PricewaterhouseCoopers LLP, Scheme Auditors Aon Hewitt, Investment Adviser to EPTL Field Fisher Waterhouse LLP, Legal Adviser to EPTL

Transcription

1 ELECTRICITY SUPPLY PENSION SCHEME Minutes of the 31st Annual General Meeting of Members of the Scheme held at Herbert Smith Freehills offices, Exchange House, 12 Primrose Street, London, EC2A 2EG on Wednesday 4 December 2013 commencing at 12 noon. Present Joanna Matthews Chair, Electricity Pensions Trustee Limited (EPTL) Kevin Groves Scheme Secretary David Sayers Chief Financial Officer Council Members of EPTL Directors of EPTL Twenty Five Members of the Scheme Advisers in attendance Duncan Brown Tim Currell David Gallagher PricewaterhouseCoopers LLP, Scheme Auditors Aon Hewitt, Investment Adviser to EPTL Field Fisher Waterhouse LLP, Legal Adviser to EPTL Notice convening the Meeting 1. The notice convening the meeting was taken as read. Introduction 2. The Chair welcomed the Members present and introduced the main speakers. The Scheme Secretary then outlined the purpose of the AGM. Minutes of the thirtieth Annual General Meeting held on 3 December The minutes of the thirtieth Annual General Meeting held on 3 December 2012 were agreed as a correct record. 4. Kevin Groves referred to minute 4 and reported that the September 2013 RPI figure had been announced at 3.2%. Rule 26 of the Scheme Rules provided that for most Defined Benefit (DB) members, pensions in payment to members and spouses and dependants should be increased in line with the increase in the RPI over the 12 months ending in the previous September (where the RPI increase was more than 5% the pensions increase may be limited by Principal Employers to less than the full increase in RPI, subject to the increase being not less than 5%). Whilst the September RPI figure each year usually indicated the level of pensions increase for DB members applicable from the following 1 April, provisions for pensions increases might differ between and within individual Groups of the Scheme.

2 Report by the Chair 5. The Chair reported that positive returns on most asset classes had led to an increase to bn in the market value of ESPS assets in the year ended 31 March The Chair went on to report on other events during the financial year 2012/13 included in the Report of the Scheme Trustee, Electricity Pensions Trustee Limited (EPTL). Matters covered included custody and accounting arrangements, the Scheme structure, execution of Scheme-wide amendments, pensions legislative reforms and central lobbying. The number of active ESPS Groups remained unchanged at twenty-three. EPTL had properly discharged its responsibilities for the preparation of the Scheme s Annual Report and Financial Statements. Further details of all these matters were recorded in the Report of the Scheme Trustee on pages 4-9 of the Annual Report and Financial Statements. The Chair thanked all those who had served on the Council and Board of EPTL, together with the professional advisers and the Capita staff, for their respective contributions to the work of the Scheme during the year. The Chair recorded special thanks to Duncan Brown of PwC who was rotating off the ESPS audit after seven years (as required by audit standards). Presentation on the Scheme Accounts for 2012/13 6. David Sayers gave a presentation on the Scheme accounts and matters dealt with in the Annual Report and Financial Statements. It was explained that the Scheme Financial Statements showed the position for the Scheme as a whole and confirmed that these met all statutory and reporting requirements. Each of the Groups produced its own Report and Financial Statements and, in order to gain information on matters relevant to their own circumstances, Members should refer to the Report and Financial Statements for their particular Group. 7. David Sayers reported on the work carried out in relation to stewardship and safeguarding of the Scheme s assets and ensuring the accurate recording of all transactions and holdings. He explained details of the control framework in place to assist with these responsibilities and covered Representations from Group Trustees. The report also covered the roles of BNY Mellon as Scheme Custodian, various general audit matters, and the format and key elements within the Financial Statements. Presentation by the Investment Adviser 8. Tim Currell reported on investment matters during the year to 31 March He firstly reported on investment conditions and on rates of return across all the major market sectors, and then gave an update on market conditions since 31 March 2013 which highlighted the US fiscal cliff deadline, continuing issues within the Eurozone, slower growth in emerging markets and generally strong global equity returns. He also gave an update on performance of the UK Property and UK Forestry Unitised Fund Sectors. Matters Arising from the Presentation 9. Mike Kavanagh (UK Power Networks Group pensioner) asked if the Scheme was exposed to any Co-operative Bank Bonds. Tim Currell suggested that any scheme Members with such concerns should approach their individual Group.

