Minutes of Proceedings

Meeting of the NIAMPS Trustee Board held in Room 135 on Wednesday 22 January 2025 at 9:45am

Present:

• Dr S Aiken OBE (Chair)
• Mr T Clarke (via conference call)
• Mr S Dickson
• Ms C Ferguson (via conference call)

In attendance: Ms S Murphy (NIA), Mr G Browne (NIA), Mrs P McClintock (NIA), Mr N Burns (Scheme Secretary), Mr M Pekacar, Ms L Brunton, Mr C Ward and Ms E Grace (GAD), Ms C Davis (Eversheds for item 3.5)

1. STANDARD BUSINESS

1.1 Apologies

Mr M Durkan

1.2 Conflicts of interest

There were no conflicts of interest.

1.3 Minutes of the Meeting on 2 October 2024

Approved.

1.4 Matters Arising

None.

2. CONSENT ITEMS

2.1 None.

3. KEY REPORTS FOR DISCUSSION

3.1 Actuarial

3.1.1 – Valuation Training

Ms Brunton provided the Trustees with a refresh of the valuation training delivered at the meeting in March 2023.

3.1.2 – 2023 Actuarial Valuation – initial results

Mr Pekacar presented the Trustees with details of the valuation, noting that the indicative results illustrated that the Scheme had a £2.1m surplus as at 31 March 2023 (£3m deficit at 31 March 2020). Mr Pekacar confirmed that the Scheme’s assets increased in value by more than expected. They also expect the assets to generate a higher return in future compared with the 2020 assumptions, which increases the discount rate, placing a lower value on the Scheme’s liabilities.

Mr Pekacar added that actual salary increases over the period were lower than assumed, generating a funding gain. These gains were somewhat offset by higher-than-expected inflation and pension increases over the period. Overall, this has resulted in a funding level improvement from 92% to 105%.

Mr Pekacar advised that a further funding estimate at 30 September 2024 had also been completed. This estimate shows a past service surplus of £10m (funding level of 129%). The main reasons for the improvement are, better than expected investment performance over the period (+£1.6M) and an increase in expected future real asset returns and hence the discount rate used (+£5.9m). Mr Pekacar concluded by outlining the options for the contribution rate and the recommendation of the Scheme Actuary:

• Option 1 – Maintain the current Consolidation Fund rate of 17.1% of pay per annum.
• Option 2 – Set the contribution rate based on the new calculated future service rate as at 31 March 2023, of 14.5% of pay per annum.
• Option 3 – Reduce the contribution rate to account for the £2.1m surplus as at 31 March 2023, resulting in a contribution rate of 11.2% of pay per annum.

Mr Pekacar confirmed that the recommendation is to reduce the Consolidated Fund’s contribution rate to 14.5% of pay per annum, which reflects the calculated cost at the valuation date. Whilst there is a surplus in the Scheme as at 31 March 2023, this maintains some buffer against future volatility and experience.

Agreed: The Trustees discussed each of the options and agreed to proceed with Option 1.

Action: Mr Pekacar to confirm the Trustee decision to the Scheme Actuary and to prepare a further paper for the next Trustee meeting.

3.2 Investment

3.2.1 – Investment Objectives

Mr Ward provided the Trustees with a summary of their current investment objectives and facilitated a discussion on any updates to those objectives.

Mr Ward reminded the Trustees that in September 2023, they had moved all their investments from M&G to Abrdn, choosing funds to broadly maintain the underlying investment strategy that was in place with M&G. Mr Ward further advised that with Abrdn now in place, the Trustees should review their investment strategy.

This process should start with first considering what their objectives are, and what beliefs and constraints they would like to incorporate into that investment strategy. Ms Grace reminded the Trustees of the importance of being a responsible investor and discussed the aims, beliefs, and constraints around ESG.

Ms Grace provided the Trustees with an overview of Abrdn’s ESG credentials in the areas of Research, Integration and Stewardship and tested these with analysis and peer group comparisons.

The Trustees confirmed that they are content with the current investment strategy and noted that they would be cautious to making any changes at this stage.

Agreed: The Trustees agreed that it would be helpful for Abrdn to provide a refresher session on ESG.

Action: Mr Ward agreed to liaise with Abrdn to arrange an ESG session at the next meeting. Mr Ward will also produce a summary document for the next meeting, outlining some of the options available to the Trustees.

3.2.2 – Investment Monitoring

Ms Grace outlined the key themes from the report for the quarter to the end of September 2024.

Ms Grace noted that the Scheme’s assets have grown in value over the quarter, with all the funds posting positive performance, all but the two equity funds (the Equity 50:50 Tracker and Emerging Markets Stock Index funds) outperforming their respective benchmarks.

3.3 Scheme Governance

3.3.1 – Risk Register

Mr Ward presented the updated version of the Risk Register to the Trustees and provided an explanation on the context behind the update.

Agreed: The Trustees agreed that it would be useful to table one section of the register at each Trustee meeting for discussion, along with any areas that may be deemed high risk.

