BRITISH COAL STAFF SUPERANNUATION SCHEME Annual General Meeting Edinburgh 8 October 2015
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Introduction
Dame Kate Barker Chairman of the Committee of Management
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Allen Clark Stuart Jukes
Pensioner Representatives Bleddyn Hancock
John Sheldon 3
Appointed Members Kate Barker Chairman of the Committee of Management Dick Barfield Chair of the Investment Sub-committee Ray Proctor Chair of the Risk and Assurance Sub-committee and the Discretions & Appeals Sub-committee Alan Whalley Chair of the Administration and Benefits Sub–committee
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AGM Programme 1. Chairman’s Report
Kate Barker
2. Key Financial Information
Geoff Mellor
3. Investment Strategy & Performance
Dick Barfield
4. Open Forum 5. Chairman’s Summary
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Chaired by Kate Barker Kate Barker
Rationale for change Poor funding position of the Scheme. Concerns: Trustee
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no increases to members
Guarantor
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unpredictable and unnecessary payments into the Scheme
Warning members for the last few years….
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Pensions News summer 2013
“It is difficult for the Trustees to see how they will be able to pay any overall pension increases in 2017, 2018 and 2019”
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Pensions News winter 2013/2014 “Any surplus in the Guaranteed Fund arising from a future valuation of the Scheme must first be used to repay the money owed to the Investment Reserve (£1,584m as at 31 March 2012, the date of the last valuation). Only after the borrowing is repaid can surpluses be transferred to the Bonus Augmentation Fund to provide new bonuses”
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Pensions News summer 2014 “Despite the better than expected short-term outcome for members, the funding problems have not gone away and the outlook for further bonuses beyond the next valuation remains poor. The Trustees continue to discuss this matter with the Guarantor to see if there are ways to improve the position”
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Pensions News winter 2014 “…the funding position of the Scheme remains disappointing and, as a result, the outlook for future bonuses remains poor. However the Trustees have been exploring potential ways to improve the position and have been in discussion with the Guarantor for some time”.
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Changes to the Scheme • From 2017 onwards, you will receive three new bonuses of 2% of your Guaranteed pension (in 2017, 2018, 2019) • After 2019, no new bonuses will be awarded • From 2020, your bonus payments will no longer be reduced and will remain level in the future • Your Guaranteed Pension (excluding the GMP element) will increase every year, by RPI • Surplus sharing no longer applies • Revisions to the Investment Reserve repayment • The Government Guarantee stays in place; the Guarantor is required to ensure that sufficient money remains in the Scheme in order to pay all future pensions (including RPI-linked increases)
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CEO Presentation
Geoff Mellor Chief Executive Officer Coal Pension Trustees Services Limited
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Maturity
Total number of members Proportion Pensioner Average Age (years) Annual Pension Payment Payroll (% of Fund)
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2015
2035
59,761
32,000
92%
100%
74
c80
£659 million
£430 million
6.9%
11%
Fund Account & Net Assets Pensions & lump sums Administration Expenses Payments to Guarantor Total expenditure Investment income less expenses Increase in market value of investments Total return on investments Net increase in the value of the Fund Net assets at 31 March 2014 Net assets at 31 March 2015
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£ million (659) (7) (37) 118 1,183
£ million
(703)
1,301 598 8,973 9,571
Future Payments to the Guarantor Investment Reserve • £500m on 2 April 2015 • £1.7bn (increased by CPI) to be repaid in 2033 (not in 2019)
Guarantor’s Fund • £37m paid on 31 March 2015 • £37m due on 31 March 2016 no longer payable
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Fund Account & Net Assets Pensions & lump sums Payments to Guarantor Administration Expenses Total expenditure Investment income less expenses Increase in market value of investments Net return on investments Net increase in the value of the Fund Net assets at 31 March 2014 Net assets at 31 March 2015
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£ million (659) (37) (7) 118 1,183
£ million
(703)
1,301 598 8,973 9,571
Management Information 2015 £ ‘000
2014 £ ‘000
Pensions & lump sums Payments to Guarantor Administration Expenses Legal, Actuarial & Other fees Total expenditure
(659,015) (37,479) (6,047) (1,090) (703,631)
