telent Pensions
The website for members of the GEC 1972 Plan
telent Pensions
The website for members of the GEC 1972 Plan
Catherine Quinn from telent pensions investments and Anne–Marie Taylor from Xafinity Paymaster were welcomed.
These were accepted without comment.
Re para 4 action, correspondence with R Beeston, K Gabler and R Grand. Peter Dronfield apologised as he could no longer find the correspondence. However, it was relating to matters raised concerning PCs involvement with telent, and he believed that they were questions that we as the PCC had already covered. Thus he did not intend to pursue.
An SPT headed letter dated 26/9/2008 concerning the PCC constitution (signed by the MNDs) had been sent to PCC reps. This letter raised further correspondence (initiated by a Peter Olney email) concerning the relationship between SPT, the PCC and MNDs. Peter Harris had emailed a reply dated 2/10/2008.
This was presented by Pat Moloney, as per report below.
There have been two board meetings since the last PCC, on the 2 and 24 September. The Actuarial Valuation is continuing. The board has also considered the PCC constitution and MND election procedure. The Investment Committee has also met several times, both physically and telephonically. The main issues were:
Training
There was a recent board training session covering legal updates, the Pensions Regulator, conflicts of interest and transfer values.
The three MNDs recently attended the Engaged Investor Trustee conference.
John Leaney then added his report on the Admin, Audit and SRC committees.
The committee asked the board to sanction an investigation into the possibility of taking plan and AVC benefits at different times. This is enabled by the ‘Tax Simplification’ legislation.
There had been a short report on Constitution Terms of Reference to consider.
The chair reported on the ongoing discussions with PC re. company covenant.
Action - Pat Moloney to provide a list of current board and committee members
Peter Olney asked if the Actuarial Valuation was yet complete? Pat said that there had been a report, but not a final one, from the actuary. Vic Webster added that the time allowed by tPR for completion had expired. So we are in dialogue with the tPR who are content as progress continues. Peter Olney asked where it was held up? Peter Harris said that the April 2007 valuation was in fact a year early. The Independent Trustees had decided to commission it then because of the PC situation. Peter Harris added that there are complex issues between PC and the trustees which needed resolving for the Plan to go forward. Dave Sawyer asked if this meant the negotiations on the terms of reference for the valuation? Peter Harris said that the completion of the valuation would be one of the end results of reaching agreement on a wider range of issues. Peter Olney wondered why we were still doing a 2007 valuation when we were now well into 2008? It seemed a waste of money.
Concerns raised about Redington and their appointment were:
Peter Harris summarised the reasons for the change and went on to state the intention of appointing Redington and Gavin Hill was to broaden the base of expertise available to the trustee. He believed that the trustee had probably been over reliant on a single source of expertise, Watson Wyatt in the past. Mick Elliott said this seemed to mean that we were now a bigger fish in a smaller pond. Pat agreed.
Vic Webster referred to the change in legislation on how to calculate Transfer Values. Peter Harris said that the aim was to include an article on this in the next newsletter, hopefully by the end of the year.
Mick Elliott referred to the SPT letter of the 26 September from the MNDs, saying that he was unhappy with it. He also asked what was the term of office of CNDs? Pat said that he believed it was at the pleasure of the sponsoring employer. Pat added that we now have a rolling four years term for the independents, noting that the independents are companies and not individual people. Pat also thought that if an MND resigned from the PCC, or was not re-elected, then it seemed unlikely that that person would want to continue as an MND. A debate then ensued involving most of the PCC reps regarding what was the legal position on who had the power to remove such an MND, if he wanted to continue against the wishes of the PCC reps and/or the board. Vic thought that the situation was so unlikely that we should not be over concerned. Peter Harris said that the board was legally responsible for the election process. Pat added that if there was a problem with an MND continuing, then the PCC can make its views known to the board.
At this point, the PCC formally noted its concern at the apparent transfer of discretion from the PCC to the board re. the tenure of MNDs in this situation.
