ANNUAL REPORT 2014/2015 NORTHERN IRELAND LOCAL GOVERNMENT OFFICERS’ SUPERANNUATION COMMITTEE ANNUAL REPORT 2014/2015

If you have any views and comments on this report, or any questions on any of the services provided, please contact us in writing; by telephone; fax; email; or by visiting our office in person as follows:

NILGOSC Templeton House 411 Holywood Road Belfast BT4 2LP

Telephone: 0845 308 7345 Fax: 0845 308 7344 Email: [email protected]

Typetalk: 18001 0845 308 7345 NILGOSC Annual Report and Accounts (for people using a textphone) For the Year Ended 31 March 2015

Website: www.nilgosc.org.uk

This annual report can be made available in a wide range of alternative formats. Requests for alternative formats should Laid before the Northern Ireland Assembly under Regulation 63(8) of the be made to the Finance Manager at the Local Government Pension Scheme Regulations (Northern Ireland) 2014 by above address. In addition to the Annual the Department of the Environment Report, NILGOSC can provide documents and correspondence in alternative formats, on including audio and large print versions for people with sight problems. Documents can 8 September 2015 also be provided in minority languages for those whose first language is not English. If you would prefer an alternative method of communication please let us know. CONTENTS

Executive Summary 01 Annual Equality Statement 39

Foreword 03 Strategic Report (ii) Investment of the Fund 41

Statutory Background 04 Background 42 The Committee 04 Fund Management 42 Committee’s Responsibilities 04 Investment Aims and Objectives 42 Committee Members 04 Investment Strategy 42 Declaration of Interests 07 Asset Allocation 43 Chief Executive and Secretary 07 Fund Managers 43 Audit 07 Market Report 45 Disclosure of Relevant Audit Information 07 Fund Value 46 Fixed Assets 07 Investment Performance 47 Important Events Occurring after the Year End 07 Investment Review 2014/15 47 Charitable Donations 07 Responsible Investment 49 Equal Opportunity 07 Voting 49 Employees’ Involvement 07 Engagement 50 Payment to Creditors 07 Climate Risk 50 Sickness Absence 07 Remuneration Report 53 Personal Data Related Incidents 07 Risks Arising from Financial Instruments 08 Remuneration Policy 54 Service Contracts 54 Management Commentary 09 Salary and Pension Entitlements 54 Senior Management Emoluments 54 Joint Statement from the Chairman and Chief Executive 10 Salary 55 Governance Statement 13 Benefits in Kind 55 Relationship between the Remuneration of the Most Highly Paid Director and Introduction 14 the Median Remuneration of the Organisation 55 The Governance Framework 2014/15 14 Pension Benefits 56 Compliance with the Corporate Governance in Central Government Departments: Code of Practice NI 2013 16 Cash Equivalent Transfer Values 56 Departmental Approvals 16 Real increase in CETV 56 Risk Assessment 16 07 Review of Effectiveness of the Governance Framework 18 Statement of Accounting Officer’s Responsibilities 57 Significant Governance Issues 19 Assurance Summary 19 Accounts 59

Fund Account 60 Strategic Report (i) Administration of the Pension Scheme 21 Net Assets Statement 61 Background 22 Statement of Cash Flows 62 Status 22 Notes to the Accounts 63 Membership 23 Actuarial Statement 79 Employing Authorities 23 Auditor’s Report 81 Members 24 Pensions Increase 24 Appendices 83 New Regulations 24 Annual Report of the Audit and Risk Assurance Committee for the year ended 31 March 2015 84 National Fraud Initiative 25 Employing Authorities contributing to the Scheme at 31 March 2015 88 The Staff 25 Glossary 91 Staff Development 26 Publications 26 Satisfaction Survey 26 Performance Standards 27 Cost per Member 28 Decisions, Reviews and Complaints 28 Review of Corporate Plan 28 EXECUTIVE SUMMARY

ADMINISTRATION OF THE INVESTMENT OF THE FUND EXECUTIVE SUMMARY SCHEME • Membership of the Scheme • The value of the Fund increased by continued to grow during the year £790m to £5.85bn during the year with 109,462 contributing members, ended 31 March 2015. pensioners and deferred pensioners at 31 March 2015. • The overall return on total assets for the year was 15.1% (2013/14: • Employer contribution rates 8.04%), which was ahead of the remained at 20% in line with the Fund’s investment target of CPI+5%. rates set by the actuary at the triennial valuation as at 31 March • Seven of NILGOSC’s ten investment 2013. managers outperformed their respective benchmarks for the year • Scheme pensions were increased by ended 31 March 2015. 2.7% with effect from 7 April 2014 in accordance with the Pensions • The index linked property portfolio Increase (Review) Order (Northern is now fully invested with a mix of Ireland) 2014. assets with an overall yield in line with the agreed strategy. • During the year plans and processes were completed to manage the • Progress has been made on the transition to the new Career Average decision to diversify returns and Revalued Earnings (CARE) Scheme identify suitable infrastructure which was implemented with effect investment opportunities. During from 1 April 2015. 2014/15 NILGOSC committed to invest £40m in Antin Infrastructure • The main administration regulations Partners Fund II and £40m with KKR for the new CARE Local Government Global Infrastructure Investors II. Pension Scheme (Northern Ireland) were made by the Department of • Markets posted solid returns over the Environment on 27 June and the year to 31 March 2015, although 30 June 2014, and the governance there was a sizeable difference regulations were made on 23 between equity regions. Bonds and February 2015. Details of the new property also delivered positive regulations are provided in the returns. Administration of the Pension Scheme section of this report.

• In March 2015, the Department of the Environment designated the Management Committee as the Pension Board of the Local Government Pension Scheme (Northern Ireland) with effect from 1 April 2015. The role of the Pension Board is set out in the Governance Statement within this report.

• There have been several cessations and mergers of employing authorities in the Scheme during 2014/15 to form new bodies under the Review of Public Administration, in particular the formation of the new councils and the Education Authority.

01 02 FOREWORD

STATUTORY BACKGROUND COMMITTEE’S COMMITTEE MEMBERS RESPONSIBILITIES FOREWORD The Northern Ireland Local Government The Management Committee (which Officers’ Superannuation Committee The Committee is required under the is similar to a board of non-executive (NILGOSC) is a non-departmental public Local Government Pension Scheme directors or trustees) consists of a body sponsored by the Department Regulations (Northern Ireland) 2014 to: chairman, five members nominated by of the Environment, established on 1 employers’ organisations, five members keep accounts of all financial April 1950 by the Local Government nominated by employees’ organisations transactions of the Fund; and (Superannuation) Act 1950, to administer and two independent members. The and maintain a fund providing pension prepare the financial statements for Committee members are appointed by benefits for employees of local the financial year ended 31 March. the Department of the Environment for authorities and other admitted bodies. a four year term. Effective from 1 July The financial statements shall comprise: 2013, the Department reappointed Trevor In accordance with Regulation 63(2) of Salmon, Joseph Donaghy, Julie Erskine, the Local Government Pension Scheme a) a Foreword; Bumper Graham and Celine McCartan Regulations (Northern Ireland) 2014, b) a Statement of the Committee’s for a second four year term ending as amended, the Committee submits Responsibilities; 30 June 2017. On 1 October 2011 the its annual report for the year ended 31 c) an Accounting Officer’s Governance Department appointed Peter Caldwell, March 2015 to the Department of the Statement; David Jackson, Peter McMurray, Linda Environment. d) a Fund Account; Neilan and Ciaran Quigley for a four e) a Net Assets Statement; year term ending 30 September 2015. f) a Statement of Cash Flows; and On 1 July 2012, the Minister for the THE COMMITTEE g) Notes to the Accounts; Environment appointed Tom Irvine and Sharon McQuillan for a four year term The Committee is the corporate body and shall be prepared in accordance with ending 30 June 2016 and on 1 May responsible for the administration of the guidance for the time being issued by the 2013 Lindsay Todd was appointed for a Local Government Pension Scheme in Department of Finance and Personnel. Northern Ireland. four year term ending 30 April 2017. In addition, the Department has appointed The financial statements shall give a an observer who may attend the true and fair view of the Fund Account meetings of the Management Committee for the financial year, and a Net Assets and Audit and Risk Assurance Statement as at the end of the financial Committee. year.

In March 2015, the Department designated the Management Committee as the Pension Board of the LGPS NI from 1 April 2015. The role of the Pension Board is set out in the Governance Statement within this report.

The biographies of the Committee members who served throughout the year are set out on the following page.

03 04 CHAIRMAN

Mr Trevor Salmon OBE was previously the Deputy Chief Executive and Director of Corporate Services in Belfast City Council. In addition to his Chairmanship of NILGOSC he is a past national Council member of the Chartered Institute of Public Finance and Accountancy. He is also a member of the Solicitors’ Disciplinary Tribunal, the Appeal Service NI, ACCA Disciplinary Panel and is an independent member of the Audit Committee of the Education Authority.

COMMITTEE MEMBERS

Mr Peter Caldwell is Treasurer of Apex Housing Association Board of Management and a member of the Ms Celine McCartan MBE is a Deputy Director at the South West College with responsibility for Finance, NI Federation of Housing Associations Board (NIFHA). Previously he was Senior Manager with the former HR, Estates and Student Support Services. She is a Fellow of the Institute of Chartered Accountants Western Health and Social Services Board with responsibility for business planning and performance in Ireland and a Chartered Member of the Institute of Personnel and Development. Celine was also management. an independent member of the Audit Committee of Omagh District Council until 31 March 2015 and she undertakes a number of other voluntary roles providing support to carer support and disability organisations.

Mr Joseph Donaghy MBE is the former Northern Ireland UNISON Regional Head of health, local Mr Peter McMurray is Lead Representative in Education for GMB the Union. He is also Branch Secretary government and education. He was an independent member of the Policing and Community Safety and represents the GMB in a number of associated Councils, Committees and Forums. Partnership until 31 March 2015 and was a board member of the North Eastern Education and Library Board until 31 March 2015.

Mrs Julie Erskine was previously the Operations Director in a Belfast-based private healthcare company, Mrs Linda Neilan is the Group Accounting Manager for the Northern Ireland Transport Holding Company/ having also worked as Support Services Director for the same company. She is a board member of the Translink with responsibility for core finance, payroll and ticketing projects. She is a Fellow of the Institute Northern Ireland Social Care Council, the Public Health Agency, the Probation Board Northern Ireland, a of Chartered Accountants in Ireland and previously was an audit manager with Deloitte. member of the Audit Committee of the Commissioner for Older People for Northern Ireland and the Chair of the Audit Committee for Northern Ireland Commissioner for Children and Young People.

Mr Bumper Graham is the Assistant General Secretary of the Northern Ireland Public Service Alliance Mr Lindsay Todd has lengthy experience in the pension fund industry and was, until his retirement, (NIPSA). He is currently a member of the Local Government Staff Commission, Chairperson of the NIC- a partner in a leading international professional services firm. He currently serves on the NI Judicial ICTU Public Service Pensions Group and Joint Chairperson of the Department of Finance and Personnel Appointments Commission, the advisory committee to the NI Central Investment Fund for Charities, is a Public Service Pensions Central Consultative Working Group. Bumper is also a member of the NI Civil trustee of a leading charity and is also a school governor. Service Pensions Board and Co-Chairperson of the North/South Bodies Pension Forum.

Mr Tom Irvine is currently a part-time Pensions lecturer for the North West Regional College, the Pension Mr Ciaran Quigley was the Town Solicitor and Assistant Chief Executive of Belfast City Council prior to his Tutor for Unite the Union in Northern Ireland and Chairman of the Unite Branch 3/83. Previously he was retirement. He previously acted as Director of Legal Services with the Council and has extensive experience a Trustee Director of the Visteon (UK) Pension Scheme until it transferred to the Pension Protection Fund as a corporate legal adviser to a range of Northern Ireland local government and other public bodies. (PPF) in February 2012. Tom is also an Independent Assessor for Public Appointments in Northern Ireland.

Mr David Jackson MBE is the Chief Executive of Causeway Coast and Glens District Council. He was Mrs Sharon McQuillan is the Payroll/Pension Manager for Causeway Coast and Glens District Council, previously the Head of Support Services at Coleraine Borough Council prior to which he was a senior where she is also a Trade Union Representative. Previously Sharon held a number of financial roles in other manager with PricewaterhouseCoopers. Councils.

05 06 DECLARATION OF INTERESTS their values are stated in note 12 and location within 10 working days. Also in RISKS ARISING FROM FINANCIAL INSTRUMENTS note 13 to the financial statements. 2008, the Finance Minister announced In order to achieve the maximum NILGOSC’s investment strategy seeks to maximise the returns from investments within a range of risk parameters and it reduces that Northern Ireland Departments had degree of openness and impartiality, investment risk to an acceptable level by investing in a well diversified range of asset classes, countries, sectors and securities. IMPORTANT EVENTS set a target of payment of invoices within the Committee maintains a register Consideration of investment risk forms part of the overall risk management framework and all risks, including investment risks, OCCURRING AFTER THE 10 working days, in order to help local of Committee Members’ and Officers’ are reviewed and monitored quarterly at a management and Committee level. Overall responsibility for risk management lies YEAR END businesses. Interests. The register is open for with the Committee. inspection at the Committee’s offices There have been no significant events NILGOSC endeavours to meet the 10 All financial instruments, including cash deposits, present a risk of loss of capital and those risks will vary depending on the asset and is available on NILGOSC’s website at since 31 March 2015. day prompt payment target and aims type. Investment risk will also be impacted by wider economic conditions and investor sentiment. www.nilgosc.org.uk. CHARITABLE DONATIONS to pay suppliers within 10 working days of receipt of a valid, undisputed invoice. CHIEF EXECUTIVE AND The Committee made no charitable Therefore, the default target for paying Market Risk Market risk or price risk is the risk of capital loss as a result of a fall in the price of investments. SECRETARY donations during the year. invoices is 10 working days. During the Fluctuations in price can arise from a variety of sources including interest rate risk, credit risk, currency Mr David Murphy, the Chief Executive year ended 31 March 2015 NILGOSC risk and liquidity risk. and Secretary, is responsible for the EQUAL OPPORTUNITY paid 1,288 invoices totalling £15.05m on The Fund is exposed to market risk as a result of its investment activities. The overall market risk of the administration of the Scheme and It is the policy of the Committee to 10 day terms, of which 57 undisputed Fund will depend on the actual mix of assets and market conditions and will encompass the different reports to the Committee on a monthly ensure that equality of opportunity is invoices were late. The average time elements of risk, some of which may offset each other. basis. provided to all employees and those to pay invoices during the year was 8 seeking employment and make all The Permanent Secretary for the working days (2013/14: 6 working days) reasonable adjustments to support the Interest Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate Department of the Environment has employment, training and development Rate Risk as a result of changes in market interest rates. NILGOSC does not hedge against the effect of such designated the Chief Executive and SICKNESS ABSENCE and retention of those with a disability. fluctuations and this position is reviewed regularly as part of the review of the investment strategy. Secretary as the Accounting Officer for The average number of days lost to NILGOSC. His relevant responsibilities sickness absence by all staff in 2014/15 EMPLOYEES’ INVOLVEMENT Credit as Accounting Officer, including his was 2.7 days (2013/14 – 1.5 days). Credit risk is the risk that the counterparty to a transaction or financial instrument will fail to discharge Risk responsibility for the propriety and Staff communication and involvement its obligation resulting in a financial loss. This risk is generally reflected in the market price of securities, regularity of the public finances for continues to be a key objective and PERSONAL DATA RELATED resulting in the risk being implicitly accounted for in the carrying value of the Fund’s investments. Cash which he is answerable and for the NILGOSC communicates with its staff INCIDENTS deposits, derivatives and stock lending are the areas of exposure where credit risk is not reflected in about its objectives, progress and market prices. The Fund is exposed to credit risk in respect of its investment portfolio and this risk is keeping of proper records, are set out NILGOSC records all personal data activities through various channels – managed through the selection and use of high quality counterparties and financial institutions. in the Accounting Officer Memorandum, related incidents and makes an team meetings, briefings, circulars and issued by the Department of the assessment against the Information the staff intranet. NILGOSC continued Currency Currency risk is the risk that that the fair value or future cash flows of a financial instrument will fluctuate Environment. The Accounting Officer is Commissioner’s Office guidance to its quarterly staff newsletter throughout Risk as a result of changes in foreign exchange rates. As a global investor whose liabilities are sterling based; also responsible for safeguarding the determine whether an incident is 2014/15 as an additional means of NILGOSC is exposed to fluctuations in exchange rates which can affect the valuation of its investments. assets of NILGOSC and hence for taking significant and/or serious enough to internal communication. Staff are The Fund reduces its exposure to foreign currencies and fluctuations in exchange rates by hedging reasonable steps to prevent and detect warrant reporting. In the year ended encouraged to take part in project groups investments denominated in overseas currencies into sterling at various times. fraud and other irregularities. 31 March 2015, there were 12 non- where possible to promote employee reportable personal data related engagement and to develop knowledge AUDIT incidents and no reportable incidents. Liquidy Liquidity risk or cash flow risk is the risk that adequate cash resources will not be available to meet and skills. Significant emphasis is placed The Local Government Pension Scheme Risk commitments such as the payment of benefits or future investment commitments as they fall due. To on training and developing staff through Regulations (Northern Ireland) 2014 manage this risk NILGOSC operates a robust treasury management framework and maintains immediate a structured training programme. A provide for the accounts kept by the access to its cash holdings. needs analysis is carried out every year Committee to be audited annually by as part of the appraisal process and an the Local Government Auditor. Her staff organisation wide training programme are wholly independent of NILGOSC and is prepared. Staff are involved in the the audit fee is disclosed in note 7 to the preparation of the annual corporate plan. Financial Statements. The auditors did not perform any non audit work this year. All these initiatives give staff the opportunity to contribute constructively DISCLOSURE OF RELEVANT to the development and progress of David Murphy AUDIT INFORMATION the Committee in its aim to develop Chief Executive and Secretary There is no relevant audit information staff, improve systems and satisfy its 25 August 2015 of which the auditors are unaware; and stakeholders’ needs. the Accounting Officer has taken all the necessary steps to ensure both he and PAYMENT TO CREDITORS the auditors are aware of all relevant In November 2008, under the Prompt audit information. Payment Initiative, former Prime Minister Gordon Brown announced FIXED ASSETS that all Government Bodies would pay Fixed assets consist of intangible assets all external suppliers who provided a and property, plant and equipment and correctly rendered invoice to the correct

07 08 MANAGEMENT COMMENTARY JOINT STATEMENT FROM THE CHAIRMAN AND CHIEF EXECUTIVE MANAGEMENT COMMENTARY JOINT STATEMENT FROM THE CHAIRMAN AND CHIEF EXECUTIVE

Trevor Salmon OBE David Murphy Chairman Chief Executive and Secretary

2014/15 was a year of significant change to account over their stewardship of following on 23 February 2015. This across public sector pensions, with 31 the respective funds. 2014/15 saw created various administrative pressures March 2015 heralding the end of the final NILGOSC make its first infrastructure as the fundamental change to scheme salary aspect of the Local Government investment with a £40m commitment benefits meant that the third party Pension Scheme (LGPS) in Northern to a European 10 year infrastructure pension administration software, Ireland. In many respects this was the fund and a £40m commitment to a US- together with all Scheme literature, end of an era, as the final salary benefit based 10 year infrastructure fund. This processes and procedures, had to be structure has been in operation since investment sees the start of NILGOSC’s rewritten ahead of the introduction NILGOSC’s creation in 1950. What this implementation of its medium term of the new Scheme. This nine month means is that after 1 April 2015, scheme asset allocation strategy of investing 5% window for the development, testing and members will accrue pension benefits of the fund in Alternative asset classes. delivery of complex and bespoke pension based on their average earnings over Infrastructure is currently an attractive administration software was particularly their career, with the final salary link opportunity for NILGOSC as it provides challenging with the third party supplier remaining for periods of service up additional diversification from the more of the software for the new Scheme to and including 31 March 2015 only. cyclical asset classes of equities and unable to deliver the first release of the 2014/15 was also a time to prepare and bonds, as well as providing longer term, new software until March 2015. Service look forward to the new Career Average stable, inflation-linked cashflows, which delivery was undoubtedly affected by LGPS, under which we will continue to are considered to be a better match both the migration to a new software provide our employers and members for pension scheme liabilities. Full system and the preparation for the new with one of the best occupational investment of the target infrastructure Scheme, however we hope that for the pension schemes in the UK. allocation of £150m will take place over majority of our members and employers the medium term as good, long term it has simply been ‘business as usual’. This statement is intended to provide a opportunities are sourced and assessed. Given the scale of changes, it was an summary of NILGOSC’s activities and exceptional achievement for NILGOSC achievements during the year ended 31 SCHEME ADMINISTRATION to be in a position to administer the new March 2015. From a scheme administration Career Average LGPS with effect from 1 INVESTMENT PERFORMANCE perspective, the last twelve months have April 2015. been dominated by three Ps, planning, The NILGOSC Fund hit the £5bn mark preparation and persuasion. Planning Despite this backdrop, NILGOSC staff for the first time in February 2014 for a major upgrade of our pension endeavoured to ensure that scheme and, despite another year of volatility administration system; preparation for members, pensioners and employers across global markets, it ended the the new Career Average LGPS which continued to receive the high level year at a new high of £5.85bn. NILGOSC comes into effect on 1 April 2015; and of customer service they have come outperformed its investment target persuasion in terms of our ongoing to expect. NILGOSC prides itself of Consumer Price Index + 5%, with efforts to ensure that the NILGOSC on providing a personal service to an overall fund return for the year of Scheme remains attractive to both members and employers, whether 15.1%. The continued strong run of its members and employers alike by that is in person, over the telephone or equity markets, particularly overseas influencing legislators both in Northern through written correspondence. More markets, made a significant contribution Ireland and at Westminster. than perhaps anyone, we appreciate to the Fund’s outperformance, as the technical and complex nature of did positive returns from both the The main administration regulations pensions and will continue to strive to bond and property markets. Active for the new Career Average LGPS (NI) ensure our members understand their management of the investment portfolio were made by the Department of the pension scheme. We are therefore remained at the top of the Committee’s Environment on 27 June and 30 June delighted that this focus on customer agenda throughout the year with all 2014, with the governance regulations satisfaction is reflected in feedback 10 investment managers being held

09 10 received throughout the year and is LOOKING FORWARD also reflected in the results of the It will be another challenging year in annual satisfaction survey which shows 2015/16 not only as we ‘go live’ with that 91.5% of respondents rated their the new CARE Scheme and associated overall satisfaction with the service they administration systems, but also, as received as being good or excellent. mentioned above, we deal with increases in demand due to the public sector PUBLIC SECTOR severance schemes. The fund is in a REORGANISATION AND sound financial position even so the RESTRAINT Committee will robustly monitor all As if the advent of the new Scheme was aspects of the Scheme administration. not enough to make 2014/15 a year to remember, the ongoing changes and THANKS contraction within the public sector Finally we would like to express our provided another challenge to the gratitude to the Management Committee scheme administration. Many of the which has devoted considerable time employing authorities in the NILGOSC and effort to the Committee’s business Scheme have been, or will be, affected over the past year. It almost goes without by the implementation of Local saying, but we couldn’t have achieved all Government reform, Education Sector that we have over the past twelve months reform and public sector redundancy without the hard work and dedication of schemes. NILGOSC has sought to work the management and staff of NILGOSC, with affected employers from the outset, who continue to make the organisation in particular advising employers on what it is today. Thank you all very much. the pension implications of certain exit schemes. We had already started to see an increase in early retirement quotation requests towards the latter end of 2014/15 and the anticipated contraction in the public sector workforce is expected to result in an increase in retirements and redundancies over the Trevor Salmon OBE next twelve to eighteen months. Given Chairman this predicted spike in demand during 2015/16, we have already taken steps to increase resources in the administration team to help maintain service delivery during the year ahead.

Also related to the new era of public sector spending restraint is the additional financial pressure faced by public bodies, many of whom have David Murphy experienced budget cuts over the last Chief Executive twelve months. A consequence of this is that the long term financial position of some scheme employers is less certain than say this time five years ago. Scheme affordability remains high on NILGOSC’s agenda but alongside this sits a responsibility to ensure that the fund and its employers remain adequately protected against the risk of employer default. With this in mind, NILGOSC completed its initial review of employers’ ability to meet current and future liabilities and going forward we will continue to monitor and manage this risk in conjunction with the funding strategy.

