The local authority had to issue a Section 114 report after making unauthorised payments to and from its pension fund reports David Floyd

Barnet Council has been forced to issue a public statement after making a series of “unlawful” payments to and from its pension fund.

The council’s Monitoring Officer issued the Section 114 report on 20th January ahead of Tuesday’s full council meeting after discovering the payments had not been signed off by either councillors or officers with delegated authority.

The issue arose after the borough’s finance team made a three-year prepayment of £20,477,000 of contributions April 2020 in a bid to save money, before also making annual payments of £6,508,000, £7,574,000 and £7,804,000 over the following three years. Two of the additional payments were subsequently repaid before the matter “came to light” last year.

While Section 114 reports are also issued when councils are unable to set a legal budget due to being effectively bankrupt, in this instance the report reflects the fact that the payments were not legally authorised.

At the meeting on 28th January, pensions committee chair Simon Radford reflected on the unusual nature of the report saying: “It’s not every day that you move a motion calling to take these actions.”

Cllr Radford added: “We need to learn the lessons of what got us here in the first place” before explaining that steps had been taken to improve governance and processes.

Conservative leader Peter Zinkin said: “Everyone should understand that paying extra money into pension funds is the dream of most pension funds and it normally benefits the pension fund, it doesn’t cause it damage.”

However, he added the mistakes highlighted a failure to properly distinguish between the two roles the council has as scheme employer and scheme administrator.

Council leader Barry Rawlings said: “While there’s no financial harm there is a bit of reputational harm, which is why it’s important to learn lessons.”

All councillors voted to accept the report’s recommendations based on a show of hands.

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