D Hampton, Pensions Office; R Mills, Pensioner; P Wharton, Marconi Selenia,
Peter Dronfield noted that as from the 1 April 2005, The Grange Marconi Social Club, which had been used regularly for the PCC meetings, was no longer Marconi owned, and its availability for future meetings was uncertain. There followed a number of views from the PCC reps on where future meetings might be held, such as Marconi Company facilities at Coventry, or on occasions at Liverpool or Beeston. Sergio said he would check out the Coventry facilities for future meetings.
Apologies had been received from Graham Allen for the agenda item on reviewing the 2003/4 accounts being cancelled. Peter Dronfield said that this supported the view of some of the PCC reps that the PCC was becoming marginalised. Vic Webster proposed that Peter Dronfield, as Chairman of the PCC, should write to Peter Harris saying that he thought it inappropriate to have removed this item from the agenda. Vic was unhappy with the justification which was that as the 2004/5 accounts could be reviewed at the July meeting, it was not worthwhile reviewing the accounts for 2003/4 at the April meeting. Based on past form, this did not appear to be a realistic target. The PCC members endorsed these views.
Mick asked if we had given Graham enough notice of the agenda item, however it was pointed out that it was in the minutes of the last meeting in January (Secretary’s note – from which meeting the Report and Accounts agenda item had been previously deferred).
These were agreed. Peter Harris was reported as having confirmed that PCC Minutes are included with Board papers which are circulated to Directors for their review in advance of Board meetings.
Ian Wood asked for a check on the web site addresses given in para 9. (Secretary’s note – the minutes should be corrected to say http://www.thepensionservice.gov.uk and http://www.dwp.gov.uk/).
Also in para 9, Jackie Foulkes said that official State Pension information (as obtained from the DWP - Department for Work and Pensions) would be included with the pensions statements for active members but not deferred members. This data will be automatically included, unless people have requested it be excluded. Vic queried why the deferreds were omitted?
Peter Dronfield asked if Marconi Pensions Office (MPO) would be giving SERPS and S2P training to the PCC? Jackie said that MPO would arrange this at some point in the future.
Steve Radford noted that ‘Pensions Surgeries’ had now been started at Liverpool and Chorley, providing support to existing members. These were on a one to one basis. Presentations had also been held at the Chorley site which were specific to their current circumstances. Arrangements for Beeston were still to be discussed.
With regard to the Pension Protection Fund (para 6) it was noted that the initial levies for all pension plans in the first year would be £15 per active and pensioner member, and £5 per deferred member. This would amount to around £950k for the Marconi Plan.
Also in para 6, Sean Leahy asked about the status of a forthcoming newsletter. Jackie said that it was going to the printers the following week, and would cover general matters including credited interest rates and the pension increase. With reference to the Disability Discrimination Act, individuals affected would be written to separately.
An email from Roger Whitt (deferred pensioner with Alstom) to Dawn Hampton (MPO) had asked when the effects of the changes from the Pensions Bill would be declared for the Marconi scheme. Jackie Foulkes said that an internal admin group was working on this and raising matters which needed further action, with the aim to have some answers by September. A newsletter after that would cover the subject.
An email from David Hopper (a former PCC rep) to Ken Buckley had noted that the new Pensions Bill now capped the legal requirement on annual RPI increases at 2.5%, whereas it was previously 5%. He had asked if this would affect this year’s increase, as inflation was running at over 3%. Ken had replied by noting that this had been discussed in the 31/3/2004 meeting (section 4) where it was minuted that the lower cap only applied to pensionable service accrued from April 2005. This minute was now further qualified by pointing out that our Plan still has a 5% cap, but if were to be in financial difficulties at some time in the future, then it had the scope to amend the rules to reduce the cap to 2.5%.
This was presented by John Leaney. He emphasised that his report was based on his own notes, rather than official minutes which have not been available before recent PCC meetings. The Board meeting being reported had been a lengthy one, with Credited Interest being the main subject discussed. A summary of the points covered is as follows:-
Credited Interest (C I) will be at 2.5%, i.e. the guaranteed minimum. No part of the terminal bonus previously declared will be consolidated. The Trustee has requested that Marconi approve the augmentation of benefits so that the total credited interest payable in the year commencing 6 April 2005 shall not be less than the total bonuses payable at 5 April 2005 (ignoring the effects of post 6 April 2005 contributions and credited interest thereon. (Post meeting note: Marconi has agreed this.)A lengthy debate then ensued at the Board Meeting, concerning the practice of declaring a single percentage of C I for both the Plan and Selected Benefit Scheme (SBS) as has been the case since the outset of the Plan . A decision was made that future declarations of Credited Interest may differ for the Plan and SBS contributions.