11 GOVERNANCE STATEMENT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015

1. INTRODUCTION sets out certain aspects of the financial •Stage II complaints framework within which NILGOSC is •New and revised policies GOVERNANCE This Governance Statement has been required to operate, in accordance •Secretary’s report on operational prepared in line with guidance issued with MPMNI. NILGOSC complied with matters and project updates by the Department of Finance and the conditions and requirements in STATEMENT Personnel (DAO (DFP) 10/12) and the Management Statement and the A sub-committee structure supports FOR THE FINANCIAL YEAR ENDED 31 MARCH 2015 contained within Annex 3.1 of Managing Financial Memorandum during the the Committee, comprising the Audit Public Money Northern Ireland (MPMNI). financial year ended 31 March 2015. and Risk Assurance Committee (ARAC) and the Staffing Committee. Following As Accounting Officer for the Northern 2.1 THE MANAGEMENT COMMITTEE each sub-committee meeting, the Ireland Local Government Officers’ Chairperson provides a verbal report to Superannuation Committee (NILGOSC), I The Management Committee (the the Committee. am responsible for maintaining a sound Committee) consists of a Chairman, system of internal control that supports five members nominated by employers’ The Committee normally meets on a the achievement of the organisation’s organisations, five members nominated monthly basis with the exception of policies, aims and objectives, while by employees’ organisations and two July when no meeting is held. The safeguarding the public funds and independent members. The Committee Department has appointed an observer departmental assets for which I am Members are appointed by the who may also attend meetings of the personally responsible, in accordance Department via the public appointments Committee and the ARAC. Minutes of all with the responsibilities assigned to me process for a four year term. A register Committee and sub-committee meetings in MPMNI. of Committee Members’ interests is are recorded. When approved, copies maintained by the Chief Executive of the Committee meeting minutes are This Governance Statement sets out and Secretary and is published on the published on the NILGOSC website, with how these duties have been carried NILGOSC website. effect from 1 April 2015, at http://www. out through the financial year ended 31 nilgosc.org.uk/minutes-of-committee- March 2015 and includes an assessment In March 2015, the Department meetings. of the corporate governance and risk designated the Committee as the management systems in place within Pension Board of the LGPS NI from The Committee met eleven times NILGOSC that have ensured these 1 April 2015. The role of the Pension during 2014/15. In addition, four ARAC responsibilities have been met. Board is to assist with securing meetings and two Staffing Committee compliance with the Governance meetings were held during the year. A 2. THE GOVERNANCE Regulations; any other legislation schedule of membership and attendance FRAMEWORK 2014/15 relating to the governance and for the 2014/15 financial year is shown in administration of the Scheme the table on the following page. NILGOSC is a non-departmental and requirements imposed by the public body (NDPB), sponsored by the Pension Regulator (TPR) in relation Department of the Environment (the to the Scheme and to assist with the Department). It is the corporate body effective and efficient governance and responsible for the administration of the administration of the Scheme. Local Government Pension Scheme in Northern Ireland (the Scheme) and its The Committee is responsible for functions and responsibilities are laid establishing the organisation’s overall down in the Local Government Pension strategic direction, ensuring that it Scheme Regulations (Northern Ireland) operates within the limits of its statutory 2014. With effect from 1 April 2015, the authority and agreeing corporate Committee is designated as the Pension targets recommended by the Chief Board for the Scheme in accordance with Executive and Secretary. The work and the Local Government Pension Scheme responsibilities of the Committee are (Governance) (Amendment) Regulations set out in the Management Committee (Northern Ireland) 2015. Terms of Reference and the Delegations A Management Statement is in place of Authority. Standing items considered with the Department which sets out by the Committee include: the broad framework within which NILGOSC will operate in administering •Management Accounts and summary of the Scheme and in the exercise of investments its functions, duties and powers. An •Fund Manager performance reports associated Financial Memorandum is •Corporate performance reports also in place with the Department, which •Reviews of the risk management framework

13 14 accords with Department of Finance and updated ‘Corporate Governance in to risk taking, with the exception of MANAGEMENT COMMITTEE AUDIT AND RISK ASSURANCE STAFFING COMMITTEE Personnel guidance. A full description Central Government Departments: compliance risks, where its appetite COMMITTEE of NILGOSC’s risk management process Code of Practice NI 2013’ with DAO is risk averse. However, this does Called Present Called Present Called Present and the assessment of risks during (DFP) 06/13. The Code is written for not prevent NILGOSC from identifying Trevor Salmon 11 11 - - - - 2014/15 are provided in section 5 of this central departments and, as such, is not opportunities to improve and modernise. Statement. entirely relevant to NILGOSC as a NDPB. Julie Erskine 11 10 - - 2 1 The risk control framework provided However, all NDPBs are encouraged to Bumper Graham 11 9 4 3 - - a consistent basis to identify, monitor consider and adopt the practice set out 2.4 CORPORATE AND BUSINESS and report risks and to progress Celine McCartan 11 9 1 1 2 1 in the Code wherever it is relevant and PLANNING strategies to mitigate against these Joe Donaghy 11 11 - - 2 2 practical and suits their business needs. risks during 2014/15. A dedicated risk The Committee publishes a Corporate I have considered the principles within Linda Neilan 11 11 4 4 - - owner is assigned at management Plan each year, which sets out its the updated Code and confirm that these David Jackson 11 11 - - 2 2 level to each risk so as to provide objectives over a three-year period have been applied in so far as is relevant clear lines of accountability across Ciaran Quigley 11 10 4 2 - - together with the appropriate targets or applicable to NILGOSC. the organisation. Risk owners review and key performance measures. The Peter Caldwell 11 11 - - 2 2 the risks that have been assigned to Committee undertook its triennial No significant conflicts of interest or Peter McMurray 11 7 - - 2 2 them on a quarterly basis and submit a strategic review in March 2012 and potential conflicts of interest were Statement of Assurance to confirm that Tom Irvine 11 11 4 4 - - subjected its revised Vision, Mission, identified during 2014/15. the existing controls are still effective Sharon McQuillan 11 11 - - 2 2 Strategic Aims and Values to a public and whether or not the risk score needs consultation in October 2012. The 4. DEPARTMENTAL APPROVALS Lindsay Todd 11 11 4 3 - - to be re-assessed. The SMT considers results of this strategic review and Average % 93% 81% 86% these Statements during its quarterly subsequent consultation exercise have In line with the DFP Pay Remit approval Attendance review of the risk register and makes been incorporated into the Corporate process, NILGOSC requested and changes to the risk scores, if necessary. Plan 2015/16 – 2017/18. NILGOSC subsequently received approval on 3 A report and any revisions to the risk Knowledge and understanding is a key 2.2 THE AUDIT AND RISK ASSURANCE •New or revised governance policies commenced its latest strategic April 2014 for the April 2014 contractual register are considered by the ARAC requirement for Committee Members COMMITTEE (ARAC) •DFP and Departmental guidance (eg. review in April 2015, which included salary increments and on 25 February prior to submission to the Management and the specific requirements are set DAOs) a comprehensive review of its Vision, 2015 for the 2014/15 and 2015/16 pay Committee for approval. out in the Public Service Pensions The ARAC provides a forum for the Mission, Values and Strategic Aims and settlements. scrutiny of NILGOSC’s corporate Act (Northern Ireland) 2014 and have The ARAC reports on the discharge of its Objectives. The outcome of this review During 2014/15, NILGOSC identified In addition to quarterly reviews of the governance, risk and internal control been incorporated into the TPR Code duties to the Committee on an annual was issued for consultation on 27 May three pension overpayments totalling risk register, a thorough annual review systems and promotes a climate of Practice 14: Governance and basis. It also considers and provides an 2015 and will be used to inform future £3,717.33 (0.003% of total pension of the risk register is undertaken at of robust financial discipline and Administration of Public Service Pension opinion on the Governance Statement business planning. payments in 2014/15) that it had been the beginning of the financial year to control. It has formally agreed Terms Schemes, effective 1 April 2015. and recommends the Annual Report and unable to recover through its normal review the existing risks and also to of Reference, which are reviewed on The Plan has been formulated by the Accounts to the Committee for approval. procedures. These overpayments were identify any new or emerging risks. All new Committee Members receive an annual basis. The ARAC comprises Committee taking into account the a result of non-notification of death The annual review for 2014/15 was induction training and are provided nominated Committee Members, at views of management and staff and 2.3 RISK MANAGEMENT AND of pensioners to NILGOSC, resulting carried out on 8 May 2014. The review with a Committee Member Handbook, least one of whom, to include the understanding external factors such INTERNAL CONTROL in pension payments continuing to included consideration of challenges which contains key documents, policies Chairperson, is required to have recent, as government policy and stakeholder be made. NILGOSC sought approval facing NILGOSC in 2014/15, including and guidance relevant to NILGOSC relevant financial expertise. Meetings needs. Each business area undertakes The system of internal control is of the Department not to pursue the the implementation of the LGPS 2015 and the role of a Committee Member. are held on at least a quarterly basis a number of operational activities which designed to manage risk to a reasonable recovery of the overpayments due to the Scheme; merging of the Councils and A Committee Member Knowledge and are attended by Internal and fulfil NILGOSC’s business objectives, level rather than to eliminate all risk circumstances involved and approval was the increased administration work Framework is in place that sets out External Audit as well as a Departmental and in turn are designed to satisfy the of failure to achieve policies, aims received on 22 June 2015. this would create and various ongoing the skills and knowledge a Committee representative. corporate aims. The Senior Management and objectives; it can therefore only projects. It was acknowledged that Member should possess or acquire to Team (SMT) reviews performance NILGOSC received approval from provide reasonable and not absolute 2014/15 would be a very busy period be an effective Committee Member. The ARAC has access to all internal audit against objectives and key performance the Department on 1 June 2015 for assurance of effectiveness. The system for NILGOSC and involve competing All Committee Members are required reports, risk registers and management measures on a quarterly basis and the write-off of £953k in respect of of internal control is based on an priorities for managers and staff but, to attend On-Board training and are reports and considers all external this is reported to the Committee and withholding tax relating to Italian ongoing process designed to identify and as these issues were already being encouraged to meet an annual target financial and governance reporting, Department. Performance against investments. This had been a long- prioritise the risks to the achievements addressed under existing risks, no new of 40 hours continual professional which informs me, as Accounting Officer, the Corporate Plan is also reported in standing issue dating back to between of the Committee’s policies, aims and risks were added to the 2014/15 register. development. Relevant training on its accuracy and appropriateness the Annual Report at the end of each 1997 and 2002. NILGOSC took all objectives, to evaluate the likelihood The risk register contained 44 risks in opportunities are highlighted to prior to release. Standing agenda items financial year. The Corporate Plan reasonable steps to recover the money of those risks being realised and the total, ten of which were categorised Committee Members and an annual for consideration by the ARAC include: is reviewed and revised annually and but was unsuccessful and a provision impact should they be realised, and as strategic risks that could impact Committee training day is organised to to manage them efficiently, effectively published on the NILGOSC website. was made in the accounts to reflect this •Quarterly review of the risk register and on the long-term achievement of the meet training needs identified through and economically. A robust system of in 2009. internal control system organisation’s strategic objectives. the training needs self-assessment. internal control has been in place in 3. COMPLIANCE WITH THE •Fraud and Whistleblowing report Training records are maintained and NILGOSC for the year ended 31 March ‘CORPORATE GOVERNANCE 5. RISK ASSESSMENT Risk appetite is the amount of risk •Internal audit reports updated on a quarterly basis. 2015 up to the date of approval of the IN CENTRAL GOVERNMENT that an organisation is willing to seek •Progress against internal audit NILGOSC’s Risk Management Policy Annual Report and Accounts, and DEPARTMENTS: CODE OF or accept in the pursuit of its strategic recommendations PRACTICE NI 2013’ sets out the organisation’s risk control objectives. It also takes account of the framework and appetite to risk. Overall, adequacy of the controls in place to On 19 April 2013, DFP issued the NILGOSC has an open/cautious appetite manage the risk. NILGOSC undertook

15 16 a thorough review of its risk appetite in due to outstanding GAD factors for the during the 2014/15 year and no incidents regarding freedom and choice and internal audit services Monitoring April 2014. It considered its strategic new Scheme. were raised through the Whistleblowing ongoing projects. These challenges • Change in the formal benchmark for • Financial and Project Management risks under the broad categories of Policy. and any new or emerging risks will be monitoring the performance of the core • Risk, Audit and Governance investment, financial, reputational, reviewed during the annual risk review property portfolio • Pension Scheme Administration NILGOSC takes information security political/strategic and compliance. It The annual test of the Business for 2015/16 and appropriate plans will • Admission of new bodies to the • Investment of the Fund seriously and has a number of controls assessed its risk appetite in relation Continuity Plan (BCP) was undertaken be put in place to effectively manage any Scheme. Details of the bodies • Communication and Engagement with in place to safeguard the security of the to each of these categories using HM in March 2015. The test was a practical risks within the existing risk and internal admitted during 2014/15 are set out Key Stakeholders information it holds. A number of minor Treasury’s classifications: Hungry, exercise, designed to test NILGOSC’s control framework. in the Administration of the Pension personal data incidents or potential Open, Cautious, Minimalist and Averse. ability to restore essential IT servers Scheme section of this report. The outcome of the evaluation for breaches were identified in 2014/15 Overall, the review determined that in order to process payments at the 6. REVIEW OF EFFECTIVENESS • Performance assessment of the 2014/15 demonstrated that, overall, but none of these issues constituted NILGOSC has an open/cautious appetite disaster recovery site. The standard OF THE GOVERNANCE Investment Advisor the Committee is set up and operates a significant breach of sensitive data to risk taking, with the exception of procedures within the BCP for advising FRAMEWORK • Outcome of the review of the asset effectively in the key areas set out above nor were they reportable breaches compliance risks, where its appetite is staff and other stakeholders of an allocation in October 2014 and and that effective processes are in place in accordance with the Information risk averse. NILGOSC’s risk appetite incident were also tested. The restore As Accounting Officer, I review the implementation of recommendations to ensure robust monitoring of NILGOSC Commissioner’s Office guidance. In May was incorporated into a revised Risk of the pension software server was effectiveness of the governance • Use of the National LGPS Framework and its performance. 2013, the management team developed Management Policy in June 2014. unsuccessful and the resolution of the framework, including risk management for Investment Consultancy Services and carried out an information risk and the system of internal control on issue was immediately prioritised. The for the tender exercise to appoint a new 6.3 PROVISION OF INFORMATION AND Following this, a further review of the assessment to identify the information at least an annual basis. The review of issue was identified and resolved by the Investment Advisor DATA TO THE COMMITTEE risk register was undertaken in July risks facing NILGOSC and the potential IT team and the test was successfully re- effectiveness is informed by the work of 2014 to categorise and score each risk impact of these risks. The outcome of performed. No other significant issues the senior managers within NILGOSC who The standing agenda items considered The Committee is provided with detailed in accordance with the agreed risk the risk assessment demonstrated that, were identified and any minor issues are have responsibility for the development by the ARAC have particular importance papers for every meeting, which include appetite. The amended risk register overall, NILGOSC’s potential exposure being addressed. and maintenance of the control to ensuring that the risk management all relevant background information, contained 43 risks in total, ten of which to information risk is low and that there environment, the regular reviews by the and internal control systems in NILGOSC facts and figures necessary to fully were categorised as strategic. is a satisfactory level of assurance NILGOSC also participates in the Committee of financial and investment are sound and operating effectively. The inform Committee Members on each that existing processes and practices The quarterly risk reviews resulted in an National Fraud Initiative’s (NFI) biennial performance, the Committee’s review highlights and key issues considered agenda item. Some examples of the are in place and operating effectively. increase in the net risk score of three data matching exercises for the of its effectiveness and the information by the ARAC during 2014/15 are set out types of information provided to the The risk assessment identified some risks on the risk register. The issues purposes of assisting in the prevention it receives, the Internal Auditor’s in its Annual Report, which is provided Committee on a routine basis include: scope for improvement and appropriate considered and the rationale for the and detection of fraud. Data matching Annual Statement of Assurance and the separately in this document. action to address any priority risk areas • Management Accounts changes are set out below. involves comparing sets of data of a body opinion provided by the External Auditor. against records held by the same or was included in an action plan. Good Assurance reports on internal controls The ARAC undertakes an annual review • Summary of investments progress was made during the 2014/15 • Receipts and payments analysis 1) The net risk score of the risk, ‘Current other participating bodies, thus allowing from the auditors of fund managers and of its effectiveness, in line with best year in relation to this action plan, • Investment performance figures and demands and competing priorities potential fraudulent claims or payments the Global Custodian are also considered practice issued by the National Audit which was reported to the ARAC on a six analysis results in unmanageable workloads to be identified. In October 2014 as part of this review. Office. The review undertaken for monthly basis. Progress included the • Fund Manager briefing reports and failure to meet organisational NILGOSC took part in the NFI 2014/15 2014/15 demonstrated that, overall, the development of an Information Strategy, • Quarterly investment reports from the objectives’ was increased during the data matching exercise and potential 6.1 HIGHLIGHTS OF COMMITTEE AND ARAC had been effective in ensuring implementation of a Secure Desk Policy, Investment Consultant first quarter of 2014/15 to reflect the matches were released to NILGOSC in ARAC MEETINGS that NILGOSC has functioned according submission and subsequent approval • Corporate Plan progress reports and increase in workload as a result of the January 2015. NILGOSC is investigating to good governance and accounting of a disposal schedule by the Public statistics implementation of the LGPS NI 2015 the matches but no cases of actual or The standing agenda items for and auditing standards and has Records Office Northern Ireland and the • Quarterly risk review reports Scheme, local government reform and suspected fraud have been identified to Committee meetings and ARAC adopted appropriate risk management roll out of a data protection e-learning • Stage II reviews ongoing projects. date. NILGOSC also takes part in the meetings have been set out in section arrangements during the period under NFI’s mortality tracing exercises in order module for all staff. 2.1 and 2.2 respectively. In addition to review. • Scheme and Regulatory updates • Business cases 2) In quarter 3, it was agreed that the to identify any potential overpayments to A robust Information Security Policy, these, other important issues considered inherent and net risk scores of the risk deceased pensioners at an earlier stage. technical safeguards and procedures by the Committee/ARAC during 2014/15 Each report has an executive summary 6.2 COMMITTEE PERFORMANCE ‘Staffing levels and structure do not NILGOSC continued to investigate any are in place to protect the security are set out below: that summarises the key issues and identified matches as a result of the NFI effectively meet current and/or future of information. Data protection and • Implementation of the LGPS NI 2015 meeting papers are issued one week data matching and mortality screening NILGOSC developed and implemented business needs resulting in an inability information security is a key part of Scheme in advance of each meeting. During exercises during 2014/15 and the ARAC a Committee Effectiveness Framework to effectively deliver a service’, should induction training for all new staff, which • Revised Statement of Investment its review of effectiveness in 2014/15, received regular reports on progress. during 2012/13. A key feature of the be increased to reflect the increased is signed off on completion. Refresher Principles and Statement of all Committee Members agreed that Framework is a self-assessment probability of this risk being realised training is also provided on a regular Responsible Investment meeting papers are useful, sufficient All cases of suspected or actual questionnaire, which aims to identify due to the uncertainty regarding public basis. • Revised Investment Monitoring and properly focused. Positive fraud are investigated in line with areas of Committee performance that sector redundancies and the increase Guidelines and Scorecard comments were made in respect of the NILGOSC’s Anti-Fraud Policy and Looking forward to 2015/16, NILGOSC are strongest and those that need in demand for NILGOSC to provide • The Committee’s risk appetite information provided, stating that the all cases of malpractice, unlawful will have a number of challenges to improvement and to identify priority quotations and benefit payments. • Approval of £40m investment in Antin quality of meeting papers is excellent. conduct or wrongdoing are investigated manage, including the potential impact areas for the Committee to focus on Infrastructure Partners II Fund and All Committee Members also agreed 3) The net risk score of the risk, ‘Failure and reported to the PSNI and the of public sector reform on Scheme improving effectiveness over the next one £40m in KKR Global Infrastructure that they are provided with key Scheme of Department to provide timely Department. NILGOSC also has a membership and the funding strategy to two years. The questionnaire focuses Investors II Fund and corporate documents and have a updated actuarial factors results in Whistleblowing Policy to allow any such of the Scheme, the impact on NILGOSC on the following eight key sections: • Outcome of the tender exercises to working knowledge of these. inability to perform calculations’, was cases to be raised confidentially. Both of the proposed merger of its sponsor appoint a contractor to carry out the • Committee Composition and Function also increased during the third quarter policies are regularly reviewed and are Department with the Department for The Committee reviews its information refurbishment of the second floor in • Committee Meetings and Support of 2014/15 to reflect the increased made available to all staff. No cases of Social Development, the potential requirements on a regular basis. Since Templeton House and a provider of • Strategic Planning and Performance probability of this risk being realised actual or suspected fraud were reported impact of new legislative provisions 2013, the Committee has had electronic

17 18 access to its meeting papers and has Ireland Audit Office (NIAO) for the from the review of the effectiveness of the confirmed its satisfaction with this provision of its external audit service. system of risk, governance and internal approach. The Local Government Auditor issued a control for the year ended 31 March 2015 qualified audit opinion for the year ended that requires reporting in this Statement. 6.4 INTERNAL AUDIT 31 March 2014 on the basis of uncertainty surrounding the eligibility of membership 8. ASSURANCE SUMMARY NILGOSC outsources its internal audit of the employees of the Youth Justice function to ASM to provide assurance on Agency Northern Ireland (YJANI). The NILGOSC aims to adhere to the the effectiveness of the governance, risk opinion was qualified on regularity and on highest standards of governance when management and control environment the financial statements on the grounds conducting its business, to ensure that in the organisation. ASM works to of limitation of scope in respect of the the organisation and the Pension Scheme an agreed audit plan, carried out in pension contributions received from are run effectively and efficiently and that accordance with the Public Sector YJANI, pension benefits paid to members decisions are taken in the best interests Internal Audit Standards. The work of who accrued benefits while employed by of its stakeholders. Internal Audit concentrates on areas of YJANI and any potential impact on Net key activities determined by analysis of Assets. The review of the effectiveness of the systems and processes that comprise the areas of greatest risk. Findings from During 2014/15, the Departments of the governance framework for 2014/15 work carried out during the year are the Environment and Justice were demonstrate that key systems are presented to the ARAC and copies of all in discussion about the means of operating soundly and that there are final reports are sent to me as Accounting transferring such employees into the no significant weaknesses or areas for Officer. In addition, Internal Audit Northern Ireland Civil Service (NICS) undue concern. Whilst I have noted provides an annual written statement to pension scheme irrespective of whether in this Statement that there are future the ARAC, setting out a formal opinion they are eligible to remain in the NILGOSC challenges and some areas where on the adequacy and effectiveness of the Scheme or not. The Department of ongoing improvements can be made, Committee’s risk management, control the Environment directed NILGOSC to these are not considered to pose a and governance processes. transfer the active membership of YJANI significant risk to the achievement of to the NICS pension scheme by way of a In their Annual Assurance Statement, NILGOSC’s strategic objectives. the Internal Auditors stated that, during bulk transfer. The transfer date is at 31 the twelve month period ended 31 March 2015 although the terms of the March 2015, NILGOSC’s systems in transfer are still to be agreed. Further relation to risk management, control and YJANI members have been given the governance were adequate and operated option of retaining their past service effectively, thereby providing substantial benefit in the NILGOSC scheme. Hence David Murphy assurance in relation to the effective last year’s uncertainties in respect of Chief Executive and Secretary whether contributions from and benefits and efficient achievement of NILGOSC’s 25 August 2015 objectives. Internal Audit did not consider paid to YJANI members since YJANI was there to be any significant control admitted to the NILGOSC scheme in 2003 issues relevant to the preparation of the may have to be repaid have been resolved Governance Statement for the year ended by both the agreement for a bulk transfer 31 March 2015. and allowing YJANI members the option to retain past service within NILGOSC. An independent external quality assessment of NILGOSC’s internal audit The NIAO has stated its intention to issue service was undertaken in 2014/15, which an unqualified opinion for 2014/15. concluded the service provided by ASM is satisfactory and conforms with the 7. SIGNIFICANT GOVERNANCE Public Sector Internal Audit Standards. .ISSUES During 2014/15, NILGOSC undertook As noted above, NILGOSC received a a competitive tender exercise for the qualified opinion (limitation of scope) provision of its internal audit service. with respect to its 2013/14 accounts on Members of the ARAC were involved the basis of uncertainty surrounding in the Selection Panel for the tender the eligibility of membership of the exercise. ASM were the successful firm employees of the Youth Justice Agency. and have been re-appointed for three This was reported as a significant issue years, effective 1 April 2015. through the Assurance Statements submitted to the Department during 6.5 EXTERNAL AUDIT 2014/15.