3 10. John Merritt (UK Power Networks Group pensioner) asked about RPI and CPI calculations. Tim Currell reported that the Government had several measures for inflation and that these all continued to be separately calculated. He commented that newspaper reporting could sometimes be somewhat simplistic and potentially misleading especially on technical matters, and that as a rule of thumb RPI was approximately % higher than CPI but was still subject to a separate calculation. Receipt of Annual Report and Financial Statements 11. The Scheme Annual Report and Financial Statements were formally received. Member s Resolutions 12. David Laws (National Grid Group pensioner) proposed, and Richard Chamberlain (National Grid Group pensioner) seconded, the following resolution: This AGM of the ESPS is most concerned at the implications for the Scheme contained in the Pensions Bill 2013, namely the statutory override which would allow employers to make changes to pension schemes without Trustee or Members consent. This statutory override is also intended to apply to protected persons regulations. Apparently this is to enable employers to recover some of their National Insurance contributions which will increase with the implementation of the universal Old Age Pension. We call upon EPTL and all our ESPS Trustee Boards to object to the Government in the strongest possible terms, to advise Government of the significant concerns of Pensioners and to press these concerns with the Principal Employers. 13. David Gallagher explained the background to the Government s proposed changes to the state pension. It was proposed to abolish the state second pension (S2P) and the contracting-out system whereby some defined benefit schemes lower National Insurance contributions were paid by members and employers in respect of members which were contracted-out. The existence of the Protected Persons Regulations which applied to some members of the ESPS would, arguably, make the introduction of the proposed changes in the ESPS rather complicated. A technical response to the Government s proposals had been sent on behalf of EPTL. However, David Gallagher reported that since then the issue appeared to have become a political debate and legislation was currently being reviewed by Parliament. In these circumstances he believed it would be inappropriate for the Scheme Trustee to be involved in any form of political lobbying. He had advised EPTL to wait until the legislation was passed and then to work to implement it, as necessary, within the ESPS. 14. David Laws thanked David Gallagher for his explanation and welcomed the work done by EPTL in responding to the Government s proposals. He said that he was concerned about the possibility that the Protection Regulations could be set aside, and he believed that the proposals would make it easier for employers generally to cut their pensions costs and accelerate the closure of defined benefit schemes. In his view the greatest security for pensioners and members lay in the existence of an ongoing defined benefit

4 scheme with active members. 15. In response to a further question from John Merritt (UK Power Networks Group pensioner) David Gallagher confirmed that the Government s current proposals did not conclusively resolve the issue of how the reforms would affect the Protection Regulations. As currently drafted the proposals would give employers the power to reduce their pension costs by reducing pensions accrual or increasing member contributions for active members from April Graham Commons (National Grid Group Member and EPTL Director) confirmed that EPTL was aware of the concerns of Members, deferred Members and pensioners on this issue. 16. Before the vote, Kevin Groves confirmed that Members resolutions voted on and carried at the Scheme AGM did not have any power conferred upon them and could not instruct EPTL, Group Trustees, Employers or others involved in the running of the Scheme. If the resolution was carried, EPL and EPTL would be notified of the result and might or might not decide to take any action in response to the resolution. 17. The resolution was then put to a vote on a show of hands and the Chair declared the resolution passed noting the number of votes in favour, against and abstentions Any Other Business 18. Les Nicholls (Magnox Electric Group pensioner) asked if the date of the Scheme AGM could in future be brought forward to the end of November as this, in his view, might be more convenient for Members. The Chair responded that the date for the 2014 AGM had already been set for 3 rd December 2014 and it would be difficult to change it at this stage, but that his request would be taken into consideration when setting the date for the 2015 AGM. 19. John Merritt (UK Power Networks Group pensioner) asked a question about the possible impact of EU Solvency II on insurance companies and the payment of annuities. Tim Currell explained that Solvency II included proposals to enforce more stringent capital requirements on all types of insurance companies (including those paying annuities). Theoretically, a Solvency II approach could be adopted for pension schemes, but it was unclear whether this would be economically/commercially viable. Vote of Thanks 20. The Chair thanked all members present for attending the AGM. Roy Down (EPTL Council Member and EPTL Board Director) proposed a vote of thanks to the Chair Joanna Matthews, EPTL Directors and Council members, Officers of the Scheme, the staff of Capita, the advisers to the Scheme, and all ESPS Members present for their attendance. Conclusion 21. There was no further business and the meeting concluded at 1.28 p.m.

5