension Fund, which comprises three Pension Funds: the Lothian Pension Fund, the Lothian Buses Fund and Scottish Homes Pension Fund (along with numerous Charitable Trusts). It is a statutory scheme and is governed by the Local Government Pension Scheme (LGPS) (Scotland) Regulations 1998. The Fund is the second largest Scottish Local Authority Fund and in the top 100 of all UK Pension Funds. The Executive of the City of Edinburgh Council delegates all pension matters to the Pension and Trusts Committee that acts as the quasi "trustees".

The Committee meets at least bi-annually. The Pensions and Trusts Committee delegate duties to the Director of Finance who is assisted by his staff and advisors. The Consultative Panels meet on the same day as the Pension and Trust Committee with representatives from the Committee. They cover largely the same agenda. The Investment & Pensions Division within the Council's Finance Department is responsible for all aspects of the Funds including investment, administration and accounting. The Division's principal responsibilities include:

Setting and implementing a funding strategy which aims to ensure that Fund assets, together with future contributions, are sufficient to meet pension liabilities. Details are contained in the Funding Strategy Statement;
Investment of Fund assets, including setting investment strategy, the selection and monitoring of external investment managers, internal management of assets and exercising corporate governance;
Safekeeping and accounting of the Funds' assets;
Preparation of the Fund's published annual report and accounts;
Provision of pension administration services including maintaining records for scheme members;
Providing advice and guidance on pension issues to employers and other external parties.

The Lothian Pension Fund has a wide range of internal and external customers and stakeholders, including:

Pension Fund members (actives, deferreds and pensioners)
Employers participating in the Fund
Staff
Other Departments of the Council and Divisions of the Finance Department
Elected members
Government departments
Consultants, advisors, pension providers and lawyers
Investment managers and external Additional Voluntary Contribution provider(s)
Council Tax payers.

Major Influences

Among the main drivers for change are the following:

Changing market conditions as well as demographic changes (in particular mortality improvements) are impacting dramatically on employer contribution rates and as a result, their attitudes to pension issues;
New pensions taxation regulation and the stocktake of LGPS;
Customer expectations in particular relating to communication;
Rapid and significant development of different products in the investment markets;
The maturing membership profile and the need to promote the LGPS to potential members to encourage membership;
Focus on efficiency/effectiveness and benchmark best practise. In particular, the review of public sector efficiency by Sir Peter Gershon in 2004 outlined the aim to "establish networking and collaborative processes for joint working" in order to improve efficiencies.

Our Vision: we aspire to be the best Scottish Administering Authority We will measure our success using a number of measures including:

Investment returns;
Cost effectiveness;
Quality of staff as measured by the proportion of staff who are appropriately qualified;
Customer satisfaction.

Our Goals

Underpinning how we plan to develop our services:

"To support staff so that they can be expertly skilled and equipped to provide an excellent service"

"To achieve excellent customer care by understanding customer needs and exceeding their expectations"

"To continually improve efficiency and stewardship by challenging service delivery methods"

"To encourage membership of the Fund for both employers and employees"

"To promote a healthy and sustainable environment through the implementation and development of the Lothian Pension Fund's policies on Socially Responsible Investment"

The strategy for each of our five goals is outline below.

To support and develop staff

Objective: "To support and develop staff so that they can be expertly skilled and equipped to provide an excellent service"

Strategies: This objective will be achieved by:

Better communication across the Division;
Reviewing the structure of teams within the Division;
Recognising good performance;
Encouraging staff to share ideas for improvement;
Providing staff with training and support to do their job as well as development opportunities;
Improving leadership.

The Finance Department has achieved Investors in People (IIP). In addition, the Pensions Administration Section of the Investment & Pensions Division has been awarded Charter Mark status. These provide evidence of Lothian Pension Fund’s commitment to its staff. The Lothian Pension Fund has implemented a new Performance Review & Development (PRD) scheme for staff which uses a Core Competency Framework. Every member of staff has an annual PRD review with a review every six months. This improves communication, highlights areas for training and development, ensures all members of staff obtain constructive feedback about their performance and clarity about what is expected of them. We will participate in a new Council Human Resource strategy which will entail a modernised pay structure.

To excel in customer care

Objective: "To achieve excellent customer care by understanding customer needs and exceeding their expectations"

Strategies: This objective will be achieved by:

Carrying out the Fund's communication strategy;
Surveying customers on a regular basis to identify requirements, expectations and progress against targets;
Developing and extending our communications tools;
Endeavouring to use Plain English in all documents;
Improving communications with employers which will provide an improved service to employers and ultimately to members of the Fund;
Improving efficiency of pension administration in order to improve service levels;
Communicating pension scheme changes with employers and members.

To improve efficiency and stewardship

Objective:"To continually improve efficiency and stewardship by challenging service delivery methods"

Strategies: This objective will be achieved by:

Reviewing internal processes (accounting, investment and pension administration);
Continuing to review the Fund's benchmark and structure and explore new investment products and managers;
Exploring opportunities to reduce costs and increase income;
Reviewing internal use of paper/electronic files;
Reviewing investment process for charitable trusts;
Reviewing opportunities for shared services.

To encourage Fund membership

Objective: "To encourage membership of the Fund for both employers and employees"

Strategies: This objective will be achieved by:

Promotion of the Fund through improved communications with employers and increased understanding;
Promotion of the Fund through communications with members and potential members particularly through face-to-face contact at induction courses and roadshows, focussing on the Scheduled Bodies;
Adopting a revised employer admission policy which aims to improve the financial covenant of the employers participating in the Scheme;
Reviewing opportunities for shared services.

To promote a healthy and sustainable environment

Objective: "The Lothian Pension Fund should encourage its stakeholders to behave in a way that produces a healthy and sustainable environment" The Lothian Pension Fund is a long-term savings and investment undertaking. It should recognise and develop ways to aid its investments in promoting a healthy and sustainable environment to benefit all the Fund’s stakeholders. While the principle requirement on the Fund is to produce financial return this can be achieved in many ways. The Fund will engage with the companies in which it invests in order to promote better corporate governance and sustainable policies and have a clear process on how it will react to dynamic events in the industry. Strategies: This objective will be achieved by:

Reviewing the Fund's Socially Responsible Investment and Corporate Governance policies to encourage the Fund’s investment managers to gain a greater awareness of the issues;
Considering existing and potential investments with regard to this policy;
Reviewing internal processes to reduce paper trail.

How staff can contribute

Staff are central to the success of the Lothian Pension Fund. To deliver the Service Plan goals, a high-level Action Plan (below) has been created. This Action Plan takes the goals laid out in this Service Plan, translates them in to specific actions and identifies who is responsible for delivering them and when they should be delivered. All staff in the Investment & Pensions Division have a role to play in ensuring the Fund achieves the Service Plan. Staff will be asked to contribute ideas on how the Fund can achieve the objectives. The actions will be converted into personal objectives for all staff in their Performance Review & Development (PRD) interview. The Action Plan will be discussed and monitored regularly to ensure that the Service Plan remains clear for all staff.

Risk: what are the principal risks?

A detailed risk matrix has been constructed and is included in the Fund's Funding Strategy Statement. It focuses on the funding risks, the possible cause and consequences of the risk and highlights controls put in place to minimise the likelihood of them ever occurring. Each risk has been assessed to quantify the likelihood, impact and financial cost (if any) in order to establish priorities. Over 2006, the risk matrix will be extended to cover non-funding issues such as operational risks, reliance on key staff etc.