The subject of splitting Credited Interest (C I) rates created much discussion at the PCC meeting, with views for and against.
Mick Elliott said that at the Board Meeting, he had voted against future C I rises using different figures for SBS and Plan Basis 3 pensions. He couldn’t accept that if Basis 3, because of its association with deferreds, was supposedly the strain in the past, then after trying to get this quantified, without success for years, it was now being suggested that SBS was the strain. The Trustee had in the past been told that it was advisable to have one rate for C I, but are now being told that two rates could be declared, and as it is the SBS which is causing a strain on the fund, then the Basis 3 rate should be higher. This was a complete reversal of advise given in the past.
Vic disagreed. He thought the strain would be if the return on the fund was less than 2.5%. If people were encouraged to stay in SBS, then there would be a strain if we had low investment returns. Basis 3 had been effectively killed off by previous changes and more and more people will now retire on a Basis 1 pension. Basis 1 is advantageous to higher paid people rather than lower paid ones who would be subsidising the former. The lower paid get less return per pound paid in than the higher paid. Basis 2 had already been devalued by reducing the Early Retirement Factors.
Vic asked if C I were to be increased for the SBS, could people who had taken all of their money out of SBS be allowed to bring it back, on the grounds that they had been misled. He had been told under no circumstances would this be allowed, so he questioned whether it was morally right to split the C I rates.
Andy Barker thought that arguably two rates was right, but he thought the Basis 3 rate should be higher, as the Deferreds can’t do anything about their position, whilst if someone is in the SBS they can do something about it – transferring somewhere else.
Pat still didn’t believe SBS to be a strain, whereas he thought Basis 3 was.
Steve Radford was curious to know what people thought about the SBS/AVC set up. The general opinion was that people were confused and were not sure that it had delivered what it should have or that it beneficial to both members and the Plan.
John Leaney terminated this discussion by saying that the sentiment from the Board is that SBS and Basis 3 Credited Interest are to stand on their own individually.
With reference to Early Retirement Factors relating to Ill Health retirements, Jackie Foulkes said that the next PCC meeting would be given a presentation on the effects of the related change.
John noted that the Investment Committee has future meetings scheduled for 22 April and 9 June 2005, with a Board Meeting on the 21 June.
Sergio referred to a page he had found on the Marconi web site entitled ‘Interim Results FY05 Investor Meetings’. It showed a pension deficit of £241million as at 30/9/04, which concerned him. It was thought that this was an FRS 17 figure, which is a snapshot in time. Pat Moloney reminded us that the Triennial Actuarial Valuation is now due to take place, with a target of September 2005 for completion. This would quantify any deficit or otherwise in the Plan. He also noted that the stock market has improved since last year. Mick added that a recent pensions funds review had shown our Plan to be one of the healthiest around.
Graham Band raised the issue of an individual who was a victim of pensions mis-selling by the Prudential and was having difficulty getting his case resolved. Jackie advised that the Prudential should be contacting Marconi Pensions Office for information to help them in arriving at a compensation value, and the Prudential should be doing this as a matter of course. The Pensions Office charge the Insurance Company for this additional work.
Chris Walton was told that the fund investments were now spread at 29.6% equities, 63.7% bonds, 4.9% property and 1.8% cash and other. He asked if there was any plan to increase the equities? Pat said the company was looking at the balance, but were much more risk averse than at one time. Vic added that the higher the investment risk, the higher the Pension Protection Fund levy. Chris said that in the past, it has been said that if there is not enough in equities, then we cannot recover from lows in the longer term. Mick thought that as it is now a very mature Plan, the risk must be reduced. Pat noted that lots of pensioners in the Plan are aged 55 or under, with long life expectancies from an actuarial point of view.
This was planned for Wednesday 6 July 2005 assuming Graham Allen is available for the Report and Accounts (Jackie Foulkes to check).
Secretary note. Although it was stated at the meeting that it would be at the Grange, Sergio has now booked the following
Stoneleigh Conference Room 1 (The Board Room)
Stoneleigh House, 1st Floor, New Century Park, Coventry, CV3 1HJ.
As well as the usual agenda items, the next meeting should cover:
Ken Buckley - 26/4/2005
This page was modified on 31 October 2006 at 12:51:14and has had 852 hits since 19 July 2005
For technical issues please contact the webmaster © 2006 telent Pensions Office