Summary Annual Report - Queen's University Belfast

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Nov 18, 2013 (3 years and 10 months ago)

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THE

RETIREMENT

BENEFITS

PLAN

OF

QUEEN'S

UNIVERSITY

BELFAST


S
UMMARY

T
RUSTEES
'

R
EPORT

F
OR
T
HE
Y
EAR
E
NDED
31

JULY

2010







1.

I
NTRODUCTION


The Trustees are pleased to present their
short Annual Report and Accounts which
summarises the most recently available
audited accounts for the Plan covering

the
year ending on 31 July 20
10
. It also
provides an update on recent events
concerning the Plan
.


2.

T
HE
P
LAN



The Plan was established in 1958. The
assets of the Plan are held in trust on
behalf of the members by the Trustees and
are completely separate from the
University.


The Actuary carries out a valuation every
three years to help ensure t
hat a suitable
level of contributions is paid to the Plan to
fund the level of accrued benefits and
provide for future benefit entitlement.



3.

T
HE
T
RUSTEES


The Trustees of the Plan are:


(a)

University Appointed Trustees




Mr RD Kells



Mr WN Bennett



Mr E Cartin



Mr FDB Young


(b)

Member Nominated Trustees


Mr G McCartney


(retired 31 October 2009)




Mrs S Gunn




Mrs E Moore




(appointed 25 March 2010)



(c)
Pensioner Trustee


M
r B McKnight




4.

M
EMBERSHIP

D
ATA




Members currently

employed

894

Pensioners

830

Ex
-
employees who have

retained rights in the Plan


918

Total

264
2



5.

S
CHEME
A
DVISERS


The advisers to the Plan are:


Scheme Actuary:

Paul McCarron, Mercer

Consultants:

Mercer

Auditors:

PricewaterhouseCoopers
LLP

Investment
Managers:

BlackRock

and Aberdeen
Asset Management



6.

F
INANCIAL

R
EVIEW


(i)

Investment Review


The Plan's assets, which are used to
fund pension entitlements, are held
and managed entirely separately from
the University. The Trustees have
delegated management of the assets
to
BlackRock

and Aberdeen Asset
Management (AAM).


(ii)

Fund Value


An extract of

the audited accounts
shown on the next page illustrates
how the Plan's assets have
ris
en from
£
8
6.9M as at 31 July 2009

to £
100.2
M
on the same date in 20
10
.





7.

I
NCOME

A
ND
E
XPENDITURE
A
CCOUNT
F
OR
T
HE
Y
EAR
T
O
31

J
ULY
20
10




£m


INCOME




Contributions


5.
87


Individual transfers in


0.
21


Claims for term insurance


0.
13


Total Income


6.21






EXPENDITURE




Benefits Paid


5.17


Payments for leavers


0.
14


Administrative Costs


0.
31


Total Expenditure


5.62






Excess of Income over Expenditure


0.
59


Plus
: Value of Fun
d at Start of Year (31 July 2009
)


8
6.97


Plus
: Inc
rease in Investments


12.71


Fund Va
lue at End of Year (31 July 20
10
)


100.27



8.

F
UNDING

P
OSITION

U
PDATE


Information on the assets alone cannot provide a meaningful picture of the funding position
without a measure of the liabilities of the scheme.
In order to examine the long
-
term financial
position of the Plan and to assess its ability to meet its liabilit
ies for benefits to be paid in the
future, full actuarial valuations are carried out at intervals of not more than three years. In the
intervening years the Actuary reviews the position of the Plan and provides funding
update
s

for
the University. The upd
ates for the University are based on different assumptions than those
used
by the Trustees in the 2008 valuation (the March 2008

Trustee valuatio
n revealed a deficit of
£26.1
M) and indicate whilst there
was some improvement during 2007/8

market conditions
since
have been extremely difficult.


T
he
chart below illustrates

that, as at 31 July 20
10
, the
Plan showed a deficit of £
27.8
M

compared
to a deficit of £
36.1
M

in the prior year.

The

improvement

in the
position compared to the previous
year is largely
due to




A
n increase of £12.7M in the market value of assets



Decreases

in
liabilities following the replacement of the Retail Price Index assumption with
a Consumer Price Index assumption for pension increases in payment and deferment.






The University and Trustees agreed, as part of the valuation process, that the
standard

employer
contribution rate of 28% of pensionable contributions, incorporating member
contributions

of 9%
under the Pensions+ arrangements, would continue. In addition,

a further £823k per annum is
payable by the University from 1 March 2009 to 28 February 2019

(subject to review after the
2011 valuation)
.