As a non-departmental public body, No other significant governance or NILGOSC is required to use the Northern internal control issues were identified

19 STRATEGIC REPORT: (i) ADMINISTRATION OF THE PENSION SCHEME

BACKGROUND STRATEGIC NILGOSC was set up by the Government The ranges for the bands for tiered contribution rates are revised by the Department in April 1950 to operate a pension of the Environment in April each year in accordance with the pensions increase. The scheme for the local councils and other revised bands, effective from 1 April 2014, were as follows: REPORT similar bodies in Northern Ireland. (i) ADMINISTRATION OF THE PENSION SCHEME The pension scheme is known as the BAND RANGE EMPLOYEE CONTRIBUTION RATE Local Government Pension Scheme 1 £0 - £14,000 5.5% (Northern Ireland), the ‘Scheme’, and 2 £14,001 - £16,500 5.8% is a defined benefit scheme, which 3 £16,501 - £21,300 5.9% provides retirement benefits on a ‘career 4 £21,301 -£35,600 6.5% average revalued earnings’ basis from 5 £35,601 - £47,700 6.8% 1 April 2015. Prior to that date benefits 6 £47,701 - £89,400 7.2% were built up on a ‘final salary’ basis. 7 More than £89,400 7.5% NILGOSC is the administrator of the Scheme. Employers’ contribution rates are determined by the Scheme’s actuary every three years. Following the results of the 2013 actuarial valuation, the Committee has From 1 April 2015, a member builds agreed with its actuary stable contribution rates of 20% for those employers whose up retirement pension at the rate participation in the Scheme is deemed to be indefinite and/or where an adequate th of 1/49 pensionable pay for each covenant is in place. year. Pension benefits in relation to membership between 1 April 2009 YEAR EMPLOYER CONTRIBUTION RATE and 31 March 2015 were built up at 1 April 2014 – 31 March 2015 20% th the rate of 1/60 pensionable pay for 1 April 2015 – 31 March 2016 20% each year of membership. There is 1 April 2016 – 31 March 2017 20% no automatic lump sum provided in respect of membership after 31 March Those employers who have closed the (Administration) Regulations (Northern 2009. Pension benefits in relation to Scheme to new entrants, or those whose Ireland) 2009 (SRNI 2009/33) any membership before 1 April 2009 participation in the Scheme is believed • Local Government Pension Scheme were built up at the rate of 1/80th to be of limited duration, have individual (Amendment and Transitional (pension) and 3/80ths (tax-free lump contribution rates and capital payments Provisions) Regulations (Northern sum) of pensionable pay for each year as determined by the actuary. Ireland) 2009 (SRNI 2009/34) of membership up to 31 March 2009. STATUS Effective from 9 May 2011, as amended At retirement, members may give up some pension for additional lump sum, The Scheme is a statutory public • Local Government Pension subject to HM Revenue and Customs service pension scheme as defined by Scheme (Councillors) (Amendment) (HMRC) limits. The conversion rate is the Pensions Schemes Act (Northern Regulations (Northern Ireland) 2011 £12 additional lump sum for every £1 of Ireland) 1993. The Superannuation (SRNI 2011/117) pension given up. (Northern Ireland) Order 1972 gave the power to the Department of the The Scheme is also governed by: The Scheme is funded by contributions Environment to make regulations • Local Government Pension Scheme made by both employees and employers providing for pensions, allowances and (Management and Investment of who have been designated as employing other gratuities for persons employed by Funds) Regulations (Northern Ireland) authorities or admitted to the Scheme. local authorities and other bodies. Since 2000 (SRNI 2000/178) Prior to 1 April 2009, employees’ the 1972 Order, various regulations have • Local Government (Early Termination contribution rates were fixed at 6% of been issued detailing the provisions of Employment) (Discretionary their pensionable remuneration (except governing the Local Government Pension Compensation) Regulations (Northern for those who were entitled to contribute Scheme in Northern Ireland. The Ireland) 2007 (SRNI 2007/93) to the Scheme at 5% before 1 February provisions that relate to the 2014/15 The new Public Service Pensions Act 2003 and have remained in continuous financial year are contained in the (Northern Ireland) enacted on 11 March employment). Tiered employee following sets of regulations: contribution rates, determined by the 2014 mainly came into effect on 1 April 2015. This Act sets out a common whole-time equivalent rate of pay, were Effective from 1 April 2009, as amended introduced from 1 April 2009. From 1 framework for the new public service April 2015, employee contribution rates • Local Government Pension pension schemes in Northern Ireland are determined on the actual rate of pay Scheme (Benefits, Membership and which came into effect on 1 April 2015. and not the whole-time equivalent Contributions) Regulations (Northern Further Scheme regulations were made rate of pay. Ireland) 2009 (SRNI 2009/32) to introduce the new Scheme from • Local Government Pension Scheme 1 April 2015. These regulations are described on pages 24 and 25.

21 22 As a public service pension scheme, the The following employing authorities were The following employing authorities ceased during the 2014/15 year: Scheme is contracted out of the State admitted during 2014/15: Second Pension (S2P) and is a registered PENSIONS INCREASE EMPLOYING AUTHORITY DATE OF ADMISSION EMPLOYING AUTHORITY DATE OF CESSATION public service scheme under Chapter Bloomfield Collegiate School 1 April 2014 2 of Part 4 of the Finance Act 2004. Phoenix Integrated Primary School (admission 1 January 2014 The Pensions (Increase) Act (Northern Automatic registration was achieved agreed on 19 December 2014, retrospective to 1 Filor Housing Association 30 April 2014 Ireland) 1971 and the Social Security Pensions (Northern Ireland) Order 1975 by virtue of Part 1 of Schedule 36 of January 2014) Flax Housing Association 30 April 2014 that Act. Full tax relief is granted on are the primary legislation that govern North Belfast Housing Association Limited 1 May 2014 Sports Institute Northern Ireland 30 June 2014 members’ and employers’ contributions increases to public sector pensions. (a new employing authority that replaced Flax and paid to the Fund and on all United Trinity Housing Association 30 June 2014 Filor Housing Associations) Scheme pensions were increased by Kingdom investment income other than Oaklee Housing Association 30 June 2014 2.7% with effect from 7 April 2014 in dividends arising from UK equities. Antrim and Newtownabbey Borough Council 26 May 2014 Antrim Borough Council 31 March 2015 line with the September to September increase in the Consumer Price Index. MEMBERSHIP Armagh, Banbridge and Craigavon District Council 26 May 2014 Ards Borough Council 31 March 2015 Armagh City and District Council 31 March 2015 Belfast City Council 26 May 2014 NEW REGULATIONS The number of active, deferred and Ballymena Borough Council 31 March 2015 pensioner members of the Scheme THE LOCAL GOVERNMENT PENSION Causeway Coast and Glens District Council 26 May 2014 Ballymoney Borough Council 31 March 2015 continued to grow during 2014/15. At SCHEME REGULATIONS (NORTHERN the end of 2014/15 changes took place Derry City and Strabane District Council 26 May 2014 Banbridge District Council 31 March 2015 IRELAND) 2014 (SRNI 2014/188) with respect to employing authority Belfast City Council 31 March 2015 THE LOCAL GOVERNMENT PENSION Fermanagh and Omagh District Council 26 May 2014 membership as a result of cessations SCHEME (AMENDMENT AND Carrickfergus Borough Council 31 March 2015 and mergers to form new bodies under Lisburn and Castlereagh City Council 26 May 2014 TRANSITIONAL PROVISIONS) the Review of Public Administration, Castlereagh Borough Council 31 March 2015 REGULATIONS in particular the formation of the new Mid and East Antrim District Council 26 May 2014 Coleraine Borough Council 31 March 2015 (NORTHERN IRELAND) 2014 councils and the Education Authority. Cookstown District Council 31 March 2015 (SRNI 2014/189) Some other cessations and mergers also Mid Ulster District Council 26 May 2014 Craigavon Borough Council 31 March 2015 The Local Government Pension Scheme took place during 2014/15 all of which Newry, Mourne and Down District Council 26 May 2014 are detailed below. For the purposes Down District Council 31 March 2015 Regulations (Northern Ireland) 2014 of this report, employing authority Ards and North Down Borough Council 26 May 2014 Dungannon and South Tyrone Borough Council 31 March 2015 were made on 27 June 2014 and The Local Government Pension Scheme membership details as at 31 March 2015 Fermanagh District Council 31 March 2015 reflect the new merged bodies. Oaklee Trinity Limited 30 June 2014 (Amendment and Transitional Provisions) (a new employing authority that replaced Oaklee and Larne Borough Council 31 March 2015 Regulations (Northern Ireland) 2014 EMPLOYING AUTHORITIES Trinity Housing Associations) Limavady Borough Council 31 March 2015 were made on 30 June 2014. Both sets of regulations are effective from 1 April Greenwich Leisure Limited 1 January 2015 Lisburn City Council 31 March 2015 At 31 March 2015, there were 179 2015. employing authorities contributing to the Education Authority 1 April 2015 Derry City Council 31 March 2015 The new LGPS (NI) Scheme will be Scheme. These employing authorities (admission agreed on 31 March 2015 with effect Magherafelt District Council 31 March 2015 a Defined Benefit Career Average were composed of 11 councils, 1 from 1 April 2015) Moyle District Council 31 March 2015 Revalued Earnings (CARE) Scheme with Education Authority, 1 library authority, Newry and Mourne District Council 31 March 2015 the key features as follows: 58 associated bodies, 85 schools, 9 During the 2014/15 year South Ulster • Pensions will accrue at the rate of further and higher education colleges Housing Association Limited closed Newtownabbey Borough Council 31 March 2015 the Scheme to new members. The 1/49th which means that each year a and universities and 14 employers North Down Borough Council 31 March 2015 member will save into their pension with restricted membership (closed admission of Oaklee Trinity Limited was Omagh District Council 31 March 2015 account an amount equal to 1/49th of to new members). A full list of these on a closed basis. the pensionable pay received in that organisations can be found on pages 88 Strabane District Council 31 March 2015 year. to 90. United Dairy Farmers 31 March 2015 • At the end of each year a revaluation Northern Ireland Legal Services Commission 31 March 2015 adjustment, the annual increase in Youth Justice Agency for Northern Ireland 31 March 2015 the Consumer Price Index to the Belfast Education and Library Board 31 March 2015 September of the previous year, is added to the account to ensure that North Eastern Education and Library Board 31 March 2015 the pension receives inflationary South Eastern Education and Library Board 31 March 2015 increases. The total of these becomes Southern Education and Library Board 31 March 2015 the opening balance for the next year. Western Education and Library Board 31 March 2015 • The contribution rate that a member pays will be determined by the Staff Commission for Education and Library Boards 31 March 2015 employer based on their actual MEMBERS pensionable pay (not whole-time equivalent). Contribution rates range Membership of the Scheme increased during the year to 109,462 members. At from 5.5% to 10.5% (six tiers). 31 March 2015, the Scheme consisted of 52,876 contributing members, 30,129 • The definition of pensionable pay pensioners and 26,457 deferred members. has been widened to include both

23 24 additional hours and non-contractual Board, which advises the Department, (or representatives of employers and overtime in pensionable pay. There at its request, on the desirability of members) as to the steps required to Chief Executive & Secretary are specific exclusions, for example, making changes to the Scheme. The bring the costs back within the target any payment in consideration of loss of Department of Environment intends cost. The Department will consult David Murphy holidays. to reconstitute the Local Government with the Scheme Advisory Board with • The qualifying period of membership Review Group as the Scheme Advisory a view to reaching agreement that is for benefits to be payable has Board. endorsed by all members of that Board. Deputy Secretary increased to two years. This also If agreement cannot be reached, the Nicola Todd means that members can receive a THE SHARED PARENTAL LEAVE AND Department will take steps to adjust the th refund of their contributions if they STATUTORY SHARED PARENTAL PAY accrual rate (currently set as 1/49 ) so leave the Scheme within the first two (CONSEQUENTIAL AMENDMENTS TO that the target cost is achieved. years of membership. SUBORDINATE LEGISLATION) ORDER • The normal retirement age will be the NATIONAL FRAUD INITIATIVE Investment Human Resources (NORTHERN IRELAND) 2015 (SRNI Pensions Pensions Information Finance & & member’s state pension age or age 65 Development Service Technology 2015/146) Governance Administration if higher. NILGOSC participates in the biennial National Fraud Initiative (NFI) run by • Two years’ service is required before This Order, made on 12 March 2015, the Northern Ireland Audit Office, which a member can be considered for ill- came into operation on 15 March NILGOSC recognises that one of its greatest assets is its professional and experienced staff and is committed to developing every has statutory powers to conduct data employee to their full potential. health retirement. 2015. It made amendments to the matching exercises for the purpose of • A member may elect to join a new Scheme’s secondary legislation (the • .Employers’ Guide to the 2015 Scheme in hard copy via the post. Approximately assisting in the prevention and detection STAFF DEVELOPMENT 50/50 section of the Scheme and pay Local Government Pension Scheme • .Employers’ Guide to Automatic 3,000 surveys were sent and the of fraud. In October 2014, NILGOSC took 50% of the contributions in return for Regulations (NI) 2014 and the 2014 Training and development of staff is a Enrolment response rate averaged at 22%. part in the NFI 2014/15 data matching 50% of the rate that the pension builds Transitional Regulations) in consequence key priority for NILGOSC and each year • Human Resources Guide to LGPS (NI) exercise. In addition, online surveys were also sent up. This is designed to be a short- of Part 2 of the Work and Families 3% of salary costs are invested in this • Payroll Guide to LGPS (NI) to all 179 employing authorities. A total term option for those facing financial Act (Northern Ireland) 2015. This Act In total, 1,376 matches have been particular area. As part of the annual • Members’ News, Deferred Members’ of 65 employers responded to the survey, difficulties. makes provision for new entitlements identified through the NFI 2014/15 data appraisal process, staff are required News and Pensioners’ News a response rate of 36%. •Transitional arrangements will be in to shared parental leave and statutory matching exercise. As at 31 March 2015, to complete individual training plans • Annual Report place to protect members nearing shared parental pay in place of additional 26 cases, with potential overpayments which outline their training needs for Key focuses for the surveys were: The Scheme rules are available from the retirement to ensure that they receive a paternity leave and additional statutory totalling £10,203.90, had been identified the following twelve months. In addition • Publications – participants were asked TSO shop at http://www.tsoshop.co.uk/ pension which is at least equal to that paternity pay. and were being investigated. As at 31 to maximising the ability of staff to to rate publications on the relevance or by telephoning 0870 600 5522. The which they would have received under March 2015, there were no cases of carry out their duties competently of information contained, presentation Regulations are also available online at the existing Scheme at the retirement suspected or proven fraud identified and efficiently, the NILGOSC training and layout, and ease of understanding. THE LOCAL GOVERNMENT PENSION www.legislation.gov.uk. age that applied to that Scheme. SCHEME (AMENDMENT NO. 2) through the NFI 2014/15 data matching and development policy is designed • Customer service – this section REGULATIONS (NORTHERN IRELAND) exercise. to support individual opportunities for In addition to providing information included questions relating to Full details on the application of the personal and career development. to members, deferred members, staff knowledge, courtesy, and 2015 (SRNI 2015/162) NILGOSC is continuing to seek recovery new CARE Scheme are on the NILGOSC prospective members, pensioners, and professionalism. of all overpayments identified through website and dedicated Scheme guides are These regulations were made on 16 PUBLICATIONS employers, the NILGOSC website also • Website and online communications. the 2012/13 NFI data matching exercise available to download and on request. March 2015 and came into operation contains a wide range of corporate which totalled £17,650.51 as at 31 March NILGOSC has produced a series of Overall satisfaction levels ranged from from 6 April 2015. They make provision information including: 2015. guides and booklets, which have 78% of deferred members to 98% of THE LOCAL GOVERNMENT for the introduction of a cost control been designed to provide additional • Statement of Investment Principles pensioners and employing authorities PENSION SCHEME (GOVERNANCE) mechanism to the Scheme as well as THE STAFF information on various aspects of the • Funding Strategy Statement who rated their overall satisfaction (AMENDMENT) REGULATIONS making a number of minor technical Scheme. Copies of these publications • Management Committee Biographies with the service they received as being (NORTHERN IRELAND) 2015 (SRNI amendments. Day to day administration of the Scheme are available on request from NILGOSC • Equality Scheme good or excellent. The total overall 2015/77) is performed by the Secretariat, who satisfaction rate for all respondents was The regulations allow the Department or may be downloaded from our website • Publication Scheme report to the Committee on a monthly 91.5%, a decrease on last year’s overall These regulations were made on of the Environment to appoint an www.nilgosc.org.uk. The guides and • Corporate Plan basis. Led by the Chief Executive and rating of 93%. Of all responses received 23 February 2015 and are effective actuary to carry out valuations of the booklets available are as follows: • Decisions, Reviews and Complaints Secretary and Deputy Secretary, over 50 from members, deferred members and from 1 April 2015. They amend the Scheme for the purpose of the cost experienced staff are responsible for the • Member Guide to the Local pensioners, only 1% rated their overall Local Government Pension Scheme control mechanism. The Department SATISFACTION SURVEY administration of retirement benefits Government Pension Scheme satisfaction as below average, showing Regulations 2014 to make provision for has appointed the Government and the monitoring of investments, and (Northern Ireland) A Stakeholder Satisfaction Survey for no change from the 2013/14 survey. the governance arrangements of the new Actuary’s Department (GAD) to carry operate within the functions shown • Welcome to the Local Government the year 2014/2015 was carried out Scheme. In particular, they provide for out these valuations in accordance in the chart on the following page. In Pension Scheme (Northern Ireland) in May 2015. Surveys were drawn up PUBLICATIONS the establishment of a Pensions Board with Department of Finance and • Retirement Guide addition, a dedicated Project Manager for members, deferred members and Respondents were asked to rank to assist the Committee in complying Personnel directions. The employer reports directly to the Deputy Secretary. • Increasing your Retirement Benefits pensioners, relevant to the service they communication materials on a scale with its legal obligations relating to the cost cap for the Scheme is set as 17% • Leaving the Scheme Before receive from NILGOSC. A sample was of 1 to 5 (1 being poor and 5 being Scheme. of the pensionable earnings of the The gender diversity of the Secretariat is Retirement compiled to include customers who excellent). Questions related to Scheme. When the cost of the Scheme shown on the following page and that of The Department of the Environment • Alternative Communications Leaflet have used our service during the year, relevance of information, presentation is calculated at a valuation as being the Committee Members is shown within has since designated the NILGOSC • Decisions, Reviews and Complaints as well as a random sample. Member and layout and ease of understanding. more than the margins specified, the Foreword. 80% of respondents rated NILGOSC Committee as the Pensions Board. • Re-Joining the Scheme and deferred member surveys were 2%, above or below the cost cap the communications as being good • Equality Scheme Summary completed online and pensioners’ There is also provision for the Department is to reach agreement with or excellent. • AVC Guide surveys were split between online and establishment of a Scheme Advisory the Committee, employers and members

25 26 CUSTOMER SERVICE alternative communication methods COST PER MEMBER currently being used by members, As with previous years, staff courtesy enabling communications to be adapted The table below shows administration expenses per scheme member, together with the ratio of members to staff. In the year and professionalism was ranked highest to meet their changing needs. ended 31 March 2015, the cost per member adjusted for inflation remained in line with previous years. across all groups with an average of 4.6 out of 5. PERFORMANCE STANDARDS YEAR ENDED TOTAL NUMBER OF MEMBERS/ ADMIN COST/ COST 31 MARCH MEMBERS STAFF STAFF EXPENSES MEMBER ADJUSTED FOR WEBSITE AND ONLINE In May 1997, the Management £’000 £ INFLATION £ COMMUNICATIONS Committee first approved a set of service 2006 74,688 43 1,737 1,771 23.71 29.71 standards for the activities carried out 2007 78,511 41 1,915 2,032 25.87 31.69 Elements of the website ranked by the Committee. Since then, these 2008 82,716 41 2,017 2,062 24.93 29.47 included relevance of information, standards have been reviewed annually ease of understanding and ease of and are monitored by the Committee. 2009 86,812 46 1,887 2,353 27.10 31.35 finding information required. 89% of Compliance with the performance 2010 88,568 50 1,771 2,659 30.02 33.62 respondents rated these categories standards for 2014/15 and the reporting 2011 90,667 50 1,813 1,950 21.51* 23.05* as good or excellent. 93% of active system was tested by the internal 2012 92,761 49 1,893 2,357 25.40** 26.48** members also advised that they would auditor, ASM, on a random sample use an online facility allowing them to basis. The following is a summary of the 2013 95,382 50 1,908 2,892 30.32 30.81 check the value of pension benefits, standards achieved during 2014/15. 2014 103,382 53 1,951 3,112 30.10 30.10 update personal details and request quotes if this service was available. 2015 109,462 58 1,887 3,267 29.85 29.85 The information gathered on the website, * In 2011, in accordance with IAS 19, Admin Expenses include a negative Past Service Cost of £868,000 arising from the change social media and email communications from RPI to CPI in uprating index-linked features of post employment benefits. The cost per member in 2011 excluding the section will enable NILGOSC to identify negative Past Service Cost of £868,000 was £31.08, which is £33.31 when adjusted for inflation.

** The cost per member for the year ended 31 March 2012 was unusually low mainly due to the release of the over-accruals TASK STANDARD TARGET WITHIN STANDARD made in the previous year. (WORKING DAYS) Lump sum retirement 10 days 90% 86.8% DECISIONS, REVIEWS AND stage one review is NILGOSC’s Secretary, payments Deputy Secretary or Acting Secretary. NILGOSC regularly monitors the nature COMPLAINTS of complaints to ensure appropriate Death grant payments 10 days 90% 93.3% If the individual is unhappy with the NILGOSC and its employing authorities action is taken if required and this is Leaver options notifications 20 days 90% 71.6% decision made by the Secretary at the have the right to make decisions a standing quarterly agenda item at stage one review, he/she may ask the Refund payments 10 days 95% 86.6% regarding membership, contributions meetings of the Senior Management Committee to undertake a stage two Transfer out quotations 20 days 90% 88.0% payable and benefits to be awarded. If Team. a member does not understand, or is review. Any request for a stage two Transfer out payments 10 days 90% 84.3% unhappy with, a decision made by their review must be sent to the Services Further information on the monitoring Transfer in quotations 10 days 90% 88.8% employer, the member should contact Manager within six months of the of appeals/complaints received by Transfer in confirmations 20 days 90% 95.4% the employer as they will have a policy individual receiving the Secretary’s stage NILGOSC can be requested by writing one review decision. to the Services Manager at NILGOSC’s New entrants certificates 20 days 95% 81.8% in place to address complaints and address which is provided at the disputes. Further details can be found in the Correspondence 10 days 95% 91.2% beginning of this report. ‘Decisions, Reviews and Complaints’ Benefit quotation requests 10 days 90% 91.3% If an individual is unhappy with a decision made by NILGOSC, they should booklet, which is available on the Issue members' annual by 30 November 100% 100.0% REVIEW OF CORPORATE PLAN try to resolve the issue with the member NILGOSC website or on request. This report 2014/15 of staff who made the decision, or with guide provides full contact details for Issue members’ annual Within 6 months of year 100% 100.0% their manager. This can be done in external bodies which may be able to NILGOSC publishes its Corporate Plan benefit statement end, unless relevant data writing, by telephone or by personal help to resolve complaints, such as the over a rolling three-year period. The unavailable visit. If the matter is not resolved to their Pensions Advisory Service, the Pensions purpose of the Corporate Plan is to set Pensions paid each month Last banking day of month 100% 100.0% satisfaction, they can make a formal Ombudsman Service, the Pensions out the aims, objectives and service Regulator and the Northern Ireland standards of the Committee, taking P60s issued to all By 31 May 100% 100.0% complaint. Ombudsman. pensioners into account external factors such as NILGOSC operates a two stage process government policy and stakeholder for Reviews and Complaints. At stage NILGOSC received 29 ill-health It is acknowledged that target performance was not met for 8 of the 15 performance standards. Performance deteriorated during needs. The Corporate Plan is reviewed one, the individual sends the Services retirement benefit appeals, 6 formal 2014/15 as a result of preparation for the new CARE Scheme, system changes due to a move from paper to electronic records, and revised annually, and a copy of the Manager at NILGOSC a letter or a complaints and 3 informal complaints migration to a new pension administration software system and an increase in the volume of queries from employing authorities 2015/16 – 2017/18 Corporate Plan can be Reviews and Complaints Form giving during 2014/15, a total of 38 appeals/ and members due to the changes to the Scheme. downloaded from the NILGOSC website details of the complaint, and asking for complaints. Of the 29 ill-health retirement benefit appeals, 4 progressed at www.nilgosc.org.uk. As can be seen a review of the decision. The form is from the following table, a significant available on the NILGOSC website or on to stage two reviews, 2 of which were upheld. 1 of the 6 formal complaints proportion of the 2014/15 Corporate Plan request from the Pensions Service team. was completed or on target at The person appointed to consider a progressed to a stage two review and was not upheld at this stage. 31 March 2015.

