Minutes of Proceedings

1. STANDARD BUSINESS

1.1 Apologies – none.

1.2 Conflicts of interest – Mr Beggs outlined a conflict in relation to McCloud.

The Trustees agreed that Mr Beggs could remain in the Meeting for discussions on this item but would not take an active part in those discussions or any decisions that were required.

1.3 Minutes of the Meeting on 4 February 2021 – approved.

1.4 Matters arising:

1.4.1    Minutes from previous meetings

Action: Ensure that minutes from previous NIAMPS Trustee Meetings are available on the website (Pensions Office).

1.4.2    Expression of Wishes Form – covered as main agenda item under Brewster.

1.4.3    Tender for Investment Manager Services

Action: To be progressed as quickly as possible (Pensions Office).

1.4.4    Member data validation

This matter is ongoing and staff support is being sought to progress and complete this task.

1.5 Items from the Chair – all covered as main agenda items.

2. CONSENT ITEMS

2.1 Investments Quarterly Performance Review Q4

Mr Jinks advised Trustees that the investment performance had improved during Q4 relative to previous quarters in 2020. Improvements related particularly to equities and long-dated gilt funds. This has continued in the current year, in part based on an expectation of interest rate rises.

He continued that whilst improvements had been made, the M&G performance against benchmarks was still largely negative. This was most marked on the Emerging Markets Fund, although it was noted that the Scheme had only a small exposure to this fund.

Mr Jinks clarified that there were positive returns for all funds, and that the negative performance only related to performance against benchmark measures. This would indicate that, in some cases, the asset managers performance was not as good as that of its peer group.

2.2  Mr Gordon Dunne MLA - Approval of Serious Ill Health Retirement

The Chair noted that a special meeting of the NIAMPS Trustee Board had taken place on 11 June 2021, and that the Trustees had approved Mr Dunne’s application for serious ill-health retirement. Actions had been taken to arrange payment of Mr Dunne’s pension entitlement.

3. PRESENTATIONS FROM EXTERNAL PARTIES  

3.1 Guaranteed Minimum Pension (GMP) Equalisation

Ms Davies outlined the background to GMP’s as a component of pension benefits for members in contracted-out schemes in the period April 1978 – April 1997. The issue of GMP inequality arose due to different regulations based on gender – for example: GMP payment age (men 65, women 60); different revaluation and increase rates on GMP; different revaluation and increase rates on the excess over GMP.

The decision arising from the Lloyds Bank case determined that pension trustees have a duty to equalise benefits for men and women, potentially going back as far May 1990.

Ms Davies continued that there are differences between the required treatment in private sector and public sector schemes, specifically that Westminster Government believe that full indexation of pension benefits, as provided by public sector schemes, effectively equalises pensions for the effect of GMPs. However, this would not necessarily apply to benefits transferred-in to a public sector scheme from a non-public sector scheme.

The Trustees noted that benefits solely earned within NIAMPS will not have a GMP element, as the Scheme commenced after the cessation of GMP arrangements. However, there could be a GMP issue were benefits had been transferred-in to NIAMPS from another scheme, or transferred-out of NIAMPS to another scheme.

Action: The Trustees agreed that Deloitte should proceed to investigate the extent of the issue for NIAMPS. Specifically, to determine the number of cases of transfers which contain a GMP component. Once this was determined, Deloitte and Eversheds would discuss requirements and provide the Trustees with a fee quote for resolution of the issue.

3.2 McCloud

Ms Davies provided Trustees with a recap of the McCloud and Sergeant cases. She noted that the outcome of these legal challenges was a determination that benefit changes and, in particular the provisional arrangements related to the benefit changes, represented age discrimination.

She continued that NIAMPS has similar arrangements to those of the Judges pension scheme and Firefighters pension scheme although rulings from the Court of Appeal in England and Wales are not directly binding in Northern Ireland.

Agreed: The Trustees agreed that the judgement was also relevant to Northern Ireland, and they would not wish to see discrimination being perpetuated and that equity of treatment was important. The Trustees agreed that they should proceed on the basis that the McCloud judgement would be applied to AMPS and the position of those members effected by it should be addressed.

Ms Davies advised that this was consistent with the approach taken by other devolved Government pension schemes.

Noted: This important matter required consideration and action by the Independent Financial Review Panel (IFRP) before members benefits could be rectified. It was crucial that the Panel was back operating as quickly as possible.

