Meeting of the Pension Trustees held on 16 September 2008
Mr D McClarty
Mr Jim Wells
Mr T Lunn
Mrs M O’Neill
Mr J Dallat
In the Chair: Mr D McClarty
Mr A Spooner (M&G Investments) (Item 4),
Mr E Hobson (NIA),
Mrs L Anderson (NIA), and
Mr H Clarke (NIA)
1. MINUTES OF PREVIOUS TRUSTEES MEETINGS
The Chairman welcomed everyone to the meeting. The minutes of the trustees meeting held on 15 April 08 were agreed.
2. MATTERS ARISING
Administrative Support to the Trustees
Mr Hobson provided a brief outline of the issues surrounding the ongoing provision of administrative support to the Trustees. Currently administrative support is provided informally by employees of the Assembly Commission, based in the Personnel Office. The Trustees were informed that the Assembly’s Head of Legal Services in conjunction with the Interim Clerk to the Assembly had advised that a full review of the administration services should be undertaken.
The Trustees agreed that it would be a matter of good practice to have in place a more formal arrangement between the Assembly Commission and the Trustees on the provision of administrative support. It was agreed that a full review of the pension administration should be carried out as a matter of urgency.
It was agreed that the pension’s administration team would initiate the review and that the Trustees would further consider the administration arrangements once the review was completed and recommendations brought forward.
- Pensions Administration section to initiate a review of the pension administration services
Scheme Rules Update
Mr McClarty reminded the Trustees of the agreed changes to the Scheme Rules. Following the last Trustee meeting on 15 April 2008 a paper was submitted to the Assembly Commission with the proposed amendments to the pension scheme recommended by the Trustees.
At plenary on 30 th June 2008, the Assembly resolved to confer upon the Assembly Commission the power to amend the pension scheme. At their meeting on 1 July the Commission agreed to accept in full the Trustees recommendations and instructed that the amended Scheme be referred to as the Assembly Members Pension Scheme (NI) 2008, effective from 1 July 2008.
The Pensions Administration Section issued the revised Scheme rules along with the Q&A brief to all Scheme Members and wrote individually to all members affected by the changes.
3. SCHEME RULES AMENDMENTS INCLUDING OPTIONAL CHANGES
The Trustees considered the optional changes to the Scheme Rules which included both the removal of the favourable early retirement ‘Rule of 80’ and the option of increasing the scheme accrual rate to 1/40 th. Mrs Anderson provided the background to the proposed optional changes.
The ‘Rule of 80’ provision is considered to be in breach of the Employment Equality (Age) Regulations 2006 Amendment Regulations and has been removed from most public sector schemes. After consideration of the paper provided by the Government Actuary’s Department (GAD) on 19 February 2008 the Trustees agreed to remove the ‘Rule of 80’ provision for new members with effect from the date of the next election and to retain the provision without amendment for the existing membership of the scheme.
Mrs Anderson provided background information regarding the option to increase the accrual rate to 1/40 th. Currently members of the AMPS accrue pension benefits at 1/50 th of their final salary for each year of service. The Trustees considered increasing the accrual rate from 1/50 th to 1/40 th allowing members to accrue pension benefits more quickly. The cost of increasing the accrual rate would be borne by the Member, the consequences being that the employee pension contributions would increase from 6% to 11% of salary. Employer contributions would remain unchanged. The Trustees discussed the issues regarding the implementation of the proposed change and Mr Wells enquired about the potential costs to the scheme if the increased accrual rate was agreed.
It was agreed that the pension’s administration section would contact GAD asking them to provide an estimate of potential costs. If the response from GAD confirmed that the increased accrual would be cost neutral i.e. the increased contribution from members would pay for the increased accrual rate, then the proposed change may be agreed as of 6 April 2009, following further discussion and consideration at the next Trustees meeting.
While it was agreed that new Members should default to a 1/40 th accrual rate on joining the Scheme, the Trustees requested that legal and actuarial advice be sought regarding the implementation of the change for existing Members.
- Legal and actuarial advice to be sought regarding the implementation of the changes for existing Scheme Members
- Submission to the Commission regarding the suggested amendments to be drafted for consideration at the next Trustee meeting
- Pensions Administration team to request drafting instructions for Scheme rule amendments
4. AMPS ANNUAL REPORT AND ACCOUNTS
A copy of the AMPS Annual Report and Account for 2007 – 2008 was issued for consideration prior to the meeting. The Northern Ireland Audit Office (NIAO) have completed their annual audit of the pension scheme, and issued their report, a copy of which was included for the Trustees consideration. The Trustees agreed the content of the Annual Report and Accounts and signed final copies for issue to the Audit Office.
- Pensions Administration team to issue final copies of the Annual Report and Accounts to the NIAO by Friday 19 September 2008
5. INVESTMENT MANAGER REPORT
A copy of the M&G 2 nd quarter report, covering the period 1 April to 30 June 2008 was issued prior to the meeting along with a one page summary of the investment performance of the Fund. Mr McClarty welcomed Mr Spooner from M&G Investments.
Mr Spooner provided the Trustees with a brief update on the current investment climate, stating that this is likely to be a difficult time for actively managed funds, however he believes that M&G have adequate buffers in place to compensate investors.
It was noted that M&G had out-performed the benchmark for the first quarter although the fund was still down -0.6% to 30 June 2008. Mr Spooner anticipates that the markets will recover, in time. The report for the period ending 30 September 08 will be available mid November.
- It was agreed that Mr Spooner would attend a Pension Trustees meeting towards the end of the financial year, providing an update
6. DATE OF NEXT MEETING