27 28 1. TO CONTINUE TO PROVIDE A LEVEL OF SERVICE NEEDED TO COMPLY WITH THE PENSION SCHEME REGULATIONS, GOOD PRACTICE, OTHER LEGISLATION AND STAKEHOLDER EXPECTATIONS.

BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 ACTION INDICATOR MARCH 2015 1.1 To pay member’s 1.1.1 To pay monthly Paid by last banking 100% of pensions paid Achieved 1.3.5 To provide an Within 20 working 88% of transfer out Substantially Achieved pension benefits, pensions promptly and day of the month by last banking day estimate of a cash days of receipt of quotations processed refunds and accurately equivalent transfer relevant details within target, average transfers promptly value time taken - 12 days 1.1.2 To pay pension Within 10 working 87% of lump sum Substantially Achieved lump sums promptly days of the receipt of payments made within 1.4 To pay death 1.4.1 To notify Within 10 working 91% dependants’ Achieved and accurately the relevant details target, average time benefits promptly and dependants of days of receipt of pensions paid within taken - 8 days accurately pensions payable relevant proof of title target, average time taken - 6 days 1.1.3 To pay refunds of Within 10 working 87% of refunds paid Substantially Achieved contributions promptly days of receiving a within target, average 1.4.2 To pay death Within 10 working 93% of death grants Achieved and accurately valid application time taken - 9 days grants promptly days of receipt of paid within target, relevant proof of title average time taken - 3 1.1.4 To pay transfer Pay the cash 84% of transfer out Substantially Achieved days payments promptly equivalent within payments within and accurately 10 working days of target, average time 1.5 To ensure that all 1.5.1 Ensure that Complete changes Shared Parental Achieved receiving authority taken - 7 days necessary action is processes change within 3 months of Leave and Statutory taken on any change to reflect regulation regulations made Shared Parental 1.2 To credit pension 1.2.1 To collect Within 10 working Average of 6 Substantially Achieved to pension scheme changes Pay (Consequential contributions, monthly contributions days of following employing authorities rules Amendments transfers and other and invest in scheme month paid late per month. to Subordinate Employer liabilities fund promptly Credit Control Policy Legislation) Order received promptly and and Procedures (NI) 2015 made on accurately applied and letters/ 12 March 2015 and late payment invoices operational from 15 issued as required. March 2015. 1.2.2 To reconcile For 100% of employers 204 out of 204 annual Achieved 1.5.2 To train relevant Relevant staff trained Staff were briefed on Achieved contributions received by 31 December returns reconciled staff on any regulation on new regulations the Shared Parental and service credited changes within 3 months of Leave regulations. annually regulations made See 1.5.5 for action re 1.2.3 To credit service Provide confirmation 95% of transfer in Achieved LGPS 2015. on receipt of within 20 working confirmations pro- 1.5.3 To have To have software No amending Achieved transfers into the days of receiving the cessed within target, administration tested and installed regulations, apart Scheme promptly transfer payment average time taken - systems updated for and to have new from LGPS 2015 that 11 days any new or amended forms and procedures required software, 1.2.4 To obtain and Within 20 working 100% carried out Achieved regulations developed within 3 form and procedural advise employers days of receipt of within 20 working days months of regulations amendments. See of actuarial costs information made 1.5.5 for LGPS 2015 and agree payment actions. schedule promptly 1.5.4 To train relevant Relevant staff trained All staff had Substantially Achieved 1.3 To provide 1.3.1 To respond to Within 10 working 91% of Substantially Achieved staff on the LGPS 2015 on LGPS 2015 scheme practitioner training members with member queries days correspondence scheme within 3 months of on 9 & 10 October information needed responded to within regulations made 2014 and refresher to make pension target, average time training on 10 March decisions promptly taken - 4 days 2015. 1.3.2 To provide Provide a statement of 72% of early leaver Moderately Behind 1.5.5 To have To have new software The new software was Substantially Achieved members leaving the benefit options within notifications Target administration tested and installed, tested and installed by Scheme with option 20 working days of processed within systems updated to have new forms and 10 March 2015 and all choices notification target, average time for the LGPS 2015 procedures developed forms rewritten. Due taken - 19 days scheme and all within 3 months of to late receipt of GAD necessary procedures regulations made guidance and final 1.3.3 To provide Benefit quotations 91% of benefit Achieved in place to administer software, procedures members with benefit issued within 10 quotations issued the scheme were updated quotations on request working days within target, average according to priority. time taken - 5 days Further programming 1.3.4 To provide Benefit statements Deferred statements Achieved needed for transfer members and issued within 6 issued in July calculations and deferred members months of year end 2014. 45,228 active councillors. with benefit unless relevant data statements were statements unavailable issued in August/ September 2014

29 30 BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 ACTION INDICATOR MARCH 2015 1.5.6 To issue To have prepared Two circulars Achieved 1.8 To ensure that the 1.8.1 To maintain Full office Phase 1 completed Moderately Behind guidance to employers and distributed were issued to all office environment and improve office refurbishment in November 2014. Target on the LGPS 2015 guidance on the employers advising is adequate to meet facilities to meet the completed by 31 Project Manager has scheme including LGPS 2015 scheme of changes to the the growing needs ongoing needs of March 2016 taken ownership of changes to the within 3 months Scheme. Employers of stakeholders and stakeholders and staff this project and a contribution rates of confirmation of attended LGPS 2015 staff revised completion where appropriate the Department of training sessions 24 date included in the Environment’s & 30 October and 2015/16 Corporate intentions 12 November 2014. Plan. Progress is in Further discretionary line with revised date. policy training was 1.9 To update address 1.9.1 To use external To update address 95% of address Achieved provided to employers information of those databases/tracing information within 10 changes processed in January 2015. members who services to track working days within target, average HR, Payroll and have not informed down members with time taken - 3 days Employers’ Guides NILGOSC of address missing address were issued. changes information 1.5.7 To monitor and 100% accuracy for Post June 2010 data Substantially Achieved improve data quality post June 2010 data. accuracy – 99.74% and ensure common 95% legacy data Legacy record data data quality meets deemed adequate accuracy - 99.7% TPR standards 1.6 To ensure 1.6.1 To respond Within 40 days (DP) 8 FOI requests (plus Achieved 2. TO MAINTAIN AN EFFECTIVE INVESTMENT STRATEGY IN LINE WITH THE ACTUARIAL PROFILE OF that systems and to Data Protection or 20 days (FOI) of 3 DoE inputs) and THE FUND. procedures comply (DP) and Freedom request 38 subject access with relevant of Information (FOI) requests (SARs) BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS legislation requests received to 31 March ACTION INDICATOR MARCH 2015 2015. All requests responded to within 2.1 To value the 2.1.1 Undertake Publish valuation by Not due in current On Target the deadline. Scheme assets and Actuarial valuation 31 March 2017 planning year liabilities and set every 3 years 1.7 To ensure 1.7.1 To ensure all That all staff complete 100% of appraisals Substantially Achieved contribution rates 2.1.2 To ensure Collect minimum All employers with a Achieved NILGOSC attracts and staff complete training plans and that training (including accordingly retains well trained plans and undertake is received identification of employer contribution contributions due change in contribution personnel appropriate training training needs) rates for 2014/15 under current Rates rate for 2014/15 have were completed and implemented and Adjustment confirmed they are returned by 30 June certificate paying the correct rate 2014. Approximately 2.2 To invest scheme 2.2.1 To achieve NILGOSC fund target 3 year and 5 year Achieved 2,510 hours of training funds in accordance investment return to 31 March was completed in the with the Statement of performance in line 2015 was ahead of year, including over Investment Principles with targets fund target of CPI+5% and above training by 6.08% and 2.62% identified through the respectively appraisal process. 2.2.2 To monitor and That no manager At 31 March 2015 no Achieved 1.7.2 To undertake a Review completed by Not due in current On Target regulate investment breaches investment fund manager had review of effectiveness 30 September 2015 planning year management guidelines and that breached investment of revised structure underperformance is guidelines and and job evaluation promptly addressed underperformance exercise was addressed 1.7.3 To undertake a Review completed by Documentation Achieved through the scorecard review of the existing 31 March 2015 reviewed and a revised process recruitment process application form is 2.2.3 To maximise Amount of income Commission Achieved and documentation being trialled for a income from scheme earned Recapture: £2,121.75 number of recruitment assets to 28 February exercises. 2015; Stocklending: 1.7.4 To introduce an Program in place by 31 Employee Assistance Achieved £281,105.58 to 28 employee assistance March 2015 Program rolled out February 2015; Class program and operational from Actions: £19,333.94 to December 2014. 31 March 2015.

31 32 BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 ACTION INDICATOR MARCH 2015 2.3 To understand and 2.3.1 Implement Vote in as many Votes cast at all 704 Achieved 3.2.3 To lay the annual In accordance with 2013/14 Annual Report Achieved adopt good practice the Statement company meetings meetings where report in the NI date agreed with and Accounts laid with in Public Sector fund of Responsible as possible, recoup research allowed an Assembly Department the NI Assembly on 8 management Investment earnings through informed decision September 2014 class actions and to be made. 128 to engage with engagement letters 3.2.4 To implement Actions completed in Pension Benefit Substantially Achieved companies to improve issued to UK and the Communications line with target dates Statements issued on governance European companies. Strategy time, videos added to the website, literature £19,333.94 recovered updated and circulated through class actions. to employers 3.3 To provide 3.3.1 Communication Within 3 months of See 3.3.3 for LGPS Achieved members and of any regulation regulations being 2015 actions 2.3.2 To undertake Review complete by Individual employer On Target employers with specific changes made a review of the March 2016 data gathered and details of regulation sustainability of the covenant strength changes 3.3.2 To advise all Issue guidance to new 82% of new members Moderately Behind fund including future assessed. Initial new members of the scheme members processed within Target funding mechanisms discussion with benefits of the pension and membership target, average time Actuary took place in scheme certificates within 20 taken - 2 days March 2015. working days of receipt 2.3.3 Review Statement Revise FSS and revise The SIP was last Achieved 3.3.3 To brief members Communications Two circulars were Achieved of Investment SIP when necessary updated and approved and employers on the issued within 3 months issued to all employers Principles (SIP) and by the Committee on LGPS 2015 of regulations made advising of the 2015 Funding Strategy 29 April 2014 changes. Employer Statement (FSS) training seminars in 2.3.4 To review Weaknesses addressed Preliminary Moderately Behind Autumn 2014 had 306 employer covenants by March 2015 assessment of scheme Target attendees. Further and address employers completed employer training on weaknesses in February 2015. discretions had 184 Identified weaknesses attendees. to be addressed in 3.4 To provide advice 3.4.1 Continue to work Meetings with bodies, Meetings and Achieved early 2015/16. on the pensions with RPA affected advice given to communications implication of other bodies and staff members, satisfaction ongoing with affected changes such as public to explain pension with NILGOSC service. bodies and the Local sector reorganisation implications of RPA Representation on Government Staff transfers working groups Commission 3. TO PROMOTE THE SCHEME AND INFORM MEMBERS AND EMPLOYERS OF THEIR PENSION OPTIONS. 3.4.2 Determine Produce a staff plan Under continuous Achieved BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS the implications of within 3 months of RPA review. The impact ACTION INDICATOR MARCH 2015 Local Government decisions being made of public sector reorganisation on reorganisation on 3.1 To actively 3.1.1 To monitor the Increase Scheme Membership at April Achieved the ability to deliver a staffing levels has encourage retention level of members membership by 10% 2012 was 44,030. pension service been assessed and in, and new opting-out of the between April 2012 Membership at 31 recruitment for membership of, the Scheme, understand and March 2015 March 2015 was additional resources Scheme the reasons and 52,876, representing has commenced. market the Scheme to an increase of 20%. non-members 3.2 To provide general 3.2.1 Publish Within 3 months of All Scheme literature Achieved Scheme information comprehensive Scheme changes and guidance was to Scheme Scheme literature and published by 31 March 4. TO INFLUENCE THE FUTURE OF THE LOCAL GOVERNMENT PENSION SCHEME. employers, their guidance 2015 employees, members BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS and pensioners ACTION INDICATOR MARCH 2015 through active 4.1 To respond to 4.1.1 To ensure that All employers Employers informed of Achieved engagement consultation on employers are aware informed of key key potential scheme 3.2.2 Provide employee Employer satisfaction 26 seminars conducted Achieved changes to the of potential scheme potential scheme changes and employer seminars rating as measured - 3 for councillors, 10 LGPS and actively through annual retirement, 11 LGPS changes changes contribute to satisfaction survey 2015 and automatic consultee groups 4.1.2 To respond By consultation reply All relevant Achieved enrolment and 2 on to Government date consultations RPA and Severance consultation exercises responded to directly or indirectly

33 34 BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 ACTION INDICATOR MARCH 2015 4.1.3 To respond By consultation reply All relevant Achieved 5.1.5 Maintain a Risk The Risk Register is The 2014/15 risk Achieved to Department of date consultations Register and take compiled, reviewed register was agreed the Environment responded to directly actions to mitigate quarterly and action by the SMT, the Audit consultation exercises identified risks identified is completed & Risk Assurance 4.1.4 To contribute to To have representation Representation has Achieved Committee (ARAC) consultee groups eg on all groups continued to date and the Management NAPF, LGPC, LAPFF Committee. The risk etc register was reviewed each quarter and 4.2 To engage 4.2.1 To identify Evidence of Major issue to date Achieved actions were taken with, and inform, interested parties engagement was HMRC registration to mitigate identified interested parties and decision makers which has been risks. and relevant for relevant issues resolved decision makers and ensure they are 5.1.6 To undertake Review undertaken Not due in current On Target adequately briefed on a triennial review of by 31 December 2015 planning period the consequences for the Organisation’s to inform the 2016/17 NILGOSC Strategic Objectives Corporate Plan 4.3 To improve the 4.3.1 Identify potential Formal notification of DOE made latest Achieved 5.1.7 To undertake the Tenders completed in A Procurement Achieved Scheme Regulations changes to the existing amendments to the Regulations which retendering of goods line with procurement Schedule is in place for the benefit of regulations or draft Department reflected advice and services schedule and tenders were employers and regulations and lobby from NILGOSC. planned/completed members the Department to Further lobbying in line with the make the changes for improvements Procurement Schedule continuing. during 2014/15. 5.1.8 To ensure that all Each member has Committee members Substantially Achieved Committee members undertaken 40 hours of completed 520 hours undertake appropriate training/ development of training, resulting 5. TO UNDERTAKE BUSINESS IN AN EFFICIENT, EFFECTIVE AND ACCOUNTABLE MANNER AS training, including per annum. in the Committee REQUIRED OF A PUBLIC BODY. induction training, in Induction completed as a whole meeting line with good practice. within 2 months of its target. Twelve BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS appointment. members met their full ACTION INDICATOR MARCH 2015 or pro-rata target and one member did not 5.1 To maintain 5.1.1 Respond to Within 10 working External Auditor letter Achieved meet their target. corporate External Auditor days responded to within 3 governance letters working days 5.2 To introduce IT 5.2.1 Implementation System installed and Project plan kept On Target arrangements developments and of an Electronic operational in line with under review to 5.1.2 Review of Annually by 31 March Governance Achieved appropriate for a other procedures Document Records project plan facilitate change in public body NILGOSC Internal Statement published in order to improve Management System pension administration Controls in September 2014 efficiency software and new 5.1.3 Participate in NFI Identify invalid The 2012/13 NFI and Achieved scheme exercise and biannual payments and recoup mortality tracing 5.2.2 To undertake a 100% members 99.8% member files Substantially Achieved mortality tracing losses exercises were closed back scanning exercise files and paper scanned as at 31 exercise in January 2015 for paper based based records held December 2014. with the recovery of records electronically by Remaining 0.2% outstanding amounts December 2014 member files and ongoing. certain corporate The matches in respect records scanned by 31 of the 2014/15 NFI March 2015. exercise were released in January 2015. 5.2.3 To collect To start using email Email addresses On Target Almost 50% of the member email addresses for bulk collected for active matches were closed addresses, automate publications by March members and existing by 31 March 2015, email address updating 2016 email addresses investigation is ongoing and preferencing, validated for deferred in respect of the open and use email for members and cases. publications if desired pensioners. Currently by the member hold email addresses 5.1.4 To test Business Annual test of The annual test of the Substantially Achieved for 9,378 active Continuity procedures Business Continuity BCP was undertaken members, 3,420 and ensure effective Plan on 27 March 2015. One deferred members element failed and was and 842 pensioners. rectified and retested 12,177 members on 3 April 2015. were emailed their annual newsletters in November 2014.

35 36 BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 ACTION INDICATOR MARCH 2015 5.2.4 To replace the New system New phone system Achieved 6.3.2 To submit s75 Submission to Equality The s75 Annual Achieved existing telephone operational by 30 installed and Annual Progress Scheme by 31 August Progress Report, system September 2014 operational by July Report to include 2014 including publication 2014 publication of of EQIA monitoring 5.2.5 To effectively Transition completed Project completed in Substantially Achieved EQIA monitoring information, was manage the in line with project December 2014 information submitted (both via transition to an plan post and e-mail) to the alternative pension Equality Commission administration system within deadline on 12 August 2014 5.2.6 To undertake Appraisal completed An appraisal was Substantially Achieved an appraisal of by 31 March 2015. completed and it requirements Implementation recommended that STATUS KEY and subsequent complete by 31 March this system should Achieved: Target met implementation 2016. be sought as part Substantially Achieved: Achieved greater than 90% of target of system to allow of the procurement On Target: Progress in line with plan for direct access to for pensions Moderately Behind Target: Achieved between 75% and 90% of target services by members. administration software. 5.3 To manage 5.3.1 To issue an Newsletter issued Issued June, Achieved change in an internal newsletter to quarterly September, December effective and timely improve and promote and March manner staff communication 5.3.2 To establish Projects managed EDRMS and Altair On Target project groups to in accordance with projects being manage projects in a PRINCE 2 methodology managed in line with timely and effective and in line with project best practice. Altair manner timetable migration successfully completed in December 2014.

6. TO BE COMMITTED TO THE NEED TO PROMOTE EQUALITY OF OPPORTUNITY, THE DESIRABILITY OF PROMOTING GOOD RELATIONS AND THE FULFILMENT OF THE SECTION 75 OBLIGATIONS.

BUSINESS OBJECTIVE OPERATIONAL PERFORMANCE PROGRESS AT 31 STATUS ACTION INDICATOR MARCH 2015 6.1 To assess 6.1.1 Use the tools of Screening and/or EQIA Ten policies were Achieved the likely impact screening and EQIA to completed during the screened during the of policies on determine the likely policy development or year ended 31 March the promotion impact of any new review process 2015. No EQIAs were of equality of policy deemed necessary. opportunity and good relations

6.2 To ensure 6.2.1 To prepare s55 Report prepared by 16 Report prepared by 16 Achieved NILGOSC personnel Report for Equality April 2014 April 2014 policies promote Commission equality of 6.2.2 To record annual Report submitted by 1 Report for the year Achieved opportunity recruitment monitoring May each year to 1 January 2014 information submitted in advance of 1 May 14 deadline on 22 January 2014 6.3 To ensure that 6.3.1 To implement Actions completed in Progress against Achieved NILGOSC meets the Equality Scheme line with plan the action plan was or exceeds best Action Plan 2012/13- reviewed for the practice as set 2014/15 periods ended 30 out by the Equality September 2014 and Commission 31 March 2015

37 38 ANNUAL EQUALITY STATEMENT the actions set out in the Action Plan for in the Local Government Pension YEAR END 31 MARCH 2015 2012 to 2015. Some of the actions that Scheme Regulations (Northern have been taken or that are in progress Ireland) 2014 with a view to sending The Committee’s Equality Scheme states include: this document to the Department of that the Committee will report on the the Environment in early 2015/16 for progress it has made in the delivery of its • An Audit of Inequalities was carried consideration. Section 75 statutory duties. out between November 2014 and March 2015 to identify any inequalities • A staff survey has been drafted and will OUR COMMITMENT that exist for those affected by the be issued during the 2015/16 financial The Committee re-affirms its functions and policies of the pension year. The results of the survey will commitment to the fulfilment of its scheme. The results were used to be used to help identify any actions duties under Section 75 of the Northern inform NILGOSC’s draft Equality that could promote improved good Ireland Act 1998 in that it will have due Scheme Action Plan 2015 to 2018. The relations among staff. regard to the need to promote equality of draft Action Plan will be issued for opportunity: consultation and, after consultation, In line with its Equality Scheme, will be submitted to the Equality NILGOSC carried out screening of any • Between persons of different religious Commission for approval. new or revised policies for equality belief, political opinion, racial impacts during 2014/15 and published group, age, marital status or sexual • NILGOSC has continued to record quarterly screening reports on the orientation; the key reasons for members leaving website. • Between men and women generally; the Scheme to try and identify any patterns which may indicate NILGOSC did not receive any complaints • Between persons with a disability and potential inequalities. This data was relating to equality issues in the 2014/15 persons without; and, also incorporated into the Audit of year and continues to provide its Inequalities. publications in alternative formats on • Between persons with dependants and request. persons without. • Monitoring data had been collected in January 2014 in respect of NILGOSC In addition, without prejudice to its Those who require further information staff and Committee members. The obligations above, NILGOSC shall, in about the NILGOSC Equality Scheme or Department of the Environment carrying out its functions, have regard would prefer to receive this document in was advised on 30 April 2014 of the to the desirability of promoting good an alternative format (such as in large Committee composition and the relations between persons of different print, in Braille, on audio cassette or on underrepresentation of certain Section religious belief, political opinion or racial computer disc) and/or language, please 75 groups. group. contact the Equality Officer at: • Following on from the review of PROMOTION OF EQUALITY OF staff monitoring data collected in Address: NILGOSC, Templeton House, OPPORTUNITY January 2014, recruitment advertising 411 Holywood Road, Belfast, BT4 2LP NILGOSC has demonstrated its continues to target underrepresented Telephone: 0845 308 7345 commitment to the promotion of groups by welcoming applications equality of opportunity during 2014/15 from those in the 41-60 year old age Typetalk: 18001 0845 308 7345 and the equality agenda continues to be group, males and Roman Catholics. (for people using a textphone) promoted and supported by the most • An Alternative Communications leaflet senior levels of the organisation. is included with all retirement claim Fax: 0845 308 7344 The NILGOSC Corporate Plan for 2014/15 forms issued. The leaflet includes included objectives relating to equality headline information in alternative Email: [email protected] and community relations. The Senior formats and languages. As at 31 Management Team has monitored the March 2015, there are 49 individuals to Copies of the Equality Scheme and this implementation of these objectives on a whom NILGOSC sends information in Annual Equality Statement are also quarterly basis. an alternative format. available on the Internet at: www.nilgosc.org.uk/equality-scheme. IMPLEMENTATION OF THE EQUALITY • Equality awareness training is provided SCHEME for new members of staff through the induction process. NILGOSC’s Equality Scheme was last approved by the Equality Commission on • Equality and Good Relations training 25 July 2012. NILGOSC carried out its was provided to the Committee at its duties in relation to the Equality Scheme annual training event on 9 April 2014. throughout 2014/15 to ensure that its policies and procedures are fair and • NILGOSC is preparing a document lawful and implemented a number of outlining the inequalities inherent

39 STRATEGIC REPORT: (ii) INVESTMENT OF THE FUND

BACKGROUND NILGOSC maintains overall control of the INVESTMENT STRATEGY Fund by: STRATEGIC The Regulations require NILGOSC NILGOSC sets its long-term investment to maintain a fund to provide for the • Agreeing the overall investment strategy by taking into account the payment of current and prospective objectives with the fund managers nature and timing of the Fund’s liabilities REPORT benefits to members of the Scheme. taking into account actuarial identified through the triennial actuarial (ii) INVESTMENT OF THE FUND In order to ensure that this objective expectations and investment powers valuation and its investment aims is achieved, NILGOSC must determine • Setting targets for asset allocation and objectives. In setting the Fund’s a suitable investment strategy, • Monitoring investment performance investment strategy, NILGOSC first which provides both a high return on • Monitoring investment transactions considers the lowest risk strategy that it investments and an acceptable level of could adopt in relation to the Scheme’s risk. NILGOSC has compiled a Statement of liabilities. The investment strategy is Investment Principles (SIP) as required designed to achieve a higher return All income received by NILGOSC, by the Local Government Pension than the lowest risk strategy while including employees’ and employers’ Scheme (Management and Investment maintaining a prudent approach to contributions, rents, interest and of Funds) Regulations (Northern Ireland) meeting the Scheme’s liabilities. dividends are paid into the Fund. 2000. The SIP is reviewed on at least Expenditure, such as monthly pensions, an annual basis to ensure it remains These considerations drive decisions retirement allowances, death grants, relevant and up-to-date. Copies of the over asset allocation. NILGOSC reviews refunds and the administration costs of SIP are available on request or can be the Fund’s asset allocation on an NILGOSC are met from the Fund. downloaded from the NILGOSC website annual basis at a meeting, which is at www.nilgosc.org.uk. The assets and liabilities of the Fund are attended by all the fund managers, the valued every three years by the Scheme Fund’s actuary and investment advisor. actuary. Following each valuation, INVESTMENT AIMS AND In determining its asset allocation, the actuary certifies the employers’ OBJECTIVES NILGOSC considers: contribution rates to maintain the NILGOSC aims to invest the assets of viability of the Fund. A statement by the • A full range of asset classes the Scheme prudently to ensure that Scheme actuary for the year ended 31 • The risks and rewards of a range of the benefits promised to members are March 2015 is included on pages `alternative asset allocation strategies provided, and to provide reasonable 79 and 80. • The suitability of each asset class stability in contribution rates for the • The need for appropriate employers. To meet this aim NILGOSC’s FUND MANAGEMENT ,diversification overall investment objective is to exceed price inflation and general salary growth NILGOSC retains overall responsibility The Fund’s investments are diversified over long term periods. for the Fund, with the power to appoint across various asset classes in order to one or more fund managers to manage increase the overall expected returns The Consumer Price Index (CPI) is a and invest fund monies on its behalf. In while reducing the overall level of measure of the average change over appointing fund managers, NILGOSC expected risk. A mixture of passive and time in the prices paid by consumers retains statutory responsibility for the active mandates is also used to capture for a market basket of consumer goods management of the Fund and that the returns required to meet the Fund’s and services. The annual percentage responsibility cannot be delegated. objectives. change in CPI is used as a measure of inflation and to index (i.e., adjust for NILGOSC has a statutory duty to: The following table sets out the Fund’s the effect of inflation) the real value of strategic asset allocation as at 31 wages, salaries and pensions to show • Take account of the amount to be March 2015 and the target allocation changes in real values. NILGOSC’s latest managed by each manager and be to be implemented over the medium actuarial valuation assumes a prudent satisfied, having taken advice, that it is term. It also sets out the approximate investment return of CPI +2.9% (or not excessive assumptions made about the real return Retail Price Index [RPI] +2%). In order to • Have regard to the suitability of for each asset class in determining the reduce the funding deficit, the aim of the investments strategy as at 31 March 2015. • Monitor the performance of the Fund is to achieve investment returns managers and from time to time above this level. Therefore, the overall review their appointment investment target is to exceed CPI by 5% • Take proper advice, obtained at regular per annum, to be measured over a three intervals and five year period.