Action: The Trustees would write to the Commission to highlight the need for the IFRP to be promptly re-established in order to address a number of pension issues (including age discrimination). Ms Davies would support Trustees in drafting a letter to the Commission by highlighting legal concerns and the importance of timely resolution. 

4. KEY REPORTS FOR DISCUSSION

4.1 Actuarial Valuation as at 31 March 2020

Ms Bell presented the Trustees with details of the valuation, noting that the indicative results illustrated that NIAMPS had a £3m deficit as at 31 March 2020 (£4m surplus at 31 March 2017), although the Standard Contribution Rate (SCR) had decreased to 17.1% (2017: 17.7%) as all members were now accruing CARE benefits from 1 May 2021.

However, Ms Bell continued that 31 March 2020 was not a good date to undertake the Valuation due to the impact of the Covid-19 pandemic on financial markets. Accordingly, it was reasonable to take account of post-valuation experience, and updating the valuation position at 31 March 2021 resulted in an improvement of some 25% in asset values and returned the Scheme to a surplus position. She noted that 31 March 2021 was also just a snapshot (like 31 March 2020) and financial uncertainty could have an impact on the future valuation of the fund.

Ms Bell added that an allowance had been included in the valuation for the impact of McCloud, and this was estimated based on returning all eligible members to a final salary arrangement for the period April 2016 - May 2021.

GAD had worked with the Assembly Pensions Office to obtain the required data for the Valuation, and although some queries remained outstanding the data was deemed to be sufficient to complete the valuation.

Ms Bell concluded by outlining that following the 2017 Valuation there had been a surplus share and as a result contribution rates were reduced. Based on the position at 31 March 2020 is looked likely that an increase in contribution rates would have been required in order to address the funding deficit over, say, a 15 year period. However, it is reasonable to take account of post-valuation experience, and on the basis of updated information at 31 March 2021 the future contribution rate can continue in line with the consolidated fund share (17.1%) with no allowance for deficit.

Agreed: The Trustees agreed that they were content with the proposed valuation methodology and assumptions used by GAD. They further agreed with the proposed approach to recognising the impact of McCloud and confirmed that they were not aware of any other relevant issues that GAD needed to take account of. The Trustees agreed that they were happy to approve the GAD valuation and the 17.1% contribution rate, subject to confirmation from GAD that the final position to be signed off is unchanged.

4.2 Brewster Judgement

The Chair noted that a significant level of membership had not submitted an Expression of Wishes Form – representing a serious gap in some member records.

It was noted that whilst an Expression of Wishes Form addresses the position in respect of discretionary lump sums, it does not directly relate to the payment of a monthly retirement income following the death of a pensioner member – this is the within the scope of Brewster.

Ms Davies outlined that to remove ambiguity relating to a spouses / partners pension in the NIAMPS would require a small and straightforward rule amendment. However, as noted during the discussion of McCloud, rule amendments are not within the remit of the Trustees, rather they are the responsibility of the Independent Financial Review Panel (IFRP).

Action: The issue and possible consequences arising due to the absence of a NIAMPS rule change relating to Brewster would be added to the letter to the Commission, adding further weight to the need for the re-establishment of the IFRP. (Pensions Office/Eversheds)  

Action: All members would be sent an Expression of Wishes Form, along with a reminder of the importance of regularly updating this information. (Pension Office)

4.3 Non-statutory transfers

The Trustees considered the details of a request for a transfer value from a member whose situation did not entitle the member to a statutory transfer. Comments from Eversheds, Deloitte and GAD were provided to Trustees outlining relevant experience of similar circumstances.

Agreed: that a transfer value would be provided to the member on the same basis as a statutory transfer request, including a 3 month guarantee on the calculated value.

Action: The transfer value would be calculated and issued to the member as soon as possible. The transfer documentation would be amended to refer to this being a non-statutory transfer.

5. OTHER ITEMS

5.1  Ill Health Retirements

The Chair noted that a number of possible ill health retirements remained a possibility, however, there was nothing further to discuss at this stage.

The Trustees noted that the actions taken to expedite consideration of the serious ill-health retirement that had been discussed earlier in the meeting had worked effectively, and that the same process could be used to consider cases between meetings if required.

6. ANY OTHER BUSINESS

None.

7. DATE OF FUTURE MEETINGS

The Chair reminded Trustees of the dates of forthcoming meetings (23 September 2021 and 16 December 2021), and thanked all Trustees for their attendance and participation at today’s meeting.