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Minutes of Proceedings

Session: Session currently unavailable

Date: 20 March 2019

77th Meeting of the Pension Trustees held on

Wednesday 20 March 2019 at 10:30am, Room 29

The Chairperson thanked everyone for attending the meeting and welcomed Mr Burns and Mr Humpherson from Deloitte, and Mr Spooner from M&G.  He also welcomed Mr Agnew to the meeting.


The draft minutes of the regular meeting held on 29 January 2019 were agreed.

Action required:

  • Agreed minutes of the 29 January 2019 meeting to be uploaded to the Assembly website (Pensions Team).


The Chairperson explained that the purpose of today’s meeting is to spend some time discussing the area of ethical investments.  This is an issue that regularly comes up and is something that has been discussed on numerous occasions.  The Chairperson reminded members that Mr Agnew wrote some time ago regarding the Scheme’s investments in fossil fuels and encouraging divestment.

The Chairperson advised that as Trustees they have responsibilities in law and regulation to administer the pension scheme to ensure that scheme members get what they are entitled to at the right time.  This involves ensuring that contributions paid by Members and the public purse into the Fund is invested wisely and prudently so that the Scheme does not need to seek additional public funding to pay out all its liabilities in the longer term.

The Chairperson high-lighted two guidance documents that were included in the pack – the first is the Pensions Regulator’s guidance to Trustees on defined benefit investment at page 12, and the second is the Law Commission guidance on fiduciary duties at page 17.

The Chairperson explained that the Regulator does not instruct Trustees on how and what extent they should consider factors such as climate change, responsible business practices and corporate governance, instead stating on page 13 that Trustees should “assess the financial materiality of these factors and to allow for them accordingly in the development and implementation of your investment strategy”.

He advised that the Law Commission guidance on page 17 seeks to answer the question, “how far may (or must) trustees consider interests beyond the maximisation of financial return, such as questions of environmental and social impact, and the ethical view of their beneficiaries?”.

Para 1.12 of the guidance states “the primary aim of an investment strategy is therefore to secure the best realistic return over the long term, given the need to control for risks.”

The Chairperson said that factors to be considered in setting an investment strategy will fall into 2 categories, financial and non-financial factors.

Financial factors may, and indeed should, always be taken into account.  This is a usually a question of balancing returns against risk. 

Non-financial factors are usually motivated by other concerns, for example, disapproval of certain industries.  In general, non-financial factors may be taken into account if 2 tests are met:

(1)  We have good reason to think that scheme members would share the concern; and

(2)  The decision does not involve a risk of significant financial detriment to the Fund.

The Chairperson explained that the current investment strategy is laid out in the Statement of Investment Principles on page 24.  To remind the Trustees and for the benefit of the Observers, the Chairperson explained that the Statement of Investment Principles is a document written after lengthy discussions between the Trustees and GAD about how the Fund should be invested.  It is reviewed at least every 3 years, usually after the full valuation of the Scheme has been completed.  The current version was written in April 2015 and should have been reviewed last year after the 2017 valuation, however it made sense to postpone the review until the Trustees have a chance to consider wider investment issues.

The Chairperson explained that paragraph 4.4 on page 31 of the packs outlined the split of assets as determined in 2015, and reminded Members that there have been some changes to the investment strategy since 2015.  In March 2016, having sought advice from GAD and Deloitte, it was decided to move the UK Equity holdings from M&G’s Recovery Fund which is an active fund, to a UK passive equity fund.  At the end of 2017, the Trustees decided to diversify the assets the fund is invested by moving approximately 15% of the fund to the Episode Allocation Fund.

The Chairperson informed Members that Paragraph 6 on page 36 of the packs detailed the position on socially responsible and ethical investing.

The Chairperson invited Mr Humpherson to give an overview of ethical investments.  Mr Humpherson delivered a short presentation on ESG investment considerations.

Mr Humpherson then facilitated a discussion of the Trustees and Observers on ethical investments.

The Chairperson called for a break at 11:40am.

The meeting resumed at 11:50am.

The Chairperson handed over to Mr Spooner for M&G’s presentation on ethical investments.  Mr Spooner made his presentation and took questions on the subject.

The Chairperson thanked Mr Agnew for attending the meeting and explained that the Trustees and Observers would consider the matter further. 

Mr Agnew left the meeting at 12:39pm.

The Chairperson invited Members to discuss how best to proceed regarding ethical investments.  Following discussion, it was agreed that further information and research was required.

Mr Humpherson suggested that the Trustees first look at the products offered by M&G in this area, and secondly, consider an established alternative index with a low carbon tilt.

Mr Spooner suggested a conference call between Deloitte and M&G to explore options with M&G, and to gain a better understanding of the indices they use.  Mr Humpherson agreed that this would provide the Trustees with further information to make a decision.

Mr O’Dowd suggested looking at other legislative bodies to see how they have dealt with the issue of ethical investments.  It was agreed that this research should be carried out.

Action required:

  • Conference call to be arranged between M&G and Deloitte to discuss products offered by M&G (M&G and Deloitte)
  • Deloitte to provide information on alternative index (Deloitte)
  • Research to be carried out to see how other bodies have invested ethically (Pensions Team).


Meeting to be arranged for Tuesday 18 June 2019 @ 10:30am

The Chairperson thanked everyone for attending the meeting today.

The Trustee meeting ended at 1:00pm

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