Minutes of Proceedings

Session: 2011/2012

Date: Tuesday, 20 September 2011

In the Chair: Mr T Lunn MLA

1. ELECTION OF CHAIRPERSON

Mr Wells nominated Mr Lunn as Chairperson.  The nomination was seconded by Mr Dallat and carried unanimously.

Mr Lunn was elected as Chairperson

2. MINUTES OF PREVIOUS TRUSTEES MEETING

The minutes of the Trustee meeting held on 20 June 2011 were agreed.

3. STANDING ITEMS

Risk Register

There have been no changes to the risk register since the last meeting.

4. MATTERS ARISING

Pension Increase RPI/CPI issues

The Trustees were updated on the Pension Increase issue and noted that Eversheds have amended the draft Scheme Rules to reflect the recommendations of the Trustees to move from RPI to CPI from a specified date of change.  The date of change may be a future date specified in the Scheme Rules or the date the draft revised Rules are accepted by the Commission.

The Trustees directed that a paper on the proposed change be sent to the Assembly Commission for consideration.

The Trustees noted that pensions in payment had been increased in line with CPI in April 2011, as per Department of Work and Pensions guidance.  The Trustees instructed the Pensions Team to write to all scheme members informing them of any change once the Commission have made their decision and arranging for any recalculation of pensions in payment if necessary.

Action Required
  • Pensions Team to prepare a paper on the proposed change for issue to the Assembly Commission
  • Pensions Team to write to all scheme members following the Commission decision.

9.45am John Dallat left the meeting

Scheme Rules Review – update

The Trustees noted that the Commissions Legal Advisors had been invited to comment on the previous draft version of the Scheme Rules.  As a result of their comments and the previous proposals around pension increases some further amendments had been made and the Trustees considered the latest draft version.   

9.47am John Dallat rejoined the meeting

The Trustees noted and accepted Eversheds recommendation that the favourable early retirement option sometimes referred to as ‘The Rule of 80’, be removed, as it is contrary to age discrimination legislation.

The Trustees instructed the Pensions Team to submit the draft rules to the Assembly Commission for consideration once the final amendments were completed.

Mr Wells raised the issue of a review of some of the provisions of the Scheme.  The Trustees agreed to look at comparative information for specific provisions and asked the Pensions Team to compile some data for the next meeting.

Action Required
  • Pensions Team to submit the draft rules to the Assembly Commission for consideration.
  • Pensions Team to compile comparative data on pension provision
Ill Health Retirement –Update

The Trustees noted that this application, which was considered and approved at a closed Trustee meeting held on 30 June 2011 has been processed and is in payment.

Scheme Annual Report and Accounts 2010-2011 & NIAO Annual Audit

The Trustees noted that the Northern Ireland Audit Office have completed their audit and their report is awaited.  As a result of the audit a few small amendments have been made to the accounts and report by the Pensions Team and the Finance Office as appropriate.  The Trustees approved and signed the final version of the Annual Report and Accounts 2010-11.

Mr Wells commented on the healthy increase in the value of the Fund over the period of the report.

Action Required:
  • Pensions Team to ensure that the required paperwork is completed and forwarded to the NIAO.
  • Pensions Team to arrange for the Annual Report and Accounts to be printed, laid before the Assembly and distributed to all scheme members.
Administration Review - Update

The Trustees previously agreed to replace the current Memorandum of Understanding with a formal administration agreement.

The Trustees noted that the administration agreement is being worked on at present and will be presented to the Commission in due course.

Action Required:
  • Pensions Team to present administration agreement to the Commission.

5. GAD Service Level Agreement

A service level agreement is in place for the service provided to the Scheme by the Government Actuary’s Department.  The Trustees noted that as Grant Ballantine has retired and a new Actuary has been assigned to the Scheme, GAD have updated the SLA.

The Trustees considered and approved the revised version of the SLA.

As Grant has been the Actuary assigned to the Scheme since its inception, the Trustees wish to thank him in writing for all the help and support he has provided. 

Action Required:
  • Pensions Team to contact GAD re revised SLA
  • Pensions Team to write to Grant Ballantine.

6. Independent Financial Review Panel

The Trustees noted that the Assembly Members (Independent Financial Review and Standards) Act (Northern Ireland) 2011 resulted in the appointment of an Independent Panel who would be responsible for determining the salaries, gratuities and allowances payable to Members of the Assembly.  The Panel were appointed on 1 July 2011. 

The Trustees welcomed the appointment of the Panel and feel that the appointment of an independent body is a positive step in mitigating potential conflicts around financial support for MLA’s.

The Trustees considered a paper from Eversheds on the impact of the Panel on the Scheme and the work of the Trustees. This paper highlighted the tripartite relationship between the Commission, the Trustees and the Panel in relation to pension matters.

