Minutes of Proceedings

78^th Meeting of the Pension Trustees held on

Tuesday 25 June 2019 at 9:50am, Room 106

The Chairperson thanked everyone for attending the meeting and welcomed Mr Humpherson from Deloitte.  He explained that Mr Allen from the Northern Ireland Audit Office would join the meeting later for item 7.

1. APOLOGIES

Mr Catney had to leave before the meeting started due to a short delay.

2. MINUTES OF PREVIOUS TRUSTEES MEETING

The draft minutes of the meeting held on 20 March 2019 were agreed.

Action required:

• Agreed minutes of the 20 March 2019 meeting to be uploaded to the Assembly website (Pensions Team).

3. STANDING ITEMS

Conflict of Interest

Mr Wells reminded the Trustees that he is also a Member of the Assembly Commission.

Risk Register

The Chairperson explained that the risk register is now in the new format used by the Assembly Secretariat; however, the content has not been changed.  This was a recommendation arising from a recent internal audit of the Pensions Team.  The Chairperson advised that there are no risk scores in the risk register yet, but this will be addressed at the September meeting when a session on risk would be added to the agenda.

Action required:

• Session on risk to be organised for September meeting (Pensions Team).
• Risk scoring to be completed (Trustees).

Review of Action Points Arising from Meetings

The Chairperson handed over to Mrs Anderson for an update.  Mrs Anderson highlighted the action points that had been completed since the last update.  She advised that the Eversheds contract is now compliant; this was an action point from the GDPR action list.  Mrs Anderson advised that the Risk Register had been updated to reflect the appointment of the Observers to the Trustee Board, as risk mitigation.  Other action points are still in progress.

4. DISCUSSION ON ETHICAL INVESTMENTS

The Chairperson reminded everyone that this had been discussed at the last meeting, where it had been agreed that further information needed to be considered before making a decision.  Mrs Anderson had been asked to find out what other comparable pension schemes had done.  He explained that a questionnaire had been issued and responses had been received from two organisations, which had been included in the meeting packs.

The Chairperson said that it had also been agreed that Mr Humpherson would have further conversations with Alec Spooner regarding M&G’s ‘ethical’ fund offerings and provide information on a low carbon alternative index.  The Chairperson invited Mr Humpherson to give an overview on M&G’s Fund offerings.  Mr Humpherson delivered a presentation on the M&G Positive Impact Fund, the M&G Sustainable Multi Asset Fund, and the MSCI World Low Carbon Target Index.

Mr Humpherson facilitated a discussion on investing in ‘ethical’ or ‘green’ funds.

The Trustees discussed the costs and financial risk of moving to either of these funds at the current time, as both funds are new and small.  The Trustees noted that M&G are active managers and these funds are actively managed.  M&G have no passive ‘ethical’ fund offering.  It was suggested that the Trustees might look for an offering by a different investment provider in the passive market; however, this would require a procurement exercise.  

Mrs Anderson reminded the Trustees that the contract with M&G expires in November 2020 and they will be starting the process of tendering for a new investment manager in the autumn of this year.

Mr Humpherson suggested that if the Trustees are minded to invest some of the fund in a low carbon fund, they spend some time considering and revising the investment strategy.  Once the review of investment strategy is completed, Investment Managers can be invited to tender on the basis of the revised strategy.

The Trustees agreed this as a sensible approach.  The current asset allocation will remain unchanged for now, and over the next 6 – 9 months, the investment strategy will be reviewed to include exposure to a low carbon fund.  The procurement exercise for a new investment manager will run in due course, on the basis of the new investment strategy.

Action required:

• Mr Agnew to be informed of the decision taken by the Trustees regarding ethical investment (Pensions Team).
• Investment Strategy to be reviewed (Trustees).

Mr Humpherson left the meeting at 10:54am.

Mr Allen joined the meeting at 10:55am.

The Chairperson welcomed Mr Allen to the meeting.

5. GAD REVIEW OF INVESTMENT PERFORMANCE

The Chairperson asked for any comments on the quarterly investment review for the period ending 31 March 2019.  The Trustees noted the areas of performance below the benchmark and will review again at the next meeting.

6. GDPR ACTION PLAN

The Chairperson advised that there is one item outstanding on the GDPR Action Plan, and it relates to the Administration Agreement between the Trustees and the Assembly Commission to cover the services provided by the Pensions Team and Finance Office.  This was discussed previously at the 29 January 2019 meeting.

The Chairperson explained that there were two outstanding issues: Payment for rectification, and data retention.

Payment for Rectification

The Chairperson reminded everyone that this is whether the Assembly Commission or the Trustees would meet the cost of rectifying any security breaches.  Mrs Anderson explained the background to this issue and the position in practice.  Following discussion, the Trustees have accepted the suggested amendments made by the Commission legal team to clauses11.4.8 and 11.4.9, which means that the agreement stays silent on this point.

The Trustees also noted that the Assembly Commission will not renegotiate the liability cap at this time as this does not fall under the scope of revisions to ensure GDPR compliance. 

The Chairperson invited Mr Allen to contribute to the discussion, from a risk perspective.

Data Retention

The Trustees accepted that the Commissions Legal Advisers will not agree to the words ‘use reasonable endeavours’ in clause 8.2 being removed.   

The Trustees agreed to accept the amended agreement as negotiated by Eversheds and Assembly Legal Services, but would like the opportunity to review the agreement in the future.

Action required:

• Revised Administration Agreement to be signed by Trustees and Assembly Commission (Pensions Team).

7. NORTHERN IRELAND AUDIT OFFICE

The Chairperson explained that it is almost time for the annual audit of the pension scheme annual accounts for the 2018-19 financial year.  The Chairperson advised that Mrs Anderson and the Finance Office have agreed the timescales.  The Chairperson handed over to Mr Allen.

Mr Allen talked through the key elements of the NIAO Audit Strategy 2018/19.  He explained that they had not identified any significant risk factors; and that two levels of materiality had been set for the Fund Account and the Net Assets Account.  Mr Allen also talked through the Audit Approach, and highlighted the Audit Office’s independence, the management of personal data, use of management experts, and the Internal Audit team’s work.  He drew the Trustees attention to the timetable detailed in the Audit Strategy.

Mr Wells raised a query as to whether the audit report should be shared with SARC (Secretariat Audit and Risk Committee).  Following discussion, it was agreed that the Trustees would issue a copy of the report to SARC.

Action required:

• A copy of the NIAO audit report to be sent to SARC upon completion (Pensions Team).

Mr Allen provided a brief update on the McCloud judgement and the implication for the Scheme Report and Accounts.  Mrs Anderson advised that further information on the judgement and its implications would be provided for the next meeting.

Action required:

• Paper on McCloud judgement to be provided for September meeting (Pensions Team).

8. ANY OTHER BUSINESS

Pensioner Update

The Trustees were saddened to hear of the death of two former Members, Mr Wilson Clyde and Mr Seamus Close and expressed their condolences to the families.  The Trustees noted that letters of condolence had been issued and approved dependents pensions.

9. DATE OF NEXT MEETING

The date of the next meeting to be arranged for Tuesday 24 September 2019 @ 11:00am.

The Chairperson thanked everyone for attending the meeting today.

The Trustee meeting ended at 11:45am