41 42

Current Target Real Asset Class WeightingCurrent WeightingTarget ReturnReal Asset Class WeightingCurrent% WeightingTarget% %ReturnReal p.a.* UK EquitiesAsset Class WeightingCurrent22.1% WeightingTarget17.5% %ReturnReal 5p.a.*.0 OverseasUK EquitiesAsset Equities Class WeightingCurrent51.522.1% WeightingTarget50.017.5% %ReturnReal 4.55p.a.*.0 % % % p.a.* IndexOverseasUK Equities-linAssetked Equities Gilts Class Weighting51.522.13.3 Weighting50.017.53.5 Return0.04.55.0 FixedIndexOverseasUK Equities -Bondslinked Equities Gilts 51.522.1%8.43.3 50.017.59.03.5% %1.25 0.04.55p.a.*.0 PropertyFixedIndexUKOverseas Equities -Bondslin ked- Equities Core Gilts 22.151.58.8.43.35 10.017.550.09.03.5 1.254.00.054.5.0 PropertyFixedOverseasIndex -Bondslin ked–- Equities CoreIndex Gilts - linked 51.54.18.8.43.35 10.050.05.09.03.5 1.253.04.04.50.0 IndexFixed -Bondslinked Gilts 3.38.4 3.59.0 1.250.0 AlternativesProperty ASSET–- CoreIndex CLASS -linked CURRENT0.24.18.5 10.05.0TARGET N/A3.04.0REAL RETURN % p.a.* ASSET CLASS FUND MANAGER % OF TOTAL FixedProperty Bonds - Core WEIGHTING8.48.5 WEIGHTING10.09.0 1.254.0 FUND *AlternativesProperty The real – returnIndex - linkedfigures are based on% 0.24.1 Aon Hewitt’s 105.0 %year forwardN/A3.0- Property – Index-linked 4.1 Current Target5.0 Real 3.0 UK Equities Baillie Gifford 8.2% looking*AlternativesProperty The real assumptions - Corereturn figures forAsset each are Class basedasset onclass0.28. Aon5Weighting and Hewitt’s have Weightingbeen 1010.05.0 year adjusted forwardReturn forN/A4.0 - its CPI lookingassumption*PropertyAlternatives The real assumptions UK– EquitiesreturnIndex of 1.9%- linkedfigures perfor each annum.are basedasset 22.1onclass4.10.2 Aon and %Hewitt’s have been 105.017.5% year adjusted forward% p.a.* forN/A3.0 - its CPI5.0 UK Unconstrained Equities BlackRock Investment Management 6.6% * The realOverseas return Equities figuresUK Equities are based 51.5on Aon22.1 Hewitt’s 1017.550.0 year forward5.0 - 4.5 Jupiter Asset Management 6.7% lookingassumptionAlternatives assumptions of 1.9%Overseas perfor eachEquitiesannum. asset class0.2 and51.5 have been5.050.0 adjusted4.5 for N/A its CPI Index-linked Gilts 3.3 3.5 0.0 The actuallookingassumption* T heasset real assumptions allocation return of 1.9% figuresIndex as perfor- linat ked each annum. are31 Gilts March basedasset 2015onclass Aon isand Hewitt’s3.3illustrated have been 10 3.5in year theadjusted forwarddiagram0.0 for - below:its CPI Global Equities Wellington Management 6.7% Fixed Bonds 8.4 9.0 1.25 The actuallookingassumption asset assumptions allocation of 1.9%Fixed as perfor Bonds at eachannum. 31 March asset 2015class isand 8.4illustrated have been 9.0in theadjusted diagram1.25 for below:its CPI Property - CoreProperty - Core 8.5 8.5 10.010.0 4.0 4.0 Global Unconstrained Equities Baillie Gifford 6.3% The actualassumption asset allocation of 1.9%Property as per at – annum. Index31 March-linked 2015 is 4.1illustrated 5.0in the diagram3.0 below: Edinburgh Partners 5.3% Property – Index-linked 4.1 5.0 3.0 The actual asset allocationAlternatives as at 31 March 2015 is 0.2illustrated 5.0in the diagramN/A below: Fund Asset Allocation at 31 March 2015 Passive Funds Legal & General Investment Management 43.6% Alternatives * The real return figures are0.2 based on Aon Hewitt’s 105.0 year forward- N/A The actual assetFund allocation Assetlooking as atassumptions Allocation31 March for each 2015 asset isat c lassillustrated 31and have March been in adjustedthe diagram2015 for its CPI below: Fund* The real return Assetassumption figures are Allocation basedof 1.9% on Aon per Hewitt’s annum. 10 year at forward-looking 31 March assumptions 2015for each asset class and have been Bonds Wellington Management 3.8% Fundadjusted for itsAsset CPI assumption Allocation of 1.9% per annum. at 31 March 2015 The actual asset allocation as at 31 March 2015 is illustrated in the diagram below: Traditional Property LaSalle Investment Management 8.5% The actual asset allocation as at 31 March 2015 is illustrated in the diagram below: Fund Asset Allocation at 31 March 2015 Index Linked Property LaSalle Investment Management 4.1% FUND ASSET ALLOCATIONFund AT Asset 31 MARCH Allocation 2015 at 31 MarchFixed 2015 Interest Securities Infrastructure Antin Infrastructure Partners 0.2% (3.6%)Fixed Interest Securities KKR Global Infrastructure Investors* 0.0% (3.6%)Fixed Interest Securities Equities (3.6%)Fixed Interest (38.8%) Securities Fixed Fixed Interest Interest Interest Securities Securities (3.6%) Securities *NILGOSC committed to invest £40m with KKR Global Infrastructure Investors during 2014/15 however there were no funds Equities (3.6%) (38.8%) drawn down as at 31 March 2015. (3.6%)Equities (38.8%) Equities Equities (38.8%) (38.8%) (38.8%) Each fund manager has been given a performance target and asset allocation ranges compiled by NILGOSC, using indices Managed or unitised applicable to the asset type and geographic market. The standard target and benchmark for each asset class of the fund as at Managed Equities (38.8%) or unitised 31 March 2015 is shown in the following table: funds Managed Managed or unitised (43.6%) or unitised funds (43.6%) Managed or unitised ASSET CLASS WEIGHT TARGET/BENCHMARK INDICES funds (43.6%) (43.6%) UK funds Managed Properties (43.6%) or unitised (12.6%) (outperformance shown per annum) Managed UK UK Properties Properties (12.6%) or (12.6%) unitised UK Equities 25.0% FTSE All Share Index UK funds Properties (43.6%) (12.6%) FTSE All Share Index + 2% funds UK Properties (43.6%) (12.6%) FTSE All Share Index + 4% UK Other Properties (1.4%) (12.6%) FTSE All World UK + 2% Other Other (1.4%) (1.4%) FTSE All World UK + 3% Other UK Properties (1.4%) (12.6%) MSCI All Countries World UK + 3% Other (1.4%) Overseas Equities 50.0% FTSE All World Developed Index (ex UK) + 2% Other (1.4%) FTSE All World Index (ex UK) + 3% MSCI All Countries World Index (ex UK) + 3%

NILGOSC monitors the suitability of with the requirement to return the FundOther (1.4%) FTSE All World North America Index

its investment strategy, taking into to 100% solvency within acceptable levels FTSE All World Developed Europe ex UK

account the funding position and of risk and contribution rate volatility. FTSE All World Japan NILGOSC monitors the suitability of its investment strategy, taking into account the Funding Strategy Statement, a copy The funding level will be reviewed each FTSE All World Developed Asia Pacific ex Japan funding position and Funding Strategy Statement, a copy of which can be downloaded FTSE All World All Emerging of which canfrom be the downloaded NILGOSC from website the at yearwww.nilgosc.org.uk. and the investment strategy NILGOSC will be prudently seeks to secure NILGOSCthe website solvency at www.nilgosc.org. of the Fund, wherereviewed solvency as necessary. is defined as being achieved when the value of uk. NILGOSCthe Fund’s prudently assets seeks is to greatersecure or equal to the value of the Fund’s liabilities, measured using NILGOSC monitorsthe solvency appropriatethe of thesuitability Fund, actuarial where solvency assumptions.of itsFUND investment MANAGERS strategy, taking into account the fundingNILGOSC position monitorsis defined and the asFunding being suitability achieved Strategy when theof its Statement,Based investment on the types ofa assetcopystrategy, class of in which taking can into be accountdownloaded the Bonds 12.5% A funding level of 100% has been targeted over a period of 20 years. NILGOSC believes NILGOSC monitorsvalue of thethe Fund’s suitability assets is greater of itswhich investment NILGOSC wishes strategy,to invest, a range taking into account the Fixed Bonds 9.0% Barclays Capital Global Aggregate Bond Index + 0.75% fromfunding the position NILGOSC and websitethat Funding the Fund’s at Strategy www.nilgosc.org.uk.investment strategy,Statement, in conjunction aNILGOSC copy with of the whichprudently certified canlevels seeksbe of futuredownloaded to secure NILGOSC monitorsor equal tothe the value suitability of the Fund’s of itsof fundinvestment managers have beenstrategy, appointed taking into account the iBoxx £ Non-Gilt ex BBB thefrom funding solvency the position NILGOSC ofliabilities, the and websiteFund,contributions measured Funding where using at to appropriateStrategy www.nilgosc.org.uk.the solvency Fund, is consistentStatement, is defined with the aas NILGOSCrequirement copy being of achieved to whichprudently return thecan whenFund seeksbe to 100%thedownloaded to value secure of solvency within acceptable levelsto manage of risk particular and contribution types of asset rateclass volatility. The funding theNILGOSCfromfunding Fund’ssolvency the position NILGOSC monitorsassets ofactuarial the a isnd websiteFund, greaterassumptions.the Funding suitability where ator Strategyequalwww.nilgosc.org.uk. solvency of to its theStatement,depending isinvestment value defined on their of areas atheasNILGOSC copystrategy, ofbeingFund’s expertise. of achieved whichprudentlyliabilities, taking can wheninto measuredseeksbe accountthedownloaded to value secure using the of level will be reviewed each year and the investment strategy will be reviewed as Index-linked Gilts 3.5% FTA Index Linked > 5 Years appropriatethefundingfrom Fund’ssolvency the position NILGOSC assets actuarial of the a isnd websiteFund,necessary.greater assumptions.Funding where ator Strategyequalwww.nilgosc.org.uk. solvency to theStatement,The is followingvalue defined table of sets atheasNILGOSC copy out beingFund’s the fundof achieved whichprudentlyliabilities, can when measuredseeksbe thedownloaded to value secure using of A funding level of 100% has been the solvency of the Fund, where solvencymanagers is defined in place to as manage being NILGOSC’s achieved when the value of Index-linked Property 2.5% Retail Price Index (RPI) appropriatefromthe Fund’s the NILGOSC assets actuarialtargeted is websiteovergreater assumptions. a period ofator 20 equalwww.nilgosc.org.uk.years. to the value of theNILGOSC Fund’s prudentlyliabilities, measuredseeks to secure using the Fund’s assets is greater or equal to theinvestment value portfolio of54 the as at 31Fund’s March 2015 liabilities, measured using Traditional Property 10.0% IPD Quarterly Universe +1% A appropriatethe funding solvency level actuarial ofNILGOSC ofthe 100% Fund, believes assumptions. has thatwhere the been Fund’s solvency targetedand is detailsover defined the a type period andas percentagebeing of 20 achievedof years. NILGOSCwhen the believesvalue of Infrastructure 0.0% CPI + 5% thatA appropriatethe funding Fund’s the Fund’s level assets actuarialinvestment of investment is100% greater assumptions.strategy, has in or conjunctionbeenstrategy, equal targeted to intheassets conjunction valueover under managementa of period the with Fund’s with of each the20 of liabilities,years. certified NILGOSC measuredlevels of believes futureusing with the certified levels of future the fund managers. Total 100% contributionsthatappropriateA funding the Fund’s level actuarial tocontributions of theinvestment 100% Fund, assumptions. to thehas Fund,is consistentbeenstrategy, is consistent targeted inwith conjunction over the requirementa period with of the20 to years.returncertified theNILGOSC levels Fund of tobelieves future100% solvencycontributions thatA funding the Fund’s withinlevel to of theacceptableinvestment 100% Fund, has is levelsconsistentbeenstrategy, targetedof risk inwith conjunctionand over the contribution requirementa period with of the20rate to years.returncertified volatility. theNILGOSC levels Fund The of to believesfunding future100% Source: HSBC that the Fund’s investment strategy, in conjunction with the certified levels of future levelsolvencycontributionsA funding will withinlevelbe toreviewed of 43theacceptable 100% Fund, eachhas is levelsconsistentbeen year targetedof and risk with the and over the investmen contribution requirementa periodt ofstrategy 20rate to years.return volatility. will theNILGOSC be Fund reviewedThe to believesfunding 100% as 44 necessary.levelsolvencycontributionsthat thewill Fund’swithin be toreviewed theacceptableinvestment Fund, each is levelsconsistentstrategy, year of and risk inwith the conjunctionand the investmen contribution requirement witht strategy therate to returncertified volatility. will the belevels Fund reviewedThe ofto funding future100% as necessary.contributionslevelsolvency will within be toreviewed theacceptable Fund, each is levelsconsistent year of and risk with the and the investmen contribution requirementt strategy rate to return volatility. will the be Fund reviewedThe to funding 100% as level will be reviewed each year and the investment strategy will be reviewed as solvencynecessary. within acceptable levels of risk and54 contribution rate volatility. The funding necessary. level will be reviewed each year and the54 investment strategy will be reviewed as necessary. 54 54 54

NILGOSC’s passive manager, Legal & Emerging markets performance was strongly on the back of declining yields. over time) which continued to be very Index returns from 31/3/2014 to 31/3/2015 Sterling terms General is responsible for maintaining strong in absolute terms but lacklustre good as property valuations continued Local currency terms Globally, most corporate bonds posted the asset allocation within the agreed 31.8% compared to most developed markets to rise on the back of high transaction positive absolute returns as credit ranges. When a range is breached, Legal returning 11.3% in local currency activity. Rental growth was also positive. 26.4% 27.1% spreads (the difference between the & General will rebalance the Fund back terms (13.2% in sterling terms). This The rate of rental value growth across yields on non-government bonds and within the agreed tolerance. 19.3% underperformance was partly caused by all UK property sectors has also seen 18.6% 18.3% equivalent maturity government bonds) ongoing uncertainty over China’s growth significant improvement. for global bonds narrowed slightly over NILGOSC monitors its fund managers 13.9% 12.6% 13.2% 13.1% and continued weak commodity prices. London based properties continued to through reports produced by the 11.3% the year. The narrowing of the credit deliver strong performance. Outside Officers, the investment advisers and 6.6% 7.5% spread together with the steep decline BONDS of London regional returns were also the performance measurer, who is in underlying government bond yields Global government bonds performed strong as the regional story moved NILGOSC’s appointed global custodian, contributed to the positive performance well during the twelve month period from strength to strength over the year, HSBC. Specifically, reports showing UK EquitiesUS Equities Europe Ex Japanese Emerging UK Fixed UK Index UK UK of global bonds. However, given the UK Equities Equities Market Interest Linked Gilts Corporate Property to the end of March 2015 amid falling because of capital value growth. the financial performance of each shorter maturity profile of corporate Equities Gilts Bonds interest rates and government bond investment manager and at the overall bonds, the returns were generally Source: Datastream/IPD yields (the income return on the bond) lower than government bonds. In the FUND VALUE Fund level are provided by HSBC. Each Markets posted solid returns over the EQUITIES falling drastically, particularly for UK, corporate bonds returned 13.1% manager is remunerated on a fee basis, Markets posted solid returns over the year to 31 March 2015, although as the graph The value of the Fund at 31 March year to 31 March 2015, although as the The UK equity market delivered the government bonds with longer dated which was slightly less than both fixed dependent on the market value of the above shows there was a sizeable difference between equity regions. Bonds and property 2015 was £5.85bn (2013/14 £5.06bn), alsograph delivered above positive shows returns. there was a sizeable lowest return amongst regional equities, maturities. As a result longer dated and index-linked government bonds. portfolio and in some cases the level of an increase of £790m (15.6%) on the difference between equity regions. Bonds returning a relatively weak 6.6% over the government bonds performed better The credit spread for the more secure performance achieved. These structures Strong US economic growth was a key driver to the positive performance. The US previous year. Federaland property Bank also also stopped delivered buying assetspositive in October 2014year. which The was UK well market received performance by the was than those with shorter term maturities. AAA-rated issues narrowed the most, have been established in order to align market. The Japanese equity market benefited from the Bank of Japan injecting money intoreturns. the economy (known as quantitative easing [QE])adversely in response affected to weak by economic the ailing Eurozone resulting in these bonds outperforming the interests of the fund managers with UK fixed gilts (bonds issued by the Market values can fluctuate widely over data. Injecting money into the economy aims to provideeconomy some stimulus. and the In falling Europe, oil the price due lower rated bonds. those of the Fund. EuropeanStrong USCentral economic Bank (E CB)growth announced was anew key stimulus measures including three interest British Government for a fixed period short periods of time, reflecting short- rate cuts to fight weak growth and deflationary concernsto inthe the UK Eurozone. market’s sizeable energy driver to the positive performance. The in return for a fixed rate of interest) term changes in investment conditions. All of NILGOSC’s active managers work component. The healthcare sector PROPERTY InflationUS Federal generally Bank remained also stopped very low buyingin the major economies over the last year. The oil returned 13.9% and index-linked gilts In contrast, the triennial valuation of the to long-term investment horizons, price fell dramatically by almost 50% over the secondproduced half of 2014. the Whilststrongest this helped returns (21.1%), UK commercial property performance someassets businesses in October in terms 2014 of reducedwhich was transportation well and energy costs, it hurt others that (bonds issued by the British Government fund is concerned with the long-term the minimum of which is three years whilst basic materials (-11.8%) and oil & was strong with returns of 18.3% over arereceived reliant byon thestrong market. oil prices. The AsJapanese a result, falling oil and commodity prices had a and linked to inflation) returned 18.6% and uses actuarial assumptions. The and accordingly, NILGOSC is not somewhat negative impact on equity markets as it sparkedgas (-10.5%)fear that global were demand the worst may performing Market values can fluctuate widelythe 12 month over period. short Performance periods was of time, reflecting short-term beequity unexpectedly market weak. benefited from the Bank of benefiting from their longer maturity actuary’s report is shown on pages 79 unduly concerned with short term sectors. Healthcare was also the best changes in investment conditions.driven predominantlyIn contrast, by capital the growth triennial valuation of the fund is Japan injecting money into the economy profile. US Treasuries (securities issued and 80. performance returns. A robust quarterly Markets were volatile over the period partly due to theperforming oil price falls sector and forincrease global in equities (increase in the value of the assets geopolitical(known as tensions quantitative making easinginvestors [QE]) nervous. Tensions in the Ukraine surfaced in early concernedby the US Treasury)with thealso performedlong-term and uses actuarial assumptions. The actuary’s report is investment monitoring process is with the oil & gas sector providing the 2014,in response leading to to western weak economicsanctions against data. Russia. Later, an uprising in Iraq added to shown on pages 94 to 96. in place, which aims to look behind geopolitical tensions. These uncertainties brought volatilitylowest to markets. return. Injecting money into the economy aims returns to see the underlying cause of Equitiesto provide some stimulus. In Europe, the US equity returns were fairly strong Value of the Fund any underperformance. In addition to The UK equity market delivered the lowest return amongst regional equities, returning a Value of the Fund relativelyEuropean weak Central 6.6% over Bank the (ECB) year. Theannounced UK market performancedespite investors was adversely having affected to make monitoring financial returns, NILGOSC £7,000 bynew the stimulusailing Eurozone measures economy including and the falling oil priceadjustments due to the UK to market's the prospect sizeable of less also reviews a number of important energy component. The healthcare sector produced the strongest returns (21.1%), whilstthree basic interest materials rate cuts(-11.8%) to fight and oilweak & gas (-10.5%)supportive were the monetary worst performing policy. At the start qualitative factors such as investment sectors. Healthcare was also the best performing sectorof forthe global twelve equities month with period, the oil &an improving gasgrowth sector andproviding deflationary the lowest return.concerns in the style and team, business strength, risk £6,000 Eurozone. economic outlook for the US pushed US management and the level of assets 56 equities to repeatedly reach record highs under management. NILGOSC also takes Inflation generally remained very low in through May and June 2014. However, advice from its investment advisor, Aon the major economies over the last year. US equities started to struggle towards £5,000 Hewitt, and so remains confident in the The oil price fell dramatically by almost the end of the twelve month period due

underlying investment process adopted 50% over the second half of 2014. Whilst ) to concerns over corporate profits. The by its external fund managers to deliver this helped some businesses in terms US dollar strengthened on the back of £4,000 the target level of return over a three to of reduced transportation and energy its stronger economy and the prospect five year investment horizon. costs, it hurt others that are reliant on of higher interest rates, which enhanced strong oil prices. As a result, falling oil returns for sterling based investors. MARKET REPORT and commodity prices had a somewhat £3,000

negative impact on equity markets as it European equities returned 19.3% Fund Value (Millions The following graph summarises the sparked fear that global demand may be in local currency terms whilst euro index returns on the main asset classes/ unexpectedly weak. weakness dragged the sterling return £2,000 regions for the year to 31 March 2015. down to 7.5%. Most of this strong Markets were volatile over the period Returns are shown in sterling terms and performance came in towards the partly due to the oil price falls and local currency terms. end of 2014 and early 2015 upon the £1,000 increase in geopolitical tensions making anticipation and eventual confirmation of investors nervous. Tensions in the quantitative easing by the ECB. Japanese Ukraine surfaced in early 2014, leading to equities performed very strongly, £0 western sanctions against Russia. Later, boosted by domestic equity buying and 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 an uprising in Iraq added to geopolitical additional quantitative easing, even as Year tensions. These uncertainties brought the economy fell into recession. volatility to markets. Investment Performance

45 46 Over the year to 31 March 2015, the Fund achieved an overall return on the total assets of 15.1%. NILGOSC’s overall investment target is to exceed the Consumer Price Index (CPI) by 5% per annum, to be measured over a three and five year period. The Fund exceeded this target by 6.1% and 2.6% on a three and five year basis respectively for the period ended 31 March 2015.