Peter said that so far we had audited figures for the Plan up to the end of August, and unaudited ones for September. He reminded the PCC of the year 2021 target, where we planned to have sufficient funds to invest entirely in low risk assets.
Slide 1- What has happened – simple view
Slide 2
| Issue | Mitigating Actions |
|---|---|
| Do we have enough cash to pay pensions each month? | We aim to hold at least a £50m cash buffer (3 months payments), and currently have £104m. |
| Impact of increasing inflation/decreasing interest rates on Plan funding. | This is what Swaps is designed to mitigate against. At the end of August, the value of the swaps was £382m. We increased our level of hedging to 87% in July. |
| Defaults on corporate bonds (especially banks) |
|
| Selling assets to pay benefits when their value has fallen |
|
| Long term health of Plan | New investment advisor is addressing the risk/return time equation for us, i.e. can we achieve the returns we need with an appropriate level of risk to hit our 2021 target. |
| Falls in the market value of assets we are holding for the long term |
|
Other points made by Peter
The chairman, Peter Dronfield, expressed his thanks on behalf of the PCC to the retiring MNDs, particularly through the last difficult year. He then read out a profile of Roger Pittock (not present), in support of his candidature for the Deferred status MND.
The PCC nominations from each PCC subgroup were as follows:
John Leaney and Vic Webster were thus elected unopposed. Pat Moloney was also elected following a vote of all of the PCC reps present.
The chairman thanked Roger Pittock for his willingness to stand for election as an MND.
Graham noted that the full document is available on the web site www.telentpensions.co.uk. Vic Webster added that the previous nine years reports were also there.
Graham then handed out a series of slides, covering:
Graham made the following observations.
Pat Moloney noted that the telent Report and Accounts is available on their web site
Action - Pat Moloney to supply web site address for the telent R + A
Peter said that the overall aim was to make the web site friendlier. Smaller changes had already been implemented. Other sections are now being progressively updated or added. There was some discussion about the News Updates section. Peter had said that it was intended to keep the last six items on line, but the PCC favoured additionally a minimum of two months.
There was then some discussion about the procedure for handling emails from Plan members addressed to MNDs and/or PCC reps. Vic thought that they should be vetted by Pensions Office before forwarding to MNDs/PCC reps. It was thought that Pensions Office might need to add their own comments first, particularly where there might be future ramifications.
Chris Purchase asked how a constituent got directly to a PCC rep? Answer – through the chairman or secretary who should then forward to PCC reps as appropriate.
Peter Johnson and Dawn are compiling a pensions glossary. Pat Moloney said that he had one of his own so he would forward it to Dawn.
Action Pat Moloney
Peter Johnson said that a who’s who would be compiled of MNDs, PCC chair/secretary, Paymaster, telent pensions office.
Peter Dronfield asked where do we publish the names of the successful MND candidates? Peter Johnson replied on the web site and in the minutes.
Peter Eykelenboom wondered if we needed a FAQs page? Peter Johnson said there were no current plans for one.
Vic Webster asked if the documents list on the PCC web site had been reviewed/updated.
Action Peter Johnson/Peter Harris to check
John Kerr referred back to the Transfer Valuation changes. Peter Harris said that the law had changed on the 1st October. Transfer Valuations were previously set by the actuary. Now they were set by the trustee (on the advice of the actuary!). Overall, we might expect to see increases in the range 18 to 23% depending on the age of the person. As this is still less than the IAS 19 pensions liabilities, and less than the value of the liabilities measured on the trustee’s October 2005 basis, it does not put any further strain on the Plan, as the Escrow keeps the plan in balance on an IAS19 basis. The trustees will review this annually. Typically, there are between one and three transfers per month.
Katy Angliss was congratulated on the recent birth of her daughter.
The next PCC meeting is scheduled for 7 January 2009. The venue will be at telent Warwick.
Ken Buckley
29 October 2008