The Trustees noted that the panel have not yet decided when they will look at pensions but will want to speak to the Trustees as part of this process.  The Trustees look forward to the opportunity of working with the Panel.

7. Any Other Business

Approval of new pensions

The Trustees approved payment of pensions in respect of 3 retiring members:

Transfer Out

The Trustees approved the payment of a transfer value in respect of Mr Jim Shannon MP.

Transfer In

The Trustees accepted transfer payments in respect of the following Members:

  • Mr Michael Copeland MLA
  • Mrs Jo-Anne Dobson MLA
October Newsletter

The Trustees considered and approved the draft AMPS Newsletter

Action Required:
  • Pensions Team to issue AMPS newsletter to Scheme members in October.
Trustee Training

The item was presented by Louise Anderson.

Louise reminded the Trustees of the legislative and regulatory requirements regarding Trustee training. 

The Trustees considered options for meeting the training requirements and agreed to attend a formal training event which would broadly cover the Pension Regulators Trustee Knowledge and Understanding syllabus. 

It was agreed that it would be more cost effective for the training to be held in Belfast.  The Trustees were content for the training to be held on a Friday in November 2011.

The Trustees were reminded of the availability of the Trustee Toolkit, a free online leaning resource provided by the Pensions Regulator. 

Action Required:
  • Pensions Team to contact the Trustees to agree a date for training
  • Pensions Team to arrange formal training course in Belfast in November
Investment Manager Tender

The Trustees were informed that the current contact for Investment Management Services provided by M&G expires in November 2012.

The Trustees noted that a procurement exercise takes some time from planning to award of the contract, therefore the Pensions Team are in contact with the Assembly’s Procurement Office regarding the Investment Management tender.  Further information will be provided at the next meeting.

8. Date of next meeting

The next meeting will be held in January 2012. 

Date and Time will be confirmed.

Action Required:
  • Pensions Team to arrange January meeting.
Presentation by Alec Spooner, Investment Manager, M&G Limited.

Alec Spooner presented to the Trustees on the role of the Investment Manager and the fund performance to 30 June 2011.  The main points were:

  • The Members scheme has a strategic asset allocation of 80% in equities and 20% in bonds split equally between corporate bonds and gilts. New contributions are directed partly to corporate bonds
  • M&G's role is to manage the scheme versus this benchmark seeking to add value from active management in UK equities and Corporate bonds. Other funds are passively managed in index funds.
  • Performance to 30 June is consistently ahead of benchmark with a one year of return of 21.9% versus the benchmark of 20.1%. Over 3 years the return is 10.2%pa versus 8.4%
  • The Specialist UK equity fund is managed by Tom Dobell and has recently been merged with the M&G Recovery fund. The two funds had been managed with near identical portfolio holdings.
  • Stock selection in UK equities has been consistently good with the Recovery fund outperforming the FTSE All-Share index in each of the last 11 calendar years
  • The economic and market outlook has weakened somewhat because of concerns about growth in the face of eurozone debt issues. Interest rates are likely to remain low for some time.
  • Within bonds corporate bonds look relatively attractive relative to government bonds.
Presentation by Ian Boonin & Daniel Selby of the Government Actuary’s Department (GAD)

Ian Boonin presented to the Trustees on the work of GAD and the role of GAD in the management and administration of the Pension Scheme.  The main points were:

  • The Scheme Rules specify that an Actuary must be appointed.  This can either be GAD or another Actuary.
  • The Trustees have appointed GAD to be the Scheme Actuary.
  • GAD are a small, self-financing Department of Government.
  • GAD provide actuarial advice to almost all UK public sector pension schemes and all the UK parliamentary pension schemes.
  • The Scheme Rules prescribe some work to be carried out by GAD, for example the actuarial valuation, providing actuarial factors and setting the contribution rate.
  • GAD also carry out many ad-hoc tasks for the Scheme, for example providing advice on legislative changes, benefit design, costings, investment performance, risk and any other relevant matters.

Daniel Selby talked the Trustees through the GAD paper ‘Actuarial Valuation Note on Proposed Approach’. 

The Trustees agreed:

  • To adopt the Objectives for the Valuation set out in the GAD paper.
  • That the Projected Unit Method be retained as the valuation methodology.
  • That the market value approach would be adopted.
  • That membership changes resulting from the May 2011 election should be taken into account for the purposes of the valuation.

In order that the 2011 valuation is meaningful the Trustees have agreed with GAD that the impact of future changes such as a determination of the Independent Review Panel relating to salaries and any changes arising from the Boundary Commission report should be taken into consideration if possible.  It was agreed that GAD would carry on with the valuation but that the report would not be finalised until further information was available on MLA salaries and numbers.

Preliminary results should be available for the January meeting.

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