The Consumer Price Index as at 31 March 2015 remained in line with that at 31 March 2014. The comparable statistics for the three and five year periods to 31 March 2015 on an annualised basis are:

Three Five Years Years % p.a. % p.a. Return of Fund 12.53 9.99

CPI +5% 6.45 7.37

The performance of the individual managers is monitored against their corresponding benchmark and performance target. The table below sets out the returns for each fund manager against their performance target for the twelve months ended 31 March 2015. Infrastructure investments are in the early stages of drawdown and therefore no meaningful performance data is available.

Portfolio Target Excess Asset Class Manager Return Return Return % % % UK Equities Baillie Gifford 0.20 8.57 -8.37

58

INVESTMENT PERFORMANCE performance lagging its performance fully invested with a mix of assets with NILGOSC committed to invest £40m in target across all timeframes. an overall yield in line with the agreed Antin Infrastructure Partners Fund II Over the year to 31 March 2015, the Fund achieved an overall return on the total assets of 15.1%. NILGOSC’s overall investment Performance on a one year basis was strategy. NILGOSC was early to invest in April 2014 and a further £40m with target is to exceed the Consumer Price Index (CPI) by 5% per annum, to be measured over a three and five year period. The Fund particularly disappointing with a relative in this asset-class and the strategy has KKR Global Infrastructure Investors II exceeded this target by 6.1% and 2.6% on a three and five year basis respectively for the period ended 31 March 2015. return of -7.02%. NILGOSC met with performed well since inception and in February 2015. The Antin Fund will Edinburgh Partners in January 2015 to had a good year, delivering a relative be invested in European brownfield The Consumer Price Index as at 31 March 2015 remained in line with that at 31 March 2014. The comparable statistics for the review and discuss the reasons for the return of 2.52% on a one year basis to 31 infrastructure assets across the energy three and five year periods to 31 March 2015 on an annualised basis are: underperformance and performance March 2015. It is hoped this portfolio will and environment, transportation and THREE YEARS % p.a. FIVE YEARS % p.a. will continue to be monitored closely provide good inflation linked returns for telecommunications sectors while the to ensure that confidence is retained the Fund in the long-term. KKR Fund will invest in similar sectors Return of Fund 12.53 9.99 that the portfolio will outperform in the but has exposure to North America and As NILGOSC’s passive manager, Legal & CPI +5% 6.45 7.37 longer term. other regions to provide geographic General has a mandate covering global diversification. The performance of the individual managers is monitored against their corresponding benchmark and performance target. The NILGOSC’s global fixed income portfolio, equities, UK fixed income and cash. table below sets out the returns for each fund manager against their performance target for the twelve months ended 31 March managed by Wellington Management, Legal & General’s mandate is two-fold: NILGOSC held its annual investment 2015. Infrastructure investments are in the early stages of drawdown and therefore no meaningful performance data is available. has been in place since March 2013 to track the appropriate market index strategy meeting in October 2014 and it which is still too early in the life of within stated tolerances for each of was agreed that the current investment ASSET CLASS MANAGER PORTFOLIO RETURN % TARGET RETURN % EXCESS RETURN % the mandate to make a meaningful the index funds in which NILGOSC is strategy remains appropriate and that assessment of performance. NILGOSC invested; and to maintain NILGOSC’s NILGOSC should continue to identify UK Equities Baillie Gifford 0.20 8.57 -8.37 believes the strategy is well placed to total asset allocation, including the suitable opportunities to invest in deliver long-term returns. portfolios managed by NILGOSC’s active Alternatives, to promote diversification BlackRock 11.68 10.57 1.11 managers, close to the benchmark of the Fund. The only change resulting The core property portfolio, managed by Jupiter 13.34 8.57 4.77 weightings and within predetermined from the annual review was to switch the LaSalle, outperformed both the index Global Equities Baillie Gifford 28.05 22.17 5.88 control ranges. NILGOSC was pleased to Japanese equity allocation held passively and its target for the year ended 31 note that Legal & General continued its with Legal & General to a currency Edinburgh Partners 14.99 22.01 -7.02 March 2015. During the year, NILGOSC strong track record of outperformance hedged fund, which was implemented in Wellington 23.45 21.44 2.01 undertook a thorough review of the against the various equity indices January 2015. NILGOSC also reviewed benchmark against which performance Fixed Income Wellington 8.36 8.58 -0.22 throughout the year ended 31 March and updated its Investment Monitoring is measured. In September 2014, the Passive 2015. Guidelines during 2014/15 to reflect its Legal & General 17.00 16.92 0.08 Committee changed the benchmark focus on longer-term performance. Property LaSalle Core 20.53 18.10 2.43 from the current IPD Life Funds & During the year, NILGOSC continued LaSalle Index-Linked 6.42 3.90 2.52 Pension Funds £100m-£500m Index to to implement its plan to reduce its In March 2015, the Committee approved the IPD Quarterly Universe as it provides allocation to UK equities with a further the use of the National LGPS Framework As NILGOSC’s objective is to achieve the maximum return on Fund investments in the longer term, having due regard to the a more appropriate formal benchmark disinvestment of £25m from the Baillie for Investment Consultancy Services as liabilities of the Fund and an acceptable level of investment risk, it is important that undue attention is not given to the returns for for assessing the performance of the Gifford UK equities mandate in January the tender approach for appointing a a single year in isolation. Accordingly, NILGOSC has agreed to focus its attention on the performance of its investments over the mandate and is more representative 2015. The funds disinvested from UK new investment advisor. The Framework longer-term, particularly on a five year basis. of both the portfolio and the wider equities will be used to fund investments is intended to promote collaborative UK property market in general. The in Alternative assets. A 5% allocation working between LGPS Funds and is INVESTMENT REVIEW 2014/15 significant underperformance against restructuring within its UK Equity team. portfolio is now fully invested and to Alternatives was made following the expected to save time and money. The the performance target on a one During the year, NILGOSC undertook LaSalle continues to seek to add value annual investment review in 2012 to tender to appoint a new investment The value of the Fund continued to rise year basis. This has also impacted a detailed review of the strategy in through asset management initiatives. promote diversification of the Fund and advisor using the Framework will be during the year to £5.85bn as at 31 on returns on a three year basis with conjunction with its investment adviser. The index-linked portfolio is also now reduce risk of over-exposure to equities. carried out in the second half of 2015. March 2015. This provides assurance performance now lagging both the As a result of the review the manager in respect of the current investment index and target although longer- was removed from the Watchlist during Top 10 Equity Holdings at 31 March 2015 strategy but it is important to recognise term performance remains ahead of the quarter ended 30 June 2014. The that financial markets are volatile and the index. NILGOSC met with Baillie portfolio has since begun to show signs COMPANY TOTAL INVESTMENT £’000’S % OF TOTAL EQUITY PORTFOLIO can impact on the Fund value over short- Gifford in January 2015 to discuss the of improvement during the latter half of Reed Elsevier 47,656 2.11 term periods. NILGOSC, therefore, reasons for the underperformance and 2014 and into 2015. Astra Zeneca 47,401 2.09 remains focused on longer-term maintains confidence that the portfolio is Baillie Gifford remained NILGOSC’s best British American Tobacco 44,687 1.97 investment performance and matching positioned to out-perform in the longer- performing global equities manager for the Fund’s liabilities. term and this will remain the focus for Amazon.com 37,183 1.64 the second year running, with strong NILGOSC, while continuing to monitor Jupiter remained NILGOSC’s best relative returns on a one year, three BG Group 33,285 1.47 the performance. performing UK Equities manager year and five year basis. Wellington Tencent Holdings 32,688 1.44 in the 12 months ended 31 March NILGOSC placed its remaining UK Management also had a good year, Compass Group 32,330 1.43 2015, with strong relative returns equities manager, BlackRock, on the delivering a positive relative return on a one year, three year and five Committee’s Watchlist in 2013/14 as a on a one year basis although longer- Next Group 31,732 1.40 year basis. By comparison, Baillie result of prolonged underperformance term performance remains behind its Reckitt Benckiser 28,690 1.27 Gifford’s UK Equity portfolio had of the portfolio against its target target. By contrast, Edinburgh Partners Illumina 28,629 1.26 a disappointing year, resulting in over the medium term, coupled with had a disappointing year resulting in

A full list of NILGOSC’s equity holdings is made available annually through the Publication Scheme, which can be accessed at www.nilgosc.org.uk.

47 48 RESPONSIBLE INVESTMENT NILGOSC does not make any and holding directors accountable for ENGAGEMENT Pension Fund Roundtable, which is a improve the awareness, management investments solely for ESG reasons. their stewardship of the company. The collective group of UK pension funds, in and disclosure of water risks in Like many responsible investors, Instead, it has instructed its active policy is reviewed on an annual basis to NILGOSC has undertaken to engage with both the public and private sector, who agricultural supply chains. NILGOSC faces an ongoing challenge fund managers to take account of ESG ensure it is up-to-date with current best companies on ESG issues, either directly work together to promote responsible NILGOSC is also a signatory to the UK to reconcile the need to obtain the considerations provided the primary practice. The policy was last reviewed on or through its fund managers, and to investment. NILGOSC regularly attended Stewardship Code. The Stewardship best financial return against the desire financial obligation is not compromised. 24 February 2015. A copy of this policy participate in collaborative engagement meetings of the Roundtable during Code, first published by the Financial for sound social, environmental and NILGOSC believes that the best can be obtained from the NILGOSC activities. 2014/15 and was a signatory to its ‘Guide Reporting Council (FRC) in July 2010, ethical practices. Under current UK law, contribution it can make in the arena website. to Responsible Investment Reporting in All active fund managers are instructed was revised in September 2012. It is pension schemes such as NILGOSC are of responsible investment is through Public Equity’, which was published in NILGOSC has appointed a third-party to engage, on NILGOSC’s behalf, with a principles-based Code, comprising not permitted to exclude investments the targeted execution of voting rights January 2015. The Guide was developed proxy voting partner, Manifest, to provide those companies where ESG policies fall seven principles that aim to improve solely on ethical grounds. and the promotion of ESG within the as part of the supporting pension funds’ company research and coordinate its short of acceptable standards and where engagement between institutional investment management industry. wider efforts to include responsible NILGOSC’s Statement of Investment voting activities. NILGOSC currently this is likely to have a detrimental effect investors and companies to help improve investment in fund manager selection Principles acknowledges that avails of Manifest’s research and on the long-term value of the company. long-term returns to shareholders and VOTING and monitoring processes. NILGOSC will environmental, social and corporate advisory services to highlight areas of NILGOSC monitors the action taken in the efficient exercise of governance adopt this Guide going forward to help governance (ESG) issues can affect the As a responsible investor, NILGOSC has potential concern or conflict with its this area by its investment managers responsibilities. NILGOSC first published inform engagement with, and monitoring performance of investment portfolios a legitimate interest in the management voting policies and as an important by reviewing the engagement reports its UK Stewardship Code Statement of, both current and prospective fund and states that it will take such matters of those companies in which it invests source of information on the non- provided on a quarterly basis. These of Adherence in September 2010, managers. into consideration as part of the and uses its voting rights to express financial aspects of a company’s reports detail company engagements subsequently updated in February investment process. NILGOSC has set concern. Proxy voting is a means of performance. undertaken and on what issues and the Demonstrating its commitment to 2013. NILGOSC also requires its out its approach to ESG issues in its maintaining effective shareholder outcome of these engagements. responsible investment practices, fund managers to confirm they are NILGOSC exercises its voting rights Statement of Responsible Investment, oversight of directors and company NILGOSC has been a signatory to the signatories and to provide copies of their at all company meetings within its Since 2010, NILGOSC has also engaged a copy of which is available on the policies, a process on which the current United Nations Principles of Responsible Statements of Compliance. actively managed equity portfolios, directly with the UK companies in which NILGOSC website. system of UK corporate governance Investment since 2008. NILGOSC reports where possible, and will vote against it invests. In instances where NILGOSC depends. Through the exercise of on its implementation of the Principles CLIMATE RISK NILGOSC delegates the selection of management if the proposed resolutions intends to vote against management at its voting rights, NILGOSC seeks to for Responsible Investment through investments to its fund managers are in conflict with NILGOSC’s voting a company meeting, it will write to the Of all the ESG risks facing investors, improve corporate ESG behaviour in the the UNPRI reporting framework on an and does not currently impose any policy or where significant ESG failings company to advise of its decision and to climate change has arguably the companies in which it invests in addition annual basis. The framework assesses investment restrictions with respect are identified. In line with the UK provide a rationale. In 2014/15, NILGOSC greatest potential for widespread impact to the Fund’s fiduciary responsibility to the areas of responsible investment to ESG issues. When appointing an Corporate Governance Code, NILGOSC issued engagement letters to 120 UK across individual corporations, sectors, add value to its investments. overarching approach; active ownership investment manager, NILGOSC assesses will consider explanations put forward by companies where against votes were asset classes and economies. As a within asset classes; engagement its ability to include ESG issues within NILGOSC has a Proxy Voting Policy, companies in relation to non-compliance cast. During the year, NILGOSC also long term investor, a changing climate and proxy voting. In November 2014, the investment decision making process. which sets out its expectations for and will also seek the advice of its fund trialled the issue of engagement letters presents significant long-term risks NILGOSC received its report for the year Any manager not able to demonstrate good corporate governance in the managers, where appropriate, before to European companies. Since January to the value and security of pension ended 31 March 2013, which was positive such a capability will be excluded from companies in which it invests. This exercising its vote. 2015, eight letters have been issued to scheme investments and capital markets in all areas assessed by UNPRI, with the next stage of the selection process. document outlines NILGOSC’s view on European companies during 2014/15. more broadly. After appointment, NILGOSC will monitor what it believes are the most important A summary of the Fund’s global voting NILGOSC performing either in line with NILGOSC believes that it can have a the managers’ action in this area and elements of good corporate governance record for the year ended 31 March 2015 or ahead of its peers in each of the areas The changing climate presents a variety bigger impact on the ESG practices will work with fund managers and the and the principles which will be used to is shown below: assessed. NILGOSC submitted its latest of risks and opportunities for pension of companies through collaborative investment sector to ensure sufficient determine voting decisions on specific assessment in March 2015 for the year fund investors. Investment practices engagement with like-minded investors data is available to aid effective decision issues. It also provides a basis for ended 31 March 2014 and will receive the should therefore seek to protect rather than acting alone. NILGOSC making. communicating with investee companies outcome later in the year. assets from climate risks such as is a member of the Local Authority weather events and regulatory change, NILGOSC participates in the UK Pension Fund Forum (LAPFF). The while simultaneously seizing the new Pension Fund Roundtable and UNPRI UK NORTH AMERICA REST OF WORLD LAPFF brings together local authority opportunities that a low-carbon economy collaborative engagements, where pension funds across the UK and presents. Accordingly, NILGOSC has appropriate. In 2014/15, NILGOSC Annual General Meetings 130 151 139 provides an opportunity for discussing developed its Climate Risk Statement became a supporting investor in two investment issues, promoting corporate which acknowledges the importance of Other Meetings 26 16 35 collaborative engagements with UNPRI. social responsibility and maximising climate risk as an investment issue and The first is an engagement on the Resolutions 2,728 1,889 2,303 the influence shareholders have on sets out the steps which will be taken director nomination process, focused Votes For Management 2,383 1,340 1,781 the companies in which they invest. to address it. In August 2014, NILGOSC on listed companies in the US and The Forum seeks to address ESG became a signatory to the 2014 Global Votes Against Management 345 549 522 France. The objective is to encourage issues through direct engagement with Investor Statement on Climate Change, those companies to improve the way that ‘offending’ companies, governments which sets out the contribution that NILGOSC voted against management on 20.5% of occasions with remuneration practices and board composition being the directors are nominated to the board and other relevant bodies on global investors can make to increasing low principle reasons for dissent. Detailed monthly voting reports are available on the responsible investment section of the and ensure that meaningful reporting issues such as climate change, executive carbon and climate resilient investments NILGOSC website. is provided. The second engagement is remuneration and audit assurance. and offers practical proposals on how on water risks in the agricultural supply The Chief Executive and Secretary is this contribution might be achieved. For passively managed equities, votes are cast by NILGOSC’s passive fund manager, Legal & General Investment Management, chains, focused on listed companies a member of the Executive Board of NILGOSC also encouraged its fund according to its own voting policies. The manager reports to NILGOSC on its voting activities on a quarterly basis. in the food, beverage, apparel, retail LAPFF. managers to sign up to the Statement, and agricultural product sectors. The where appropriate. NILGOSC is also a member of the UK objective of this engagement is to

49 50 During the year, NILGOSC also co-filed a shareholder resolution with other like-minded investors at the AGMs of both BP and Shell, requesting enhanced disclosures of corporate strategy on climate change outlook and risk management as part of routine reporting from 2016. In an unprecedented but welcome move, the boards of both companies publicly recommended that shareholders support the resolutions.

NILGOSC is also an investor signatory to the Carbon Disclosure Project (CDP). CDP seeks to improve the management of environmental risk by encouraging listed companies to measure and disclose environmental information. It does this by issuing annual questionnaires on behalf of its investor signatories, requesting standardised climate change, water and forest information.

David Murphy Chief Executive and Secretary 25 August 2015

51 REMUNERATION REPORT

REMUNERATION POLICY SERVICE CONTRACTS The remuneration of all NILGOSC All appointments are made on merit, on employees, including its Chief Officers, the basis of fair and open competition. REMUNERATION is determined by the Committee which The officers covered by this report hold has adopted the pay scales of the appointments which are open ended. National Joint Council (NJC) for Local REPORT The conditions of service including notice Government Services. periods are those laid down by the NJC The NJC for Local Government Services for Local Government Services and represents local authorities and various local agreements. their employees across the UK. The Further information on the NJC for Local principal role of the Council is to reach Government Services and the Green agreement on a national scheme of Book can be found at www.lge.gov.uk. pay and conditions for local application. The Council consists of 70 members, SALARY AND PENSION 12 employer representatives and 58 ENTITLEMENTS employee representatives. The following sections provide details of In 1997 the NJC for Local Government the remuneration and pension interests Services agreed a national framework of senior officers and members of the to suit local service requirements. This Management Committee. framework is known as The Single Status Agreement and salary scales and conditions of service agreements are as published in the Green Book.

SENIOR MANAGEMENT REMUNERATION AND PENSION ENTITLEMENTS (AUDITED)

2014/2015 2013/2014

Officers Salary Benefits in Pension Total Salary Benefits in Pension Total Kind Benefits Kind Benefits £ £ £ £ £ £ £ £ David 85,001- - 28,203 115,001- 85,001- 1,239 20,869 105,001- Murphy 90,000 120,000 90,000 110,000 Chief Executive and Secretary Nicola 65,001- - 20,451 85,001- 65,001- 1,239 18,267 85,001- Todd 70,000 90,000 70,000 90,000 Deputy Secretary

Band of Highest Paid Employee’s 85,001-90,000 85,001-90,000 Total Remuneration

22,212 21,734 Median Total Remuneration

Ratio 3.94 4.03

53 54 The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real PENSION BENEFITS (AUDITED) increase in any lump sum) less (the contributions made by the individual). The real increases include increases due to inflation and any increase or decrease due to a transfer of pension rights. Officers Accrued Pension Real Increase in CETV at CETV at Real Increase in and Related Lump Pension and 31/03/15 31/03/14 CETV The Chairman is the only Committee member in receipt of an emolument, which is a non-pensionable salary. Sum at Age 65 as Related Lump Sum at 31/03/15 at Age 65 2014/2015 2013/2014 £ £ £ £ £ Chairman Salary Benefits in Kind Salary Benefits in Kind David Murphy 25,952 1,694 £ £ £ £ Chief Executive and plus lump sum of plus lump sum of 378,616 345,556 28,913 Trevor Salmon 12,841 - 12,644 - Secretary 51,676 505 SALARY were in receipt of an essential car user’s and Customs as a taxable emolument. allowance of £1,239 per annum which The Committee members, with the Nicola Todd 13,157 1,255 Salary includes gross salary, overtime, has been included within the salary exception of the Chairman, receive a recruitment and retention allowances, Deputy Secretary plus lump sum of plus lump sum of 151,380 133,771 16,004 amount in 2014/15, reclassified from a meeting fee for attending Management private office allowances and any other benefit in kind. Committee, Audit Committee and allowance that is subject to UK taxation. 19,000 186 Staffing Committee meetings. Details If bonuses were payable, these are BENEFITS IN KIND reported separately from the salary of those members who received an amount. Both the Chief Executive and The monetary value of benefits in kind allowance are shown below. covers any benefits provided by the Secretary and the Deputy Secretary Pension benefits are provided through CASH EQUIVALENT TRANSFER CETVs are calculated within the employer and treated by HM Revenue the NILGOSC Scheme. This is a statutory VALUES guidelines and framework prescribed scheme that provides benefits on a ‘final by the Institute and Faculty of Actuaries Management Committee Members’ Attendance Allowance salary’ basis at a normal retirement A Cash Equivalent Transfer Value (CETV) and in accordance with the Occupational age of 65. Benefits accrue at the rate is the actuarially assessed capitalised Pension Schemes (Transfer Values) 2014/15 2013/14 of 1/80th of pensionable salary for each value of the pension scheme benefits (Amendment) Regulations. They do not year of service up to 31 March 2009 and accrued by a member at a particular take account of any actual or potential Committee Members Meeting Fee Meeting Fee at a rate of 1/60th for each year after. In point in time. The benefits valued reduction to benefits resulting from £ £ addition a lump sum equivalent to 3/80ths are the member’s accrued benefits Lifetime Allowance Tax which may be and any contingent spouse’s pension Joseph Donaghy 2,061 1,824 of pensionable salary for each year of due when pension benefits are taken. service up to 31 March 2009 is payable payable from the Scheme. A CETV is a Julie Erskine 1,716 2,166 on retirement. payment made by a pension scheme REAL INCREASE IN CETV Bumper Graham 2,061 1,710 or arrangement to secure pension Employees currently pay contributions Celine McCartan 1,032 1,596 benefits in another pension scheme or This reflects the increase in CETV of between 5.5% - 7.5% of pensionable arrangement when the member leaves effectively funded by the employer. Peter McMurray 1,035 1,824 earnings. Pensions increase annually a scheme and chooses to transfer the It takes account of the increase in Linda Neilan 2,406 1,824 in line with the Consumer Prices Index. benefits accrued in his/her former accrued pension due to inflation, and Peter Caldwell 2,175 1,824 On death, pensions are payable to the scheme. contributions paid by the employee surviving spouse, nominated co-habiting (including the value of any benefits David Jackson 1,833 1,938 partner or civil partner. On death in The pension figures shown relate to transferred from another pension Ciaran Quigley 1,494 1,482 service, the Scheme will pay a lump the benefits that the individual has scheme or arrangement). Tom Irvine 2,520 1,938 sum benefit of three times pensionable accrued as a consequence of his/ pay and will also provide a service her total membership of the pension Sharon McQuillan 2,175 2,052 enhancement on computation of the scheme, and not just to his/her service Lindsay Todd * 2,175 1,824 spouse’s pension. in a senior capacity to which disclosure * Appointed on 1 May 2013 applies. The CETV figures and the other The accrued pension quoted is the pension details include the value of any pension the member is entitled to David Murphy RELATIONSHIP BETWEEN THE The banded remuneration of the contributions and the cash equivalent pension benefit in another scheme or Chief Executive and Secretary receive when they reach pension age, or arrangement which the individual has REMUNERATION OF THE MOST highest-paid employee in NILGOSC in transfer value of the pensions. immediately on ceasing to be an active 25 August 2015 the financial year 2014/15 was £85,001- transferred into the NILGOSC Scheme HIGHLY PAID DIRECTOR AND The decrease in the ratio to 3.94 in member of the Scheme if they are at or £90,000 (2013/14, £85,001-£90,000). and for which NILGOSC has received THE MEDIAN REMUNERATION 2014/15 from 4.03 in 2013/14 is a result over pension age. Pension age is state This was 3.94 times (2013/14, 4.03) the a transfer payment commensurate OF THE ORGANISATION of an increase in the median total pension age or age 65 if higher. median remuneration of the workforce, with the additional pension liabilities Reporting bodies are required to remuneration resulting from the NJC pay which was £22,212 (2013/14, £21,734). being assumed. They also include any disclose the relationship between award of 2.2% with effect from 1 January additional pension benefits accrued the remuneration of the highest- Total remuneration includes salary, non- 2015, combined with the fact that the as a result of the member purchasing paid employee in their organisation consolidated performance-related pay banded remuneration of the most highly additional years of pension service in the and the median remuneration of the and benefits-in-kind. It does not include paid employee did not change from Scheme at his/her own cost. organisation’s workforce. severance payments, employer pension 2013/14.

