Agenda item

Report of the Director of Finance and Corporate Services

The Cabinet Member considered a report of the Director of Finance and Corporate Services which sought approval for the Council to provide a pension guarantee to the Central England Law Centre (formerly Coventry Law Centre) to mitigate future potential risks in relation to its pension position. This guarantee would be at a net nil cost to the Council.

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals (Minute 10 below refers).

Central England Law Centre (CELC), formerly Coventry Law Centre, was the largest law centre in the UK. It had developed from what was Coventry Law Centre, and its focus is still very much on the city. The CELC provided specialist legal advice to Coventry citizens, covering areas including but not restricted to social care and health, welfare benefits, housing, debt, immigration and asylum.

CELC has been a key local delivery partner for the Council for many years and the Council provides £440k p.a. core funding to the Law Centre.  Within the Council, CELC was regarded as an effective and important voluntary sector delivery body within the city. This was demonstrated by the level of on-going funding provided by the Council and fact that the Council has periodically chosen the Centre to provide a number of other work programmes supported by specific grant funding.

Historically, CELC employees had access to the Local Government Pension Scheme via the West Midlands Pension Fund (WMPF). Scheme entry was closed for new employees in May 2007 and there was now a small number of active members of the scheme. In addition, there are former CELC employees who are already in receipt of their pension or who will be able to draw their pension when they reach the relevant age.

The CELC had just received the latest triennial superannuation report which determines its employer pension contributions for the next three years. Only employees working in Coventry and who were historically part of Coventry Law Centre are members of the WMPF rather than employees of other parts of the CELC. The previous (2016) deficit calculated on a ‘funding basis’ was £211k whereas the recent revised valuation for 2019 indicates a surplus of £69k. This means that the CELC would only have to make employer superannuation payments in relation to the current cost of its employees’ pensions, not any deficit recovery payments.

However, WMPF had also provided a revised calculation for a crystallisation of the pension costs based on the least risk approach. When the remaining employees who were active members of the WMPF ceased their employment with CLC, the Law Centre would need to pay the liability to the Fund calculated on this basis. The guarantee would be of benefit only to CELC employees and therefore does not confer any advantage on CELC.

The WMPF was able to avoid charging the least risk calculated sum if the relevant body was able to align itself with another organisation with a strong financial covenant and active employees within the Fund. The purpose of the report was to recommend that the Council takes on this role by providing a pension guarantee to CELC and the WMPF.

RESOLVED that the Cabinet Member for Strategic Finance and Resources:

(1)  Approve the Council providing a pension guarantee to the Central England Law Centre as set out in the report.

(2)  Delegate authority to the Director of Finance and Corporate Services following consultation with the Cabinet Member for Strategic Finance and Resources to identify, agree and arrange the legal and financial measures required.