9.


I
NVESTMENT

P
OLICY


(i)

Assets

of the Fund as
at 31 July 20
10



£m


Equities: UK

36.1



Overseas

27.1


Fixed Interest: UK/Overseas

20.1


Index Linked

11.2


Property

1.
4


Asset Allocation

1.
9


Cash

3.
5


Total

101.3


Plus



Net Current Liabilities

(1.2
)


AVCs

0.
2


Total

100.3





(ii)

Asset

Distribution as at 31 July 2010




(iii)


Investment Managers


The Trustees have employed

BlackRock

and Aberdeen Asset Manage
ment (AAM) as fund
managers.
BlackRock

manage approximately 97% of the holdings of the Plan since January
2006. They run a consensus fund with the same asset allocation as the average pension fund.
The remainder of the portfolio, which primarily consists of property, is held by AAM.


The Trustees receive quarterly updates from the fund managers and closely monitor the returns
achieved.


During the past year

global equity markets have performed strongly but remain

extremely
volatile. Ho
wever, the Trustees have received good reassurance from the University of the
covenant of the employer which enables the Trustees to continue with the management of the
Plan under the existing arrangements.

35.70%

26.80%

19.90%

11.00%

1.40%

1.80%

3.40%

UK Equities
Overseas
Equities
fixed Interest
Index Linked
Property
Asset Allocation
Cash

10.

THE GOVERNMENT’S PEN
SIONS REFORM


Government
pension reform affects the way in
which the Plan’s actuarial valuations are
carried out. Currently, every three years, the
Scheme Actuary carries out a formal actuarial
valuation of the Plan’s assets and liabilities.
The valuatio
n for

the Plan as at 31 March 2008
was completed in early 2009.


New rules applied

to the Ma
rch 2008 actuarial
valuation which

involve
d

the Trustees and
University working closely to agree the
strategy for funding the Plan going forward.


U
nder the new
rules

the Trustees will now

issue an annual funding statement to all
members detailing specific information
regarding the Plan’s funding status.



1
1.

PENSIONS
+


On 1 April 2008 the University implemented
Pensions+. The new arrangements have no
effect on
the Plan’s funding or on benefits
payable to members but provide national
insurance savings to both the University and
members.



12
.

ACTUARIAL MATTERS


In June 2010 the Government announced a
change in the statutory revaluation. From
2011 onward the Reta
il Price Index (RPI)
would be replaced with the Consumer Price
Index (CPI) for pension increases for pensions
in payment and deferred benefits. The
Trustees
agreed that, as the rules of the Plan
stated that Statutory Increases were to be
applied, provided

that

CPI increases
were
ratified by

the University, the new measure
would apply in respect of any increases from
April 2011 onwards
.


Deferred members who leave the Plan have
normal revaluation applied up to age 60 for
service to 31 July 2002, if their be
nefits are
paid after
age
60 a late retirement factor is
applied in respect of service up to 2002. In
June 2010 the Trustees approved, given the
then
deficit position and low interest rates, a
reduction in the late retirement factor from 7%
to 3% with imm
ediate effect.



1
3
.

EARLY RETIREMENT


CHANGE IN LEGISLATION


As a reminder, the Governments’ rules on
early retirement
have changed
. From 6 April
2010 the minimum retirement age
was

increased from 50 to 55. However, if you are
suffering from serious ill
-
health you may still be
able to take your pension at any age.



1
4
.

AVCs


The Trustees have two AVC providers, namely
AEGON (formerly known as
Scottish
Equitable
)

and Prudential. If you would like
further details of increasing your pension
provision please contact the Pensions Office
.



15
.

LUMP

SUM

PAYMENTS


As part of your RBP benefits, if you die in
service and for up to five years after you retire,
there is

a discretionary lump sum payable on
your death. It is important that we know whom
you wish to receive this amount in the event of
your death. Please make sure that you have
completed an Expression of Wish Form and
that it is up to date. This form is av
ailable from
the Pensions Office.



16
.

S
UMMARY
F
UNDING
S
TATEMENT



A copy of the annual summary funding
statement is attached.



17
.


F
URTHER
I
NFORMATION


If you require any further information about the
Plan, or a full version of the Annual Report and
Accounts, you should contact Abigail Beckett,
Pensions Office.