Teachers’ Pension Scheme (TPS) Scheme Administration

History 1992 - Executive Agency 1996 - Outsourced to Capita: delivered reduced running costs and investment in IT, EDM introduced. 2003 - 2nd contract - delivered rationalisation of systems and introduction of Hartlink platform. Improved Service Delivery via rigorous SLA and KPI regime. 2011 3rd (current) contract - delivering focus on Member and Employer engagement 2014 – current contract extended to 2021– focus on delivery of Digital by Default through the TPS Vision the original TPS procurement was conducted in line with Government best practice as advocated by OGC as they were at that time (they are now Crown Commercial Service). The procurement followed the Competitive Dialogue procedure following publication of a Contract Notice in OJEU.

Procurement Process OGC (now Crown Commercial Service) best practice. Competitive Dialogue procedure following publication of a Contract Notice in OJEU Existing contract included the option to extend – Cabinet Office approval necessary and obtained.

TPS Contract – scope Centrally administered scheme Capita carries out the bulk of the administrative functions Maintenance of member records Calculating, processing, paying pension benefits Pre-retirement operations Collection and reconciliation of contributions Scheme accounts forecasts Improving member and employer engagement and understanding Keeping accurate records of member service and salary details Pre-retirement operations include processing pension flexibility elections, transfers in and out, ill-health, opt-outs, opt-ins, death benefits Resource accounts remains a responsibility of the Department

Current Contract Contract value £128m Fixed Charge Year 4 £15.6m Fee Dependent upon achievement of service (SLAs) and outcomes Open Book Accounting with Gainshare mechanism in place to prevent excessive profits

Current Service Key facts 643,831 Active Member 531,856 Deferred Member 670,623 Pensioners 28,683 Retirement applications this year 18,505 Death Benefits payments £5.378bn in contributions £7.341bn in benefits

Service Reporting Comprehensive Monthly Service Delivery Report showing achievement against SLAs and KPIs Progress of specific initiatives/projects Audit and security Service Improvement Programme Finance Engagement Quality Management Annual Report

Current Services - Measures 11 SLAs - delivery of the service 8 KPIs - qualitative measures 12 Contract Outcomes – progress against strategic objectives (member & employer engagement and digital transformation) £51,648.82 withheld in Year 3 non achievement of SLAs Only £64,388 paid of possible £919,831 for Outcomes year 3

Risk Management Controls to manage risk to a reasonable level to identify and prioritise, evaluate likelihood and impact. Specific controls are: One Risk Register that covers all sections: contract, policy, finance and administration – Risk Committee is responsible for management of the register Escalation – Service Governance (see previous slide) Contractual Audit Requirement - TP produce an audit strategy that complies with Public Sector Internal Audit Standards (PSIAS) Annual Audit Plan – a risk based Annual audit plan delivered by Capita’s Group Internal Audit that is approved by DFE

Current Risks Risk Description Potential Impact Gross Risk Current Position Net Risk Target Risk Rating TPS Cash Forecasting exercises, Spring Supplementary and OBR are inaccurate, potentially leading to Resource Accounts qualification. Reputation Cash Qualification   Good controls in place give confidence that OBR (submitted in September) is accurate. Controls also give assurance regarding Spring Supplementary (due January). Will always remain at least Amber due to the nature of the risk Employers and stakeholders are not engaged in the TP scheme which will impact on the ability to deliver an effective service and achieve outcomes. Contractual obligations Costs Complaints Customer Service SLA's (Critical/Key Measures) Engagement Strategy reviewed regularly. Project set up to include Capita and TP staff to review Outcomes The increase in digital transactions and ability for teachers to view information via tablet,mobile etc should increase engagement. Could move to green after implementation of Reform Programme digital transactions Failure to implement or effectively manage legislative change brought about by the 2015 Reform initiative into the business, Regulatory Censure, Complaints, Customer Service, SLA's Cost of re-work Reputation Outcomes TPS ahead of other schemes and on track. Due to the timeline of this Project it will always remain at least Amber until the conclusion in April 2015. Inadequate control environment in which to monitor and submit accurate figures iro the TPS resource position throughout the year (monthly to Treasury/OBR iro estimating) could ultimately lead to account Reputation Treasury Risk Forecasting Excess Vote Qualification Meeting required to define detailed process map in order to understand requirements for handover of the work from DfE to Capita. Concern that end of financial year is fast approaching and process map not yet drafted. Due to the nature of the risk this will always remain at least Amber.

Customer Feedback Continuous Customer Satisfaction Surveys – reported monthly Outcome measures - annually. Engagement Focus groups Teachers’ Pensions Admin Forum – termly meeting with scheme members and employers TP Admin Review Group- termly meeting between TP, DfE, unions and employer representatives

Employers’ Role TPS/DfE does not employ scheme members 6,000+ employers includes LAs, academies, colleges, universities, independent schools and others. LAs often do not carry out many of their “employer” functions. Employers are responsible for: Salary and service data on all scheme members Deducting and remitting contributions Providing audit certificates for contributions Enrolling teachers in the scheme Providing information on appointment and at key stages in career Assisting with and authorising retirement applications Debt Recovery Collecting contributions for additional pension payments

Current Initiatives Final phases of Scheme Reform – an extensive programme of operational changes and engagement activities Relocation Project – moving to brownfield site in Darlington – target date end Sept 15 with contingency to end Nov 15 Deferred Programme – specific programme to contact 200K members over a 4 year period Monthly Data Collection – currently in approach assurance phase, first on-boarding April 2015, to be mandated April 18

Other contracts Medical advisor GAD Prudential AVC contract (no monetary value – outside TPSPB remit) Methods (IT Security Specialists)