55 56 STATEMENT OF ACCOUNTING OFFICER’S RESPONSIBILITIES

Under the Occupational Pension The Department of the Environment has Schemes (Requirement to obtain appointed David Murphy as Accounting Audited Accounts and a Statement from Officer of the Northern Ireland Local STATEMENT OF the Auditor) Regulations (Northern Government Officers’ Superannuation Ireland) 1997, the Department of the Committee. The responsibilities ACCOUNTING OFFICER’S Environment has directed the Northern of an Accounting Officer, including Ireland Local Government Officers’ responsibility for the propriety and Superannuation Committee to prepare regularity of the public finances RESPONSIBILITIES for each financial year a statement of for which the Accounting Officer is accounts in the form and on the basis answerable, for keeping proper records set out in the Accounts Direction. The and for safeguarding the Northern accounts are prepared on an accruals Ireland Local Government Officers’ basis and must give a true and fair view Superannuation Committee’s assets, of the state of affairs of the Northern are set out in Managing Public Money Ireland Local Government Officers’ Northern Ireland published by the HM Superannuation Committee and of its Treasury. income and expenditure, recognised gains and losses and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

•observe the Accounts Direction issued by the Department of the Environment, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;

•make judgements and estimates on a reasonable basis;

•state whether applicable accounting standards as set out in the Government Financial Reporting Manual and the Statement of Recommended Practice (Revised May 2007) (where applicable) have been followed, and disclose and explain any material departures in the accounts; and

•prepare the accounts on a going concern basis.

57 58 FUND ACCOUNT YEAR ENDED 31 MARCH 2015

Note 2014/15 2013/14 £'000 £'000 THE ACCOUNTS Note 2014/15 2013/14 £'000 £'000

Contributions and benefits Contributions receivable 4 231,351 214,491 ContributionsTrans andfers benefitsin 5,227 7,757 Contributions receivable 4 231,351236,578 214,491222,248 Transfers in 5,227 7,757 236,578 222,248 Benefits 5 (181,519) (176,399) Payments to and on account of leavers 6 (3,610) (2,784) BenefitsAdministration expenses 57 (181,519)(3,267) (176,399)(3,112) Payments to and on account of leavers 6 (188,396)(3,610) (182,295)(2,784) Administration expenses 7 (3,267) (3,112) (188,396) (182,295) Net additions from dealings with members 48,182 39,953

Net additions from dealings with members 48,182 39,953

Return on investments Investment income 8 89,170 92,107 Return onChange investments in market value of investments 9 609,530 255,154 InGainsvestment arising in cfromeom changes in fair values 108 89,17057,449 92,10728,945 ChangeInvestment in mar managementket value of e xpensesinvestments 119 609,530(13,826) 255,154(11,458) Net returnGains on in arisingvestments from changes in fair values 10 742,32357,449 364,74828,945 Investment management expenses 11 (13,826) (11,458) Net return on investments 742,323 364,748 Net increase in the Scheme during the year 790,505 404,701

RemeasuNet increaserement in the (lo Schemesses)/gains during on the the r etiyearrement 790,505 404,701 benefit obligation 17 (475) 84 Remeasurement (losses)/gains on the retirement (475) 84 benefit obligation 17 (475) 84 Opening net assets of the Scheme 5,055,506 (475) 4,650,72184

COpeninglosing net net a asssetssets of of the the Scheme Scheme 5,845,5365,055,506 5,055,5064,650,721

Closing net assets of the Scheme 5,845,536 5,055,506

59 60 STATEMENT OF CASH FLOWS NET ASSETS STATEMENT FOR THE YEAR ENDED 31 MARCH 2015 AS AT 31 MARCH 2015

2014/15 2013/14 Note 2014/15 2013/14 £'000 £'000 £'000 £'000 Cash flows from operating activities Non-current assets Net increase in the Scheme during the year 790,505 404,701 Financial assets 9 5,060,978 4,412,830 Adjustments for non-cash transactions Change in market value of investments and gains Investment properties 10 722,910 587,425 arising from changes in fair value (666,979) (284,099) Depreciation/amortisation 178 129 Intangible assets 12 462 89 IAS 19 pension cost less contributions payable 134 132 Gain on revaluation of property, plant & equipment (304) (53) Property, plant and equipment 13 1,342 814 Adjustments for movements in working capital (Increase)/decrease in trade and other receivables (1,533) 2,838 (Decrease)/increase in trade and other payables (262) 15,702 Total non-current assets 5,785,692 5,001,158 Net cash inflow from operating activities 121,739 139,350 Current assets 5,055,506 Trade and other receivables 14 39,683 38,150

Cash flows from investing activities Cash and cash equivalents 15 52,263 47,953 Total current assets 91,946 86,103 Purchase of property, plant & equipment and intangible assets (775) (155) Purchase of investment properties (92,730) (194,282) Total assets 5,877,638 5,087,261 Purchase of investment assets (1,420,475) (1,044,330) Proceeds of disposal of investment properties 14,694 2,057 Proceeds of disposal of investment assets 1,381,857 1,101,594 Current liabilities Net cash outflow from investing activities (117,429) (135,116) Trade and other payables 16 (29,035) (29,297) 4,310 4,234 Total current liabilities (29,035) (29,297)

Non-current assets plus net current assets 5,848,603 5,057,964 Net increase in cash and cash equivalents 4,310 4,234

Non-current liabilities Cash and cash equivalents at the beginning of the period 47,953 43,719 Retirement benefit obligations 17 (3,067) (2,458) Cash and cash equivalents at the end of the period 52,263 47,953 Total non-current liabilities (3,067) (2,458)

Assets less liabilities 5,845,536 5,055,506

The financial statements summarise the Scheme year. The actuarial position the transactions of the Scheme and deal of the Scheme, which does take account with the net assets at the disposal of the of such obligations, is dealt with in the Committee. They do not take account of statement by the Actuary on pages 79 to obligations to pay pensions and other 80 and these financial statements should benefits which fall due after the end of be read in conjunction with it.

David Murphy Secretary 25 August 2015

61 62 NOTES TO THE ACCOUNTS 2.13 Depreciation of property, plant and 2.16 Retirement benefits 3.Segmental information for the year ended 31 March 2015 equipment Employees are members of the NILGOSC NILGOSC has only one operating 1. Basis of preparation the Scheme year end) and as such may 2.6 Transfers to and from other Depreciation is provided so as to write Scheme which is a defined benefit segment. The Committee monitors and down the assets to their residual values pension scheme. The cost of providing controls its operation through review of The financial statements have been differ from estimated amounts. schemes over their estimated useful lives. The benefits is determined using the income and expenditure information on prepared in accordance with the Transfers are accounted for on a receipts selection of these estimated lives Projected Unit Credit method. Formal a portfolio basis. The Committee looks Occupational Pension Schemes 2.2 Valuation of investments and payments basis. requires the exercise of management actuarial valuations are carried out every at the Scheme in totality as it cannot (Requirement to obtain Audited Accounts • Quoted investments are stated at bid judgement. three years and updates are carried be disaggregated into any separate and a Statement from the Auditor) value, excluding any accrued 2.7 Investment management expenses out at the end of each reporting period. segments. Please refer to the Fund Regulations (Northern Ireland) 1997, income, or if the bid value is This represents the amount paid 2.14 Foreign currencies The difference between the fair value Account on page 60 and the Net Assets guidance set out in the Statement unavailable, at the value of the most to investment fund managers who of the assets held and the liabilities are Statement on page 61. of Recommended Practice (Revised recent transaction date. Transactions denominated in foreign are remunerated on a net fee basis. recognised in the Net Assets Statement May 2007) (where applicable) and • Unquoted investments are valued at currencies are translated at the Acquisition costs are included in the as an asset or liability as appropriate. the 2014/15 Government Financial the manager’s bid value. exchange rate at the date of the purchase cost of investments. Changes in the retirement benefit Reporting Manual (FReM) issued by the • Pooled investments are stated at the transaction. Investments held at the Net obligation are charged immediately to Department of Finance and Personnel, manager’s unit value on a bid price Assets Statement date are translated at 2.8 Administration expenses the Fund Account. and the Accounts Direction issued by basis if published, or, if single priced, the closing Net Assets Statement rate. Administration expenses are accounted the Department of the Environment. at the closing single price. The resulting exchange gain or loss is for on an accruals basis. 2.17 Application of new and revised The accounting policies contained in • Fixed interest securities and index dealt with in the Fund Account. International Financial Reporting the FReM apply International Financial linked securities are valued on a bid 2.9 Taxation Standards Reporting Standards as adapted or price basis excluding accrued interest. 2.15 Financial instruments interpreted for the public sector context. Accrued interest is included within The Scheme is a Registered Public The International Accounting Standards Where the FReM permits a choice of investment income receivable. Service Scheme under Chapter 2 of Trade receivables Board has not issued any new or accounting policy, the accounting policy • Derivatives are valued on a fair value Part 4 of the Finance Act 2004. It has Trade receivables are recorded at their amended standards applicable for which is judged to be most appropriate basis. received automatic registration by virtue nominal amount less an allowance for 2014/15. of Part 1 of Schedule 36 of that Act. to the particular circumstances of the doubtful debts. IFRS 13 Fair Value Measurement was 2.3 Income from investments Northern Ireland Local Government issued with an effective date of 1 January 2.10 Intangible assets – software Officers’ Superannuation Committee Income from equities is accounted for Trade payables 2013. The Financial Reporting Manual intangibles for the purpose of giving a true and on the basis of the “ex-dividend” date Trade payables are stated at their 2014/15 states that IFRS 13 applies fair view has been selected. The with outstanding dividends (quoted “ex- Where computer software is not nominal value. to entities from 1 April 2015 and early particular policies adopted by the dividend”) at 31 March being included as an integral part of a related item of adoption is not permitted. Northern Ireland Local Government income for the financial year. computer hardware, the software is Officers’ Superannuation Committee are treated as an intangible asset. described below. They have been applied Income from equities includes consistently in dealing with items that irrecoverable withholding tax. 2.11 Property, plant and 4.Contributions receivable are considered material to the accounts. Income from fixed interest and index- equipment 2014/15 2013/14 linked securities, cash and short-term Property is valued on the basis of open 2014/15 2013/14 £'000 £'000 2. Accounting policies deposits is accounted for on an accruals market value at 31 March 2015 by the £'000 £'000 Employers The accounts are prepared on an basis. independent chartered surveyors BNP Employers normal 167,901 156,365 accruals basis. Paribas Real Estate in accordance normal 167,901 156,365 early retirement funding 2,113 2,839 2.4 Rental income with the RICS Appraisal and Valuation early retirement funding 2,113 2,839 special contributions * 3,743 1,266 2.1 Use of estimates Rental income from properties has been Manual. special contributions * 3,743 1,266 Employees The use of estimates and assumptions taken into account by reference to the Employees Non-property assets are carried at fair normal 52,648 49,428 is required in the preparation of the periods to which the rents relate and is normal 52,648 49,428 value; depreciated historical cost is used additional voluntary contributions 4,946 4,593 financial statements. Where estimates shown net of related expenses. as a proxy for fair value for Plant and additional voluntary contributions 4,946 4,593 231,351 214,491 and assumptions are required, the Equipment as the present value of the 231,351 214,491 techniques used are considered 2.5 Contributions and benefits assets’ potential can be assumed to be *The special contributions in 2013/14 were receivable from Royal College of Nursing, appropriate and are consistently applied. Contributions, other than additional at least equal to the cost of replacing *The special contributions in 2013/14 were receivable from Royal College of Nursing, United Dairy Farmers, Oaklee Homes Group, Lagan College, Citizens Advice and Actual results may however differ from voluntary contributions, are accounted that service potential. United Dairy Farme*Ther specials, Oaklee contributions Homes Group, in Lagan2014/15 Col includelege, Citizens payments Advi madece and to the Fund by specific those assumptions and estimates used. for on an accruals basis. Benefits Ards Citizens'Ards Citizens' Advice BuAdviemployingreau.ce Bu Threau. eauthoritiesy include They includepayments in addition payments made to the to made the minimum F tundo the in F%additionund contribution in addition certified by the payable are also accounted for on an 2.12 Investment properties to the minimumto the minimum % contributionactuary % contribution and certified include c ertifiedby cessationthe actuary by the payments, actuaryand include and strain includecessation on cfundessation payments, deficit recovery The key estimate and assumption payments, strain on fundpayments payments on andclosure deficit or rtransfersecovery payments of staff and on cpaymentslosure or in respect of situations accruals basis. Investment properties are valued on the payments, strain on fund payments and deficit recovery payments on closure or used in the preparation of the financial transfers of staff. specific to a particular employing authority. basis of open market value at 31 March transfers of staff. statements relates to investment Employers’ special contributions are 2015 by the independent chartered management performance fees which accounted for in accordance with the surveyors BNP Paribas Real Estate in are calculated based on observed agreement under which they are being accordance with RICS Appraisal and performance to the year end date. The paid, or in the absence of such an Valuation Manual. The carrying amounts actual performance fee will depend on agreement, when received. of these assets approximate their fair the outturn for the performance year value. (which is not always co-terminus with

63 64 Administration expenses

2014/15 2013/14

£'000 £'000

Staff costs (note 18) 1,920 1,759 Agency staff costs (note 18) 144 51 Office overheads 592 570 Depreciation (notes 12 & 13) 178 129 Communication 170 153 Other administration 154 160 Templeton House revaluation (note 13) (304) (53) Actuarial fees 39 112 Internal audit fees 25 25 External audit Fees 26 21 Legal and other professional fees 268 129 Medical fees 55 56 3,267 3,112

NILGOSC occupied 67% of Templeton House until 6 December 2012 when AXA Sunlife paid a premium to surrender their lease. The net rental income and the surrender premium received in respect of the 33% of the property not occupied by NILGOSC is accounted for within Administration expenses in 2012/13. Also included within Administration expenses is the gain/loss on revaluation of Templeton House, which is valued at open market value at the end of each financial year.

5. Benefits 8. Investment income Investment income 2014/152014/15 2014/15 2013/142013/14 2013/14 £'000£'000 £'000 £'000£'000 £'000 2014/15 2013/14 £'000 £'000 PensionsPensions * * Pensions * 142,974142,974 142,974 135,309135,309 135,309 CommuCommutationstationsCommu and and lump lumptations sum sum and reti r etilumprementrement sum benefits benefitsretirement benefits 34,39534,395 34,395 36,71636,716 36,716 Fixed interest securities 5,778 4,898 LumpLump sum sum death deathLump benefits benefitssum death benefits 4,1504,150 4,150 4,3744,374 4,374 Dividends from equities 49,742 48,711 181,519181,519 181,519 176,399176,399 176,399 Pooled Investment vehicles 749 646 Net rents from properties 32,831 24,713 *In addition, £4.494m of agency and compensation pensions were paid on an agency * *In In addition, addition, *£4.494m £4.494mIn addition, of of agency agency£4.494m and and of c ompensationagencycompensation and c ompensationpensions pensions w wer epensionser epaid paid on on wan ane ragencye agency paid on an agency Interest on deposits 387 460 basis and recharged to employing authorities (2013/14:£4.488m). These payments basis basis and and recha r echa basisrgedrged and to t orempecha emplorlyinggedoying tauthoritieso authorities employing (2013/14:£4.88m). (2013/14:£4.88m).authorities (2013/14:£4.88m). These These payments payments These payments relate to compensation benefits which, under the applicable regulations, cannot be Stock lending Income 360 385 r ela relatet eto t oc ompensationc ompensation relate to c ompensationbenefits benefits which, which, benefits under under which,the the appli appli undercabcabl ethel eregulations, r egulations,applicable c r annotcegulations,annot be be cannot be paid from the Fund and for which NILGOSC acts as a paying agent only. Accordingly, Other - Class Actions/foreign exchange paid paid fr fomrom the the paid F undFund fr andom and thefor for Fwhich undwhich and NI NIL fGOSCLorGOSC which acts acts NI as LasGOSC a apaying paying acts agent asagent a payingon only.l y .A agentccAccorodingr dingonly,yl.y, A ccordingly, these transactions have not been reflected in these financial statements. gains/(losses) & other income (216) 12,841 these these tr tansactionsransactions these hatr haansactionsvev enot not been been ha ref vreeflec notlected tbeened in in these rtheseeflec financial tfinancialed in these s tsatta ements.financialtements. statements. 89,631 92,654 Irrecoverable withholding tax (461) (547) 6. Payments to and on account of leavers Total Investment Income 89,170 92,107

2014/152014/152014/15 2013/142013/142013/14 £'000£'000£'000 £'000£'000£'000 Stock Lending (iii) Collateral comprises mainly of UK RefundRefundR toefund to members members to members le leavingaving lea serviceving service service 101010 161616 The Fund’s securities lending ...and overseas equity and Government PaPymentaymentPa ymentfor for members members for members joining joining joining state state state scheme scheme scheme - - - 333 programme continued during the year ...debt. TrTansfersransfersTransfers to to other other to otherschemes schemes schemes 3,6003,6003,600 2,7652,7652,765 ended 31 March 2015. The main features As at 31 March 2015, securities 3,6103,6103,610 2,7842,7842,784 of the programme are: amounting to £64,434,205 were on (i) .Lending maximum of 35% of total loan against collateral of £68,980,168 ..investment assets; (2013/14: Securities amounting to AdminiAdministrationstration expenses expenses (ii) Global Custodian acts as securities £102,417,036 were on loan against 7. Administration expenses ..lending manager and collateral collateral of £108,027,765). ..manager; 2014/152014/15 2013/142013/14

£'000£'000 £'000£'000

StaffS ctaffosts c o(nostst e(no 18)te 18) 1,9201,920 1,7591,759 9. Financial assets AgencyAgency staff s ctaffosts c o(notests (note 18) 18) 144 144 51 51 OfficOffie ovcerheadse overheads 592 592 570 570 Value at Purchases Sales Reclass- Change in Value at 01 04 2014 at cost proceeds ifications market value 31 03 2015 DeprDepeciationreciation (notes (notes 12 & 12 13) & 13) 178 178 129 129 £' 000 £' 000 £' 000 £' 000 £' 000 £' 000 CommuniCommunicationcation 170 170 153 153 Fixed interest securities 188,381 335,523 (322,749) - 12,139 213,294 OtherOther admini administrationstration 154 154 160 160 Equities 2,021,001 643,358 (630,313) (960) 230,623 2,263,709 TempTempletonle Houseton House revaluation revaluation (note (note 13) 13) (304)(304) (53) (53) Pooled investment vehicles 2,180,819 423,087 (425,558) - 366,675 2,545,023 ActuarialActuarial fees fees 39 39 112 112 Derivative contracts 1,671 - - - (691) 980 AVC investments 20,958 5,850 (3,106) - 1,064 24,766 InternalInternal audit audit fees fees 25 25 25 25 Private equity/Infrastructure - 12,657 (131) 960 (280) 13,206 ExternalExternal audit audit Fees Fees 26 26 21 21 4,412,830 1,420,475 (1,381,857) - 609,530 5,060,978 LegalLegal and andother other prof epsrsionalofessional fees fees 268 268 129 129 MediMedical feescal fees 55 55 56 56 The change in market value of balances, this relates to exchange gains Transaction costs incurred during the investments during the year comprises and losses. year amounted to £2,288,659 (2013/14: 3,2673,267 3,1123,112 all increases and decreases in the £2,977,673). In addition to the transaction Transaction costs are included in the market value of investments held at costs disclosed above, indirect costs are cost of purchases and sales proceeds. any time during the year, including incurred through the bid-offer spread on Transaction costs include costs charged profits and losses realised on sales investments within pooled investment NILGOSCNILGOSC occupied occupied 67% 67% of Temp of Templetonle Houseton House until until 6 De 6c emberDecember 2012 2012 when when AXA AXASunli Sunlife fe directly to the Scheme such as fees, of investments during the year and vehicles. The amount of indirect costs is paid paida pr emiuma premium to sur tor endersurrender their their lease. lease. The Thenet rnetent alren intalcome income and andthe surther endersurrender commissions, stamp duty and other fees. reinvested income arising on the Legal not separately provided to the Scheme. premiumpremium recei rveedcei inved respect in respect of the of 33%the 33% of the of ptheroperty property not onotccupied occupied by NI byLGOSC NILGOSC & General Pooled investments. In the is accisoun acctouned ftored within for within Admini Administrationstration expenses expenses in 2012/13. in 2012/13. Also Also included included within within case of deposits and other investment AdminiAdministrationstration expenses expenses is the is gain/the gain/loss lonos sr evonaluation revaluation of Temp of Templetonle House,ton House, which which is is valuedvalued at open at open mar kmaret vkalueet value at the at endthe endof each of each financial financial year .year. 65 66

InveInstmentvestment income income 2014/152014/15 2013/142013/14 £'000£'000 £'000£'000

FixedFi inxedte rinestet rsecuritiesest securities 5,7785,778 4,8984,898 DividendsDividends from f requitiesom equities 49,74249,742 48,71148,711 PoolPedoo Inledve sIntmentvestment vehic vlehices les 749 749 646 646 Net rNetents rents from f rpomroperties properties 32,83132,831 24,71324,713 InterInestet rones tdeposits on deposits 387 387 460 460 StockSt lockending lending Income Income 360 360 385 385 OtherOther - Cla -s Clas Actions/ss Actions/foreignforeign exchange exchange gains/( gains/(losses)los ses)& other & other income income (216)(216) 12,84112,841 89,63189,631 92,65492,654 IrrecIrorvecroabvelerab withholdingle withholding tax tax (461)(461) (547)(547) TotalT oIntalve sIntmentvestment Income Income 89,17089,170 92,10792,107 9. Financial assets (continued) 2014/15 2013/14 9. Financial assets (continued) AVC Investments £'000 £'000 AVC Investments Members participating in this 2014/15 2013/14 Fixed interest securities 2014/15 2013/14 The Committee holds assets invested separatearrangemently from the main each funds receive with anEqui annualtable Li fe £'000 £'000 TheAssu Committeerance Society holds and assets Prudential invested Assu rance Companystatement Limi madeted. up to 31 March UK public sector 10,668£'000 £'0006,382 Fixed interest securities separately from the main funds with confirming the amounts held to their UKFix edother interest securities 9,547 8,854 EquitableMembers Life participating Assurance in thisand arPrudentialrangement eachaccount receiv ande an theannual movements statement in made the up to UK public sector 10,668 6,382 UKOve publicrseas fisecxedtor interest 193,07910,668 173,1456,382 Company31 March Limited.confirming the amounts held to theiryear. account The andaggregate the mov amountsements in of the AVC yea r. UK other 9,547 8,854 investments are as follows: UK other 213,2949,547 188,3818,854 The aggregate amounts of AVC investments are as follows: Overseas fixed interest 193,079 173,145 Overseas fixed interest 193,079 173,145 213,294 188,381 2014/15 2013/14 Equities 213,294 188,381 £'000 £'000 UK quoted 1,292,795 1,228,636 Equitable Life Assurance Company Limited Equities UKEquities unquoted - 959 Equitable Life with profits 185 193 UK quoted 1,292,795 1,228,636 Equitable Life unit-linked funds 96 88 UKOve quorseasted quoted 1,292,795970,914 1,228,636791,406 UK unquoted - 959 Equitable building society fund 33 33 UK unquoted 2,263,709- 2,021,001959 Overseas quoted 970,914 791,406 314 314 Overseas quoted 970,914 791,406 2,263,709 2,021,001 2,263,709 2,021,001 2014/15 2013/14 £'000 £'000 Pooled investment vehicles Prudential Life Assurance Company Limited Unit trusts - property - - Pooled investment vehicles Prudential With Profits Accumulation Fund 5,714 5,369 UnitPool edtru instsve -s othertment vehicles 2,545,023 2,180,819 Prudential Deposit Fund 9,514 7,880 Unit trusts - property - - Unit trusts - property 2,545,023- 2,180,819- Prudential Cash Fund 909 824 Unit trusts - other 2,545,023 2,180,819 Unit trusts - other 2,545,023 2,180,819 Prudential Discretionary Fund 1,500 1,139 2,545,023 2,180,819 Prudential Fixed Interest Fund 185 158 2,545,023 2,180,819 Prudential Global Equity Fund 154 136 Derivative contracts Prudential Index Linked Fund 316 246 Forward currency contracts 980 1,671 Prudential International Equity Fund 230 201 Derivative contracts Derivative contracts 980 1,671 Prudential Long Term Growth Fund 5 11 Forward currency contracts 980 1,671 Forward currency contracts 980 1,671 Prudential Overseas Equity Passive Fund 35 26 980 1,671 Prudential Property Fund 413 303 980 1,671 Prudential Retirement Protection Fund 693 596 DeriPrivatevati vEquity/Infrastructuree contracts Prudential Socially Responsible Fund 347 384 UK 872 - Prudential UK Equity (Passive) Fund 872 893 DeriOverseasvative contracts 12,334 - Derivative contracts Prudential UK Equity (Active) Fund 282 248 - 13,206 Prudential Corporate Bond Fund 137 100 Prudential Aberdeen Life Multi-Asset 97 87 Prudential Pre Retirement Fund 149 124 Prudential UK Specialist Equity Fund 25 28 Futures Contracts Foreign Currency Hedging Prudential Aberdeen Life North American Equity Fund 7 6 The Fund’s objective in entering into Investments denominated in overseas Prudential BGI Aquila (60:40) Global Equity Index Fund 14 18 futures position is to decrease risk in currencies may be hedged into sterling Prudential BGI Aquila All Stocks Corporate Bond 266 162 the portfolio by matching assets that at various times. The purpose of this Prudential BGI Aquila UK Equity Index Fund 117 166 are already held in the portfolio without action is to reduce the Fund’s exposure Prudential BGI Aquila World ex UK Index Fund 244 165 disturbing the underlying assets. to foreign currencies and fluctuations in Prudential Newton International Global Equity 202 105 exchange rates depending on conditions Prudential BGI (50:50) Global Equity Index Fund 583 355 and expectations in these markets. Prudential BGI Aquila over 15 years UK Gilt Index 878 516 There were forward currency contracts Prudential Index Linked Passive Fund 398 in place at 31 March 2015 and 31 March Prudential BGI Aguila Emerging Markets Equity - 2014 as shown in the analysis above. Prudential BGI Aguila Market Advantage -

