Issue - meetings

REVIEW OF INVESTMENT STRATEGY:

Before asking the officers to present the report the Chair expressed concern as to how to comply with the legal comments in the report as to how, “act in the best interest of the beneficiaries as a whole” in the absence of any representatives at the Panel meeting from admitted bodies. It was said by the officers that the admitted bodies were present at the Annual General meeting of the Pensions Panel. The adviser to the Trustees advised to take legal opinion on the issue. The Chair drew the attention of officers to the subject.

A representative from Hymans Robertson (Mr Vince McEntegart independent of the scheme actuary) presented the company’s report to the Panel.

Mr McEntegart said that the last time the company had been contracted to provide a review of investment strategy they had produced a 50-page report. This time they had produced a shorter document with supporting information provided. The Chair stated that the supporting documents, as mentioned  in various sections of the reports were not released to members, and as such Panel Members were not aware if any fundamental information had been omitted. The Director of Finance assured the Panel that the key information were incorporated into the tabled reports, however the chair asked the officers that in future he would like to see reports from Hymans Robertson in full. In addition to the report, the representative of Hymans Robertson  tabled a range of graphs, highlighting various points.

The first chart showed the forecast benefit outgoings for current members of the Pension Scheme. This was currently £20m per annum and would rise to a peak of £60m in 2030. After 2030, liabilities to current members of the scheme would start to reduce. However, of course, by that stage new members would have joined the scheme and so the total outflow of benefits would be higher as benefits would have to be paid to new members who had reached retirement age by then.

Combined forecasts for income and outflow were provided to 2023. The income for the scheme would come from 3 sources: standard employer contributions, employer deficit contributions and employee contributions. In April 2005, the actuary set the current rate for employer deficit contributions. Currently the net flow (the difference between the income and outgoing) into the Pension Scheme was positive but, in 2015, it was forecast to become negative if current contribution rates remained the same.

The Panel enquired as to what were the best safeguards the Panel could take so that admitted bodies would not default, because many of them have no tax raising powers of their own.

The Director of Finance advised the Panel that some admitted bodies had bonds to cover the risks.  The Panel asked the D.O.F to let the Panel know in due course what safeguard the Panel could have in the case of admitted bodies, which had no bonds or tax-raising powers. The Chair pointed out that we must have proper safeguards to take account  ...  view the full minutes text for item 5