Action: Risk Register to be added as a Standing Item for forthcoming meetings.

3.4 Legal Issues

3.4.1 – Legacy Issues

Ms Murphy provided an update on the legacy issues that had been identified in the Scheme. The issues relate to Reckonable Service, and the calculation of Officeholder Contribution factors in the Final Salary section of the Scheme.

The third issue relates to the Inflationary Increases used to annually revalue the accrued pension benefit for members in the CARE section of the Scheme. Ms Murphy informed the Trustees that work was ongoing with Eversheds, GAD and Isio and that legal advice is currently being finalised in respect of each of the issues.

Action: Ms Murphy to follow up with Eversheds on the legal advice.

3.5 Legal Update

3.5.1 – Guaranteed Minimum Pension (GMP) Equalisation

Ms Davies outlined the background to GMPs 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.

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

The Trustees noted that benefits solely earned within the NIAMPS will not have a GMP element, as the Scheme commenced after the cessation of GMP arrangements. However, there could be GMP components of pension within the Scheme because of benefits having been transferred into NIAMPS from another scheme.

Agreed: The Trustees agreed that cases involving transfers in and transfers out should be reviewed to identify if any contain an element of GMP.

Action: The Secretariat team to review all transfer cases to identify if any contain GMP.

3.5.2 – McCloud

Ms Davies provided the Trustees with a recap of the McCloud and Sargeant cases. She noted that the outcome of these legal challenges was a determination that 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 relevant to Northern Ireland and that they should proceed on the basis that the McCloud judgement would be applied to NIAMPS and the position of those members impacted by it should be addressed.

Action: The Trustees will raise the issue with the Assembly Members Remuneration Board.

3.5.3 – The Brewster case

Ms Davies outlined the facts of the case and noted that this case does affect the Scheme as pensions are payable to “cohabiting partners”, but that a rule amendment would be required.

Agreed: The Trustees agreed that a rule amendment would be required.

Action: The Trustees will raise the issue with the Assembly Members Remuneration Board.

3.6 Administration

3.6.1 – Pensions Dashboards

Mr Burns provided the Trustees with an outline of the fees for Stage 1 of the five stage Dashboards project. This stage includes a Matching readiness report, a Decisions tracker, development of a Project Plan and a call to discuss decisions.

Mr Burns noted that other areas for consideration during the project include Data improvement and automation work, Member communications and support, Connection and administration readiness and Post connection tasks.

Mr Burns reminded the Trustees that their connection date is expected to be 31 October 2025.

Action: Mr Burns to prepare a Project Plan for discussion at the next meeting.

3.6.2 – Annual Benefit Statements

Mr Burns noted that the Secretariate team will commence the process of gathering the data used in the preparation of the 2025 annual benefit statements, in April 2025.

Action: Mr Burns will provide an indicative timetable for the issuing of annual benefit statements at the next Trustee meeting.

3.6.3 – Annual pensioner declaration

Mr Burns noted that there were 9 individuals who had not yet responded to requests for confirmation of details.

Action: The Secretariate team will continue to liaise with individuals to request outstanding information.

Mrs McClintock added, that while following up with the outstanding individuals, they had been made aware of a change in circumstances of one of the dependant pensioners, which, in accordance with the Scheme Rules, may mean that the pension in payment would cease.

Action: Mrs McClintock to obtain more information on this case and check if there have been any similar cases in the past.

4. AOB

4.1 - Annual Report and Accounts

4.1.1 – NIAMPS Final Report to those Charged with Governance (RTTCWG) 22-23

Mrs McClintock informed the Trustees that the RTTCWG was received in 2024 and was reviewed and discussed with the previous Chair of Trustees but was not signed prior to the Chair stepping down from the role.

Agreed: The Trustees agreed to sign the RTTCWG 22-23.

4.1.2 – Letter of Understanding 23-24

Mrs McClintock confirmed that the Northern Ireland Audit Office has issued the Letter of Understanding for 2023 - 2024 setting out the basis upon which the Comptroller and Auditor General audits the financial statements of the NIAMPS.

Agreed: The Trustees reviewed the letter and agreed to sign.

4.1.3 – Annual Report and Accounts 23-24

Mrs McClintock confirmed that the Draft Report to those Charged with Governance (RTTCWG) 23-24 was received on 20 January 2025. Mrs McClintock added that it was an extensive audit and that one point had been raised in the report. Mrs McClintock confirmed that a new process had been implemented to ensure that the issue would not reoccur.

Agreed: The Trustees thanked the Secretariat team for their work on the accounts and agreed to sign the draft RTTCWG 23-24.

4.2 – Draft letter to Assembly Commission

Ms Murphy outlined the contents of the current version of the letter and suggested that, considering the issues discussed at today’s meeting, the Trustees may wish to update this letter before sending it to the Assembly Members Remuneration Board for consideration.

Action: Ms Murphy to ask Eversheds to draft a revised version of the letter.

5. Date of future meetings

The next meeting is scheduled for Wednesday 2nd April 2025 at 2pm.