(665,347) (37,575) (5,283) (1,211) (709,416)
Investment income Increase in market value of investments 498,269 Investment management expenses Net return on investments
143,393 1,208,980
139,974
(50,610) 1,301,763
(54,939) 583,304
Net increase/(decrease) in the Fund Net assets at Scheme year-end 17
598,132
(126,112)
9,570,917
8,972,785
Management Information 2015 £ ‘000
2014 £ ‘000
Pensions & lump sums Payments to Guarantor Administration Expenses Legal, Actuarial & Other fees Total expenditure
(659,015) (37,479) (6,047) (1,090) (703,631)
(665,347) (37,575) (5,283) (1,211) (709,416)
Investment income Increase in market value of investments 498,269 Investment management expenses Net return on investments
143,393 1,208,980
139,974
(50,610) 1,301,763
(54,939) 583,304
Net increase/(decrease) in the Fund Net assets at Scheme year-end 18
598,132
(126,112)
9,570,917
8,972,785
Management Information 2015 £ ‘000
2014 £ ‘000
Pensions & lump sums Payments to Guarantor Administration Expenses Legal, Actuarial & Other fees Total expenditure
(659,015) (37,479) (6,047) (1,090) (703,631)
(665,347) (37,575) (5,283) (1,211) (709,416)
Investment income Increase in market value of investments 498,269 Investment management expenses Net return on investments
143,393 1,208,980
139,974
(50,610) 1,301,763
(54,939) 583,304
Net increase/(decrease) in the Fund Net assets at Scheme year-end 19
598,132
(126,112)
9,570,917
8,972,785
Management Information 2015 £ ‘000
2014 £ ‘000
Pensions & lump sums Payments to Guarantor Administration Expenses Legal, Actuarial & Other fees Total expenditure
(659,015) (37,479) (6,047) (1,090) (703,631)
(665,347) (37,575) (5,283) (1,211) (709,416)
Investment income Increase in market value of investments 498,269 Investment management expenses Net return on investments
143,393 1,208,980
139,974
(50,610) 1,301,763
(54,939) 583,304
Net increase/(decrease) in the Fund Net assets at Scheme year-end 20
598,132
(126,112)
9,570,917
8,972,785
ISC Chairman’s Presentation
Dick Barfield Appointed Trustee and Chairman of the Investment Sub-committee
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Investment Update Investment Objectives Strategic Asset Allocation Investment Performance
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Strategic Asset Allocation Target Allocation at the start of the year Asset %
Fixed income Cash Emerging market debt Private debt Special Situations Debt
19.2 0 7.2 7.0 5.0
Equities and property Public Equity Private Equity UK property and infrastructure
77.3 52.3 10.0 15.0
Global Macro Shipping Total 23
2.0 1.5 100.0
Strategic Asset Allocation at 31 March 2015 Actual %
Fixed income Cash Emerging market debt Private debt Special Situations Debt
21.0 10.6 5.7 3.9 0.8
19.2 0 7.2 7.0 5.0
Equities and property Public Equity Private Equity UK property and infrastructure
76.7 51.5 12.0 13.2
77.3 52.3 10.0 15.0
2.3 0
2.0 1.5
100.0
100.0
Global Macro Shipping Total 24
Target %
Strategic Asset Allocation New Target Allocation from September 2015 New Target
Fixed income Cash Developed global & Government bonds Emerging market debt Private debt Special Situations Debt
% 40.0 0 22.5
% 19.2 0 0
0 10.0 7.5
7.2 7.0 5.0
Equities and property Public Equity Private Equity UK property and infrastructure
56.0 30.0 12.5 13.5
77.3 52.3 10.0 15.0
2.5 1.5
2.0 1.5
100.0
100.0
Global Macro Shipping Total
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Previous Target
Annualised Return on Assets % p.a.
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1 year
14.47
3 years
11.32
5 years
9.51
Investment Performance The table below shows the Scheme Returns versus the Benchmark Returns
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Scheme Return %
Benchmark %
2015
14.5
15.9
2014
6.8
5.0
2013
12.9
12.5
2012
3.0
2.0
2011
10.8
9.4
Q&A
AGM Written Questions and Answers Jon Heathfield Scheme Secretary
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Question 1 From Mr D Gadsby Many thanks for conducting the round of roadshows some months ago... at the roadshow which you conducted in Nottinghamshire, it was mentioned that more safety was being sought regarding the investments of the Scheme and that it sounded like liability driven was to become the future theme. Could I please ask on behalf of younger members, that the Trustees remember that older members have benefited from excellent bonuses and it is hoped that this latest investment strategy will not close the door on younger members enjoying these too.
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BRITISH COAL STAFF SUPERANNUATION SCHEME
OPEN FORUM Annual General Meeting Edinburgh 8 October 2015
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Looking Forward • Certainty of member benefits • Continuation of the Government Guarantee • Working hard to ensure the Scheme remains well funded • Thank you for your questions and for attending today
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BRITISH COAL STAFF SUPERANNUATION SCHEME Annual General Meeting Edinburgh 8 October 2015
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