Minutes of Proceedings
Date: 02 April 2003
Mr D Watson
Mr M Carrick
Mr J Dallat
Mr D McClarty
Mr J Kelly
IN THE CHAIR:
Mr D Watson
Mr T Evans, Mr E Hobson, Ms A Whitaker, Ms K McCartney
1. Minutes of meeting of 19th March were accepted
Mr Watson extended the Trustees condolences to Mr Kelly over the recent bereavement in his family.
2. MATTERS ARISING
The Government Actuary's Department (GAD) has provided a response to the query raised in the meeting of 10 February 2003 on the matter of AVC flexibility. As it may involve an amendment to the Scheme rules, legal advice will need to be sought. The GAD letter was issued to the Trustees for discussion at the next meeting.
Increase in Employer's Pension Contribution
Mr Evans confirmed that he would bring this matter to the attention of the Secretary of State's Office at their next meeting.
Mr Evans will report back to the Trustees at their next meeting.
In response to the Trustees request for clarity on funding of the Scheme, Mr Evans stated funding of the employer's contribution to the Scheme comes out of the Commission's vote. It was for this reason that any shortfall in funding would be brought to the attention of the Commission / Secretary of State so that appropriate plans can be made.
Amalgamation of Old Assembly Pension Scheme and AMPS (NI) 2000
GAD is preparing a report on the amalgamation of the old and Assembly Pension Fund with the AMPS (NI) 2000.
3. ANNUAL REPORT
The Trustees agreed that the printed Annual Report be lodged with the Business Office and circulated to members as required by the Scheme Rules.
4. MEETING WITH PARLIAMENTRY PENSIONS CONSULTANT - WESTMINSTER
A document detailing the business covered at the meeting with the Parliamentary Pensions Consultant in Westminster was tabled. The following items were highlighted for discussion:
a) Appointing Scheme Advisors
Mr Carrick highlighted the different focus in the two briefings supplied by Joe Whiterod (Westminster) and Lindsay Todd (Pricewaterhouse Coopers (PWC)) as to what Specialist Advisors the Scheme should employ.
The Trustees, while stressing the need to protect member's interests, as well as the Trustee's and support staff's position, noted that the size of the fund placed constraints on the cost that could realistically be spent on scheme Advisors.
The Trustees agreed to discuss the possibility of sharing of the cost of Scheme Advisors with the Scottish Parliament and the Welsh Assembly who may have similar needs.
5. ANY OTHER BUSINESS
Trustee training was briefly discussed. The Trustees have attended training with the Parliamentary Pensions Advisor in Westminster (20th March 2003), with PriceWaterhouse Coopers (31st March 2003) and have received information from OPRA on the roles and responsibilities of Trustees.
- Investment Strategy of the Fund
A meeting with Archie Cameron from Westminster is scheduled for May 2003 - it was suggested that revision of Statement of Investment Principle and revised Investment Strategy be discussed with him at this meeting.
It was noted that PWC is available to assist in the revision process.
- Bank Transactions
A summary of bank transactions for the Fund was presented to the Trustees.
Mr Hobson drew attention to the balance of the account, which has been increased as previously agreed by the Trustees, to ensure funds are available to cover the estimated pension payments to Members not standing for re-election.
Mr Dallat asked the administrators to look at the possibility of placing the money into an account where it will be earning interest for members while it is being held over. This was agreed.
6. MEETING WITH INVESTMENT MANAGERS
At this point Mr Lindsay Todd of PriceWaterhouse Coopers joined the Trustees and a short discussion was held on the items to be discussed with the Investment Managers
Mr John Kilcommins and Mr Rick Dentith, both from Royal London Asset Management (RLAM) joined the meeting and made a brief presentation on the state of the fund and its investments.
RLAM stated that the future investment strategy was to:
- Increase the fund's UK Assets, as the market is better placed in this area in the current investment climate
- Maintain the equity portfolio as they are a cheap investment in the current market
- Avoid disasters - that is avoid taking positions that would put the assets of the fund at any more risk than absolutely necessary
The meeting then questioned the fund managers. Issues raised included:
The Fund Managers poor performance against the investment objectives. This matter was of great concern and RLAM were examined at length on this point
The difference in cash value of the investment if the Investment Manager had achieved the investment objective of a return in the upper quartile of CAPS as opposed to the current performance of equalling the CAPS median. Mr Todd (PWC) did point out that it was only because the market was performing so badly that any difference in cash value was relatively small, in a more positive market the difference generated by poor performance would have been a lot greater.
How RLAM intends to improve their performance
The nature of the funds in which the Fund managers were investing (while no clear statement was made in the Statement of Investment Principle, Mr Dallat raised the point that social responsibility would need to be examined and weighed up against profitability of the fund. It was felt that when the investment strategy is revisited this would be an appropriate time to consider this)
RLAM explained that as the current investment is a pooled vehicle, the facility to add and remove portions on ethical grounds is not available. For this to be achieved a segregated fund would be needed which specified ethical investment restrictions.
- The nature of the Team that monitors the Scheme's investment portfolio and the methods employed to monitor the investments
Asset allocation, in particular how long RLAM envisage the equity market will take to recover. Mr Dentith stressed that it is the breakdown of the investment into bonds / equities rather than whether it is tracker / actively managed that will have most impact on the returns of the fund.
- Discount of fees charged by RLAM
RLAM undertook to provide the Trustees with the following documentation:
I. Detailed documentation on the investment team make up and capability
II. A list of the companies that the Fund is invested with
III. Written details of RLAM's future investment strategy to achieve the fund's objective of returns in the Upper quartile of the CAPS in the short and medium term
IV. A document confirming what the difference in monetary value of the fund would be if RLAM had achieved the Fund investment objective as opposed to achieving CAPS median
V. The Trustees will send a formal letter to RLAM asking for a reconsideration of fees in light of the companies overall poor performance
It was agreed that the Trustees would frame further questions that would be sent in writing to Mr Dentith and Mr Kilcommins for response. Included in this letter would be a note of thanks to RLAM for attending.
There being no further questions the Trustees thanked RLAM for their attendance and at this point the RLAM representatives left the meeting.
In ensuing discussion the Trustees raised the following Action Points:
- The Investment strategy of the Fund will be reviewed (active vs tracker management; bonds vs equities)
- Pricewaterhouse Coopers will be called on to advise the Trustees on a revised investment strategy. Mr Todd advised the Trustees that changing fund managers does not necessarily require encashment of investments, can transfer investment in species to new Fund Managers
- The timescale required for appointing / changing investment managers through a tender process is to be investigated.
- Consideration to be given to having more than one investment Manager and splitting the fund.
- Discussion with the Welsh Assembly and Scottish Parliament needs to be held with consideration given to forming an investment subcommittee to manage any joint requirements that may arise, while maintaining control of individual investments placed against specific fund liabilities.
In closing the Chairman thanked Mr Todd for his attendance.
7. DATE OF NEXT MEETING
The next meeting will be held on Tuesday 29th April at 11h00.