Eykelenboom (Pensioner), S Requena-Rueda, D A Slack, M Symonds,P Waterhouse.
Peter Dronfield noted that there were still no Coventry reps. Pat said that as the new elections were now so close, we were awaiting elections under the new procedure.
These were accepted without comment.
Nothing raised
The Secretary noted four items
Re. iv, it was noted that this table was produced before the Ericsson split. The number of actives was now much lower.
Roy noted that there was a large number of deferreds without an address. Dawn said that Pensions Office had a procedure in place to trace people via the DWP as they reach age 65.
Peter Dronfield also referred to a letter he had received from a Mr. Luker, which raised questions about the financial health of the Plan and also the security of the Escrow fund.
This was presented by Vic Webster. In summary, his report was as follows:
The MNDs were uncertain whether to 'achieve full funding by 2021' meant fully funded or funded to insurance company buyout level. Pat Moloney added that for the 80% matching assets, the vast majority were in UK corporate bonds. Mick Elliott was told that this meant that the impact of the recent stock market plunge was minimised, and that assets were now matched to deferreds and pensioners, as we cannot now afford to take big risks.
Roy Mills asked if the £11m taken out of funds each month to pay pensions meant that the fund was now reducing, or did interest cover this? Pat thought that at the moment, there were slightly higher returns to cover the payouts.
Roy asked more about the Paymaster transfer. Vic Webster said that as far as members were concerned, it was a seamless move. The transfer was better for the security and retention of staff. Graham Allen was still secretary to the Board, although his employment had transferred to Xafinity Paymaster, as has Dawn's and the rest of the office. However, Peter Harris and Simon Lee were still with telent.
Following recent legislation, Roy Mills asked if it was now possible to take an SBS/AVC pension at a different time to the main pension. Pat Moloney thought that this question had not yet been considered by the Board. Roy said he would like it raised with them. Dawn said that legislation does not override scheme rules in this case, and also members might lose some tax advantages regarding the tax free lump sum. Vic pointed out that, subject to approval by telent, the Board does now allow members to take their pension whilst still working. He also thought that all deferreds should be written to pointing out what benefits they have and could take.
It was noted that as the provision of external AVCs (in lieu of SBS) was still the overall responsibility of SPT, then in a worst case scenario, Pat believed that the insurance companies provided 90% protection, and he would expect SPT to make up the difference.
Mick referred to the item Limiting Spouses Pensions. Vic said that this relates to a change in the 2004 Finance Act whereby, in a very small number of cases, if a spouse's pension is greater than the deceased member's pension, a situation can arise where the spouse can be heavily taxed and financially penalised for going over the Inland Revenue limit, as redefined from 2004, on pensions. It only affects a small number of people.
Re. Age Discrimination, it was noted that a rule change will now allow someone working past age 65 to continue accruing pension in the Plan.
Re. Ill Health and Early Retirement (as per the paper handed out at the last PCC meeting). Vic Webster said that he thought this should be looked at again, to ensure we were being fair to deferreds. Roy Mills added that some schemes were now starting to conduct a review say every two years after an Ill Health pension was started. He thought that the benefits on potential Plan savings would compensate any increase in administration costs involved in doing this.
Roy asked about the Pension Protection Fund Levy. Pat said it was paid by the telent, and is now calculated with reference to risk. Vic Webster said that the fund's risk was now considered low.
Mick Elliott noted the MND representation on the Board Committees. Pat said that although not experts, MNDs were a lot more involved and had earlier visibility of what was going on.
Roy Mills was told that the Investment Committee (chaired by Peter Harris) still uses Watson Wyatt for advice. Pat said that they usually had two representatives at meetings. Watson Wyatt is also the Plan actuary.
There have now been three subcommittee meetings to consider this, the outcome being as described in paper SPT 07.03.05. Vic Webster highlighted various bits of the paper.
Because of new legislation, some changes described have had to be complied with, others are by choice, for example deferred representation was a Board decision. It was thought better that a MND should be voted for by all PCC reps, not just the eight PCC reps in his category. Peter Harris has indicated that regions would be split by postcodes, but the boundaries are not yet known. A potential PCC rep must get five nominations from his own region and category of Plan member. One person can only make one nomination. The company no longer have the power to appoint MNDs. The PCC will now do this (previously, the PCC could only nominate to the Company, the Company then appoint).
Mick Elliott said that his minority view was that each category of MND should only be elected by those in his category and questioned why we therefore have separate categories of MNDs. Pat said because of legislation. Mick then said that if an MND changes category, why do we not say he has to resign and a new person elected into the vacant category. Pat thought that the law was based on status at the time of election.
The paper was approved by the PCC representatives present. Peter Dronfield added that he was pleased that we did not have the committee of sixty odd suggested at one time.
This was covered earlier in the Director's Report.
It was confirmed for Roy Mills that there would be no change for a person on retiring to look at the option of looking for an external provider to source his SBS annuity.
Roy asked if the P7 expression of what a member wishes to be done with his pension on death will still operate. Dawn said it will. The P7 envelope is opened on receipt, scanned and filed.
Peter Harris joined the meeting by conference phone link at this point. He referred to a slide hand out regarding the new pension plan – the telent 2007 Pension Plan.
In essence, new employees from 1 April 2007 will only be eligible to join the telent 2007 Pension Plan. It will be a defined contribution plan, with telent matching employees' contributions up to 6%. Contributions will be invested with Standard Life, offering a range of investment funds from low to high return/risk. Current members of the G.E.C. 1972 Plan may continue as members of that plan. Also current employees who have not joined the G.E.C. 1972 Plan will retain their right to join the plan in the future. A web site will be launched on 1 April giving full information on the new plan.
Peter added that it is a group plan, not requiring a Trustee Board, PCC etc. There will be a management committee made up of people from telent.
Peter Dronfield asked if members of the existing plan could transfer their cash to the new scheme. Peter Harris said yes, but they could not subsequently transfer it back.
Vic noted that death in deferment in the new plan was better than the existing plan.
Peter Harris said he would go through the future targets for the Plan fund (based on the 'funnel diagram') at the next PCC meeting. He 'left' the meeting at this point.
Pat Moloney requested that Peter Harris gave a periodic Investment Review to the PCC – say annually.
Roy Mills noted that as it was now possible to defer taking a state pension beyond age 65, would it therefore be possible to continue with the enhanced pension arrangement after 65? Dawn Hampton said that this would be difficult to operate but in any case there would be no change to those already in receipt of their pension as the actuarial calculation of the increase and decrease in pension will have been calculated for age 65.
Roy referred to the attempt by Fortress last year to take over telent, and possible risks to our pension. Pat said that the 2004 legislation helped to protect the fund.
The next PCC meeting was scheduled for Wednesday 4 July 2007.
(John Leaney subsequently booked the usual dining room conference room.).
Ken Buckley
20 March 2007
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