24,45220,644 20,644

67 68 10. Investment property 12. Intangible assets Intangible assets Intangible assets Intangible assets InInInInvvevevseseIntmentstmentstmentvtmentestment pp r prpopertyropertyropertyoperty property 2014/152014/152014/152014/152014/15 2013/142013/142013/142013/142013/14 Computer Computer Computer £'000£'000£'000£'000£'000 £'000£'000£'000£'000£'000 software software software FFairFairFairair VVF alue ValueairValuealue Value £'000 587,425587,425587,425 £'000 £'000 AtAtAtAt ss t startsartAtttartart s ofof t ofartof yy ear yeary earofear year 587,425587,425 366,255366,255366,255366,255366,255 Cost AdditionsAdditionsAdditionsAdditionsAdditions 92,73092,73092,73092,73092,730 194,282194,282194,282194,282194,282 CostCost Cost SaSaSaSallesesllesesSales (14,694)(14,694)(14,694)(14,694)(14,694) (2,057)(2,057)(2,057)(2,057)(2,057) At 1 April 2014 216 GainsGainsGainsGainsGains arisingarising arisingarising arising ffr r fomfomrromom f changeschangesr omchangeschanges changes inin in in ffair air ffair airin vv aluesf valuesairvaluesalues values 57,449 57,449 57,449 57,449 57,449 28,94528,94528,94528,94528,945 At 1 April 2014 At 1 April 2014 216 216 Additions 448 AtAtAtAt endend endendAt of of end ofof yy ear yeary earofear year 722,910722,910722,910722,910722,910 587,425587,425587,425587,425587,425 Additions DisposalsAdditions 448 (114)448 Disposals Disposals (114) (114) At 31 March 2015 550 At 31 March 2015 At 31 March 2015 550 550 The investment properties were valued valued on the basis of Market Value. The investment properties are leased to as at 31 March 2015 by qualified All valuations were carried out in tenants under non-cancellable operating Amortisation professional valuers working for accordance with the RICS Appraisal and lease agreements. The leases have Amortisation Amortisation BNP Paribas Real Estate, Chartered Valuation Standards. varying terms, escalation clauses and At 1 April 2014 127 Surveyors, acting in the capacity of renewable rights. At 1 April 2014 At 1 April 2014 127 127 External Valuers. All such valuers are NILGOSC received net rental income of Charge for the year 75 Charge for the year ChaDisposalsrge for the year 75 (114)75 Chartered Surveyors, being members £32.8m (2013/14: £24.7m) in respect of Disposals Disposals (114) (114) of the Royal Institute of Chartered these investment properties. At 31 March 2015 88 At 31 March 2015 At 31 March 2015 88 88 Surveyors (RICS). The properties were Net book value The future minimum lease receipts under non-cancellable operating leases Net book value Net book value expiring: The future minimum Thelease futu rerceeipts minimum under l easenon- rceanceiptscellab underle ope non-ratingcan cleasesellable operating leases At 31 March 2014 89 2014/15 2013/14 At 31 March 2014 At 31 March 2014 89 89 expiring: expiring: At 31 March 2015 462 2014/15£'000 2014/15 2013/14£'000 2013/14 At 31 March 2015 At 31 March 2015 462 462 £'000 £'000 £'000 £'000 Not later than one year 36,896 33,131 Computer software is amortised on a straight-line basis over a period of three years. All the intangible assets are owned by NILGOSC. LaNotter la thanter than one yoneear yandearNot not la tlaert erthan than one fi yveare years 130,57836,896 36,896 111,98533,131 33,131 LaLaterter than than fi oneve y eayearrs andLat ernot than later one than year fi vande y eanotrs later than five years 239,979130,578 130,578 198,694111,985 111,985 Later than five years 239,979 198,694 13. Property, Plant and Equipment Later than five years 407,453239,979 343,810198,694 407,453 343,810 407,453 343,810 FixtuFixtures,res, Fixtu r es, FittingsFixtuFittingsres, & & Fittings & PPropertyroperty EquipmentFittingsEquipmentProperty & RefurbishmentEquipmentRefurbishmentRefurbishmentToTtoaltal Total 11. Investment management expenses Property£'000£'000 Equipment£'000£'000£'000 Refurbishment£'000£'000£'000 £'000£'000T£'000otal £'000 InInvevsetmentstment management management e xpensesexpenses CoCostst Cost £'000 £'000 £'000 £'000 2014/152014/15 2013/142013/14 Cost £'000£'000 £'000£'000 AtAt 1 1April April 2014 2014At 1 April 2014 725725 725666666 666733733 7332,1242,124 2,124 RAtRev 1evaluation Aprilaluation 2014 Revaluation 725275275 666275- - -733- - 2,124275- 275 275 102102 102 AdminiAdministsrtation,ration, management management and and cu custsodytody 13,47913,479 11,22311,223 AdditionsRAdditionsevaluation Additions 275- - -- 225225- 225327275327 327 DisposalsAdditionsDisposals Disposals - - (381)102(381)- (381) - - (381)327-(381) (381) PPererformanformancec emeasu measurementrement servi servicesces 2626 2626 Additions - 225 327 DisposalsAtAt 31 31 Ma Marchrch 2015 2015At 31 March 2015 10001000- 1000(381)387387 387958958- 9582,345(381)2,345 2,345 OtherOther advisory advisory fees fees 321321 209209 At 31 March 2015 1000 387 958 2,345 13,82613,826 11,45811,458 DepDepreciationreciation Depreciation Depreciation AtDepAt 1 r1Aprileciation April 2014 2014At 1 April 2014 - - 590590- 590720720 7201,3101,310 1,310 Investment management expenses respect of investment advice, custody At 1 April 2014 - 590 720 1,310 mainly consist of fees paid to Fund services and property valuations are ChaAtCha 1 rAprilgerge for f 2014or the the yCha earyearrge for the year 2929- 590295757 577201717 1,31017103103 103 - - - Managers in respect of the management included within investment management RChaRevevaluationrgealuation for the Adju Adju yRearevstmentsaluationtment Adjustment (29)29(29) (29)57 17- - -103(29)(29) (29) (381)(381) (381) - - - and investment of funds on NILGOSC’s expenses. RAmortisationAmortisationevaluation Adju on onAmortisation disposalss tmentdisposals on disposals (29)- - - - (381)(29)(381) (381) (381) behalf. These fees vary from year to year AtAmortisationAt 31 31 Ma Marchrch 2015 on2015At disposals 31 March 2015 - - (381)266266- 266737737- 7371,003(381)1,003 1,003 as they are based on the market value At 31 March 2015 - 266 737 1,003 NetNet book book v aluevalueNet book value of the investments held and in some cases include a performance based Net book value AtAt 31 31 Ma Marchrch 2014 2014At 31 March 2014 725725 7257676 76 1313 13814814 814 fee element. In addition, fees paid in 814 AtAt 31 31 Ma Marchrch 20142015 2015At 31 March 2015 1,0001,000725 1,00012176121 12122113221 2211,3421,342814 1,342 At 31 March 2015 1,000 121 221 1,342

69 70 13. Property, Plant and Equipment (continued) 16. Trade and other payables Trade and other payables 2014/15 2013/14 The property was valued as at 31 being members of the Royal Institute the property, plant and equipment are March 2015 by qualified professional of Chartered Surveyors (RICS). The owned by NILGOSC. £'000 £'000 valuers working for BNP Paribas Real property was valued on the basis of Estate, Chartered Surveyors, acting in Market Value. The valuation was Trade payables and other current liabilities 169 799 the capacity of External Valuers. All carried out in accordance with the RICS Unpaid benefits 4,175 2,861 such valuers are Chartered Surveyors, Appraisal and Valuation Standards. All Social security and other taxes 1,463 1,630 Accruals and deferred income 23,228 24,007 29,035 14. Trade and other receivables 29,297 Trade and other receivables 2014/15 2013/14 An analysis of trade and other payables by organisation is as follows: £'000 £'000 Balances with other central government bodies 1,463 1,630 Receivables and other current assets 11,144 14,483 Balances with local authorities - - VAT and other receivables 3,933 447 Subtotal: Intra-government balances 1,463 1,630 Less: Provision for impairment of receivables (861) (1,316) Balances with bodies external to government 27,572 27,667 Receivables and other current assets-net 14,216 13,614 29,035 29,297 Pension contributions due * 12,633 13,992 Prepayments and accrued income 12,834 10,544 39,683 38,150 17. Retirement benefit obligations 2013 and the contributions to be paid of its assets in liquid investments. As a until 31 March 2017 resulting from that consequence there will be no significant NILGOSC provides pension valuation are set out in the Fund’s Rates restriction on realising assets if a large An analysis of trade and other receivables by organisation is as follows: arrangements for the benefit of its and Adjustment Certificate within the payment is required to be paid from employees through the NILGOSC report on the Actuarial Valuation as at the Fund in relation to an employer’s Balances with other central government bodies 3,307 1 Scheme. The NILGOSC Scheme is 31 March 2013. An actuarial valuation of liabilities. The assets are invested in a known as the Local Government Pension Balances with local authorities and other related bodies 12,972 14,597 the Fund will be carried out at 31 March diversified spread of investments and the Scheme (Northern Ireland) and is a Balances with public corporations and trading funds 14 48 2016 and as part of that valuation a new approximate split of assets for the Fund funded defined benefit scheme. Benefits Subtotal: Intra-government balances 16,293 14,646 Rates and Adjustment Certificate will be as a whole is shown in this note. earned up to 31 March 2015 are linked produced for the three year period from Balances with bodies external to government 23,390 23,504 to final salary. Benefits earned after 1 April 2017. At 31 March 2015 NILGOSC had 60 39,683 38,150 31 March 2015 are based on a Career active members (2013/14:50), 51 Average Revalued Earnings scheme. The Fund Administering Authority, deferred members (2013/14:48) and 16 *All contributions due to the Scheme relate to the month of March 2015 and were paid in full to the Scheme within the timescale Northern Ireland Local Government pensioners (2013/14:17). The funded nature of the Local required by the Local Government Pension Scheme (Administration) Regulations (Northern Ireland) 2009. Officers’ Superannuation Committee is Government Pension Scheme requires responsible for the governance of the the employer and its employees to pay Pension Fund. 15. Cash and cash equivalents contributions into the pension scheme, calculated at a level intended to balance The NILGOSC Scheme is a multi- Cash and cash equivalents includes short-term deposits with banks and other financial institutions, with an initial maturity of one the pension liabilities with investment employer scheme. The assets allocated month or less. The carrying amount of these assets approximates their fair value. assets. Information on the framework to the Employer in the Fund are notional for calculating contributions to be paid is and are assumed to be invested in line set out in the Local Government Pension with the investments of the Fund for 2014/152014/15 2013/142013/14 Scheme (Administration) Regulations the purposes of calculating the return £'000£'000 £'000£'000 (NI) 2009 (as amended) and the Fund’s to be applied to those notional assets Funding Strategy Statement. The last over the accounting period. The Fund is actuarial valuation was at 31 March large and holds a significant proportion AtAt 1 April1 April 47,95347,953 43,71943,719 NetNet change change in incash cash balan balancesces 4,3104,310 4,2344,234 - - 52,26352,263 47,95347,953 Net defined benefit liability 2014/15 2013/14 TheThe fol flolowinglowing balan balancesces at at 31 31 Ma Marchrch w ewrere £’000 £’000 heldheld at: at: 7,575 6,653 CommeCommercialrcial banks banks and and cash cash in inhand hand - - 8,3038,303 7,7907,790 Fair value of assets (10,642) (9,111) InInvevsetmentstment cash cash - - 43,96043,960 40,16340,163 Present value of funded defined benefit obligation (3,067) (2,458) 52,26352,263 47,95347,953 Funded status Impact of minimum funding requirement / asset ceiling - -

Net defined benefit liability (3,067) (2,458)

71 72 17. Retirement benefit obligations (continued)

The split of the defined benefit obligation at the last valuation date between the various categories of members was as follows: Analysis of amounts charged against profits

2014/15 2013/14 Active members 41% Deferred pensioners 18% £’000 £’000 Pensioners 41% Operating cost Current service cost 304 282 FinancialFinancial assumptions assumptions Past service cost - 26 A full actuarial valuation of the NILGOSC account of the requirements of IAS 19 304 308 definedA full actuarial benefit valuation scheme ofwas the carried NILGOSC definedin order benefit to assess scheme the liabilities was carried of the out as at 31 March 2013. The financial assump- Finance cost outtions as haveat 31 been March updated 2013. Theby independent financial qualifiedScheme actuaries at 31 March to take 2015: account of the requirements of IAS 19 in order to assess the Interest on net defined benefit liability 100 101 assumptionsliabilities of the have Scheme been updated at 31 March by 2014: Finance cost 100 101 independent qualified actuaries to take

2014/15 2013/14 Remeasurement Gains and Losses % % 2014/15 2013/14 3.3 Rate of increases in salaries 3.9 £’000 £’000 3.2 Discount rate 4.3 Inflation / Pension increase rate 1.8 2.4 Return on plan assets in excess of that recognised in net interest (588) (338) Actuarial losses/(gains) due to change in financial assumptions 1,121 (271) Demographic assumptions for longevity. The base longevity Based on these assumptions, the Actuarial gains due to changes in demographic assumptions - (158) Demographic assumptions The demographic assumptions are assumption made is in line with standard average life expectancies at age 65 are Actuarial (gains)/losses due to liability experience (58) 683 in line with those adopted for the last SAPS mortality tables and includes summarised below: Net loss/(gain) 475 (84) The demographic assumptions are in line with those adopted for the last formal actuarial valuation for the Scheme and are formal actuarial valuation for the improvements based on the CMI Core based on the recent actual mortality experience for members within the Fund. The key demographic assumption was the Scheme and are based on the recent Projections with a long term annual rate allowance made for longevity. The base longevity assumption made is in line with standard SAPS mortality tables and includes actual mortality experience for members of improvement in mortality rates of improvements based on the CMI Core Projections with a long term annual rate of improvement in mortality rates of 1.5% per within the Fund. The key demographic 1.5% per annum. annum. Based on these assumptions, the average life expectancies at age 65 are summarised below: assumption was the allowance made Scheme assets Changes in fair value of the scheme assets are as follows:

2014/15 2013/14 2014/15 2013/14 Years Years £’000 £’000

Current pensioners (at age 65) - males 22.2 22.1 Fair value of scheme assets at start of year 6,653 6,025 Current pensioners (at age 65) - females 24.7 24.6 Interest income on assets 287 272 Future pensioners (at age 65) - males 24.4 24.3 Contributions by Members 88 82 Future pensioners (at age 65) - females 27.0 26.9 Contributions by the Employer 270 277 Benefits paid (311) (341) Re-measurement gains on assets 588 338 The next funding valuation of the Scheme is due to be carried out as at 31 March 2016, when the mortality trends under the Fair value of scheme assets at end of year 7,575 6,653 Scheme will be reviewed and the demographic assumptions updated if appropriate.

Analysis of assets The actual return on assets is as follows: The major categories of assets as a percentage of total plan assets are: 2014/15 2013/14 2014/15 2013/14 £’000 £’000 % %

Equities 73.0 74.2 Interest income on assets 287 272 Bonds 12.2 12.0 Re-measurement gains on assets 588 338 Property 12.6 11.2 Actual return on assets 875 610 Cash 2.0 2.6 Other 0.2 -

73 74 17. Retirement benefit obligations (continued) 17. Retirement benefit obligations This risk may fall on other employers. (continued) ‘Orphan liabilities’ are currently a small Present value of defined benefit obligation proportion of the overall liabilities in the Risks associated with the fund in Fund. Changes in the present value of retirement benefit obligations are as follows: relation to accounting

2014/15 2013/14 The risks associated with the Fund in Future cash flows £’000 £’000 relation to accounting are set out below: An estimate of the expected employer’s

Asset Volatility regular contributions to the Fund for the Present value of obligations at start of year 9,111 8,435 accounting period ending 31 March 2016 Current service cost 304 282 The liabilities used for accounting is £279k. Interest cost 387 373 purposes are calculated using a Contributions by Members 88 82 discount rate set with reference to The estimated duration of the Fund’s Past service cost - 26 corporate bond yields. If assets liabilities is 21.1 years. Benefits paid (311) (341) underperform, this yield will create a Actuarial losses/(gains) on liabilities – change in financial assumptions 1,121 (271) deficit in the accounts. The Fund holds Actuarial gains on liabilities – change in demographic assumptions - (158) Actuarial (gains)/losses on liabilities – experience (58) 683 a significant proportion of growth assets Present value of obligation at end of year 10,642 9,111 which, while expected to outperform corporate bonds in the long term, Sensitivity analysis creates volatility and risk in the short benefit obligation as at 31 March 2015 A sensitivity analysis for each significant term in relation to the accounting and 31 March 2014. In each case only actuarial assumption is provided below. figures. the assumption stated is altered; all This shows the approximate impact of other assumptions remain the same. Changes in Bond Yield changing the assumption noted on the present value of the funded defined A decrease in corporate bond yields will increase the value placed on the Discount rate assumption 31 March 2015 31 March 2014 liabilities for accounting purposes although this will be marginally offset by Adjustment to discount rate +0.1% p.a. -0.1% p.a. +0.1% p.a. -0.1% p.a. +0.1% p.a. -0.1% p.a. Present value of total obligation (£000’s) 10,419 10,869 8,932 9,330 the increase in the assets as a result. 8,932 9,330 % change in present value of total obligation -2.1% 2.1% -2.2% 2.2% -2.2% 2.2% Inflation Risk Projected service cost (£000’s) 294 317 284 304 284 304 The majority of the pension liabilities Approximate % change in projected service cost -3.8% 3.9% -3.4% 3.4% -3.4% 3.4% are linked to either pay or price inflation. Higher inflation expectations will lead to Rate of general increase in salaries 31 March 2015 31 March 2014

a higher liability value. The assets are +0.1% p.a. -0.1% p.a. Adjustment to salary increase rate +0.1% p.a. -0.1% p.a. +0.1% p.a. -0.1% p.a. either unaffected or loosely correlated 9,184 9,075 Present value of total obligation (£000’s) 10,710 10,575 9,184 9,075 with inflation meaning that an increase 0.6% -0.6% % change in present value of total obligation 0.6% -0.6% 0.6% -0.6% 296 292 in inflation will increase the deficit. Projected service cost (£000’s) 305 305 296 292 0.8% -0.8% Approximate % change in projected service cost 0.0% 0.0% 0.8% -0.8% Life Expectancy The majority of the Fund’s obligations Rate of increase to pensions in payment and deferred pensions assumption, 31 March 2015 31 March 2014 are to provide benefits for the life of and rate of revaluation of pension accounts assumption +0.1% p.a. -0.1% p.a. the member following retirement, so Adjustment to pension increase rate +0.1% p.a. -0.1% p.a. +0.1% p.a. -0.1% p.a. 9,275 8,986 Present value of total obligation (£000’s) 10,813 10,474 9,275 8,986 increases in life expectancy will result in 1.6% -1.6% % change in present value of total obligation 1.6% -1.6% 1.6% -1.6% an increase in the liabilities. 300 288 Projected service cost (£000’s) 317 294 300 288 2.0% -2.1% Exiting Employers Approximate % change in projected service cost 3.9% -3.8% 2.0% -2.1% As set out in the Fund’s Funding Post retirement mortality assumption 31 March 2015 31 March 2014 Strategy Statement, NILGOSC seeks

- 1 year + 1 year to remove as much of the risk as Adjustment to mortality age rating assumption* - 1 year + 1 year - 1 year + 1 year 9,327 8,930 possible of remaining Fund employers Present value of total obligation (£000’s) 10,929 10,355 9,327 8,930 2.2% -2.2% being required to make contributions in % change in present value of total obligation 2.7% -2.7% 2.2% -2.2% 303 285 future to meet the liabilities of departed Projected service cost (£000’s) 316 294 303 285 3.1% -3.1% employers by carrying out a cessation Approximate % change in projected service cost 3.5% -3.5% 3.1% -3.1% valuation when an employer leaves the Scheme. If the employer (or guarantor) *A rating of +1 year means that members are assumed to follow the mortality pattern of the base table for an individual that is is not able to meet this exit payment the 1 year older than them. liability may in certain circumstances fall on other employers in the Fund. Further the assets at exit in respect of ‘orphan liabilities’ may, in retrospect, not be sufficient to meet the liabilities.

75 76 18. Staff numbers and related costs StaffSt affcos ctsos ctsomprise: cSomprise:taff costs comprise: 23. Summary of losses and special 2014/152014/15 2014/152013/142013/14 2013/14 StaffStaff cos coststs comprise: comprise:Staff costs comprise: payments StSafftaff c ocsotssts c omprise:comprise: 2014/15 2014/152013/14 2013/14 PermanentPermanently PlyermanentOtheOthelyrs rs Others 2014/152014/15TotTalotal 2013/142013/14TToottalTalotal Total (i) Losses empemployledoy ed employed Losses incurred on the sale of Permanently PermanentOthelyrs Others Total TToottalal Total PPermanentermanentstaffstafflyly staffOtheOthersrs ToTtoaltal ToTtoaltal investments are disclosed as a “Change employed employed empemp£'000l£'000oyloyeded £'000£'000£'000 £'000 £'000£'000 £'000£'000£'000 £'000 in Market Value” in Note 9 and “Gains/ staff staff losses arising from changes in fair stsafftaff £'000 £'000£'000 £'000 £'000 £'000£'000 £'000 value” in Note 10. WagesWages and and salaries Wsalariesages and salaries 1,4561,456£'000£'000 1,456202£'000202£'000 202 1,6581,658£'000£'000 1,6581,4021,402£'000£'000 1,402 SocialSocial security securitySocial cos ctso ssecurityts costs 98 98 98 4 4 4 102102 102100100 100 Losses incurred during the year in Wages and salariesWages and salaries 1,456 1,456202 202 1,658 1,6581,402 1,402 respect of pension overpayments total OtherOtherWWages pensionages pension and and Othercsalaries osalariess ctsos pensionts costs 2971,4561,456297 297 72022027 7 3041,6581,658304 3043081,4021,402308 308 Social securitySocial costs security costs 98 98 4 4 102 102100 100 £5,454 and relate to the non-recovery TotTalSocialoSocialtal security securityTotal c ocsotssts 1,8511,8519898 1,85121321344 213 2,0642,064102102 2,0641,8101,810100100 1,810 Other pension Othercosts pension costs 297 297 7 7 304 304308 308 of pensioner death overpayments, of OtherOther pension pension c ocsotssts 297297 77 304304 308308 Total Total 1,851 1,851213 213 2,064 2,0641,810 1,810 which £3,717 required approval by the ToTtoaltal 1,8511,851 213213 2,0642,064 1,8101,810 Department of the Environment which AveArvageerage number numberAve ofrage peof rpenumbersonsrsons emp ofempl opeyledrosonsyed employed was received in June 2015.

Average numberAve ofrage per numbersons emp ofl opeyedrsons employed Bad debts written off during the year TheTheA aAvveve rearagervageeagerage numbernumber numberThe number av e ofof rofage pe whoof per whosonsnumberrlsonse-timele-time emp emp ofequil owho lequiyoedvyaedle-timeentvalent pe r peequisonsrsonsv aemplent empl oypeedloyrsons edduring during emp theloy the yedear yduringearwaswas as the fasol y learfoolws:lowasws: as follows: total £974,323 and relate to irrecoverable investment property rental income of The average numberThe ave ofrage who numberle-time ofequi whovale-timeent per equisonsv aemplentl oypeedrsons during emp theloy yedear duringwas as the fol ylearows:was as follows: TheThe a vaevreagerage number number of of who whole-timele-time equi equivavlaentlent pe personsrsons emp employloyeded during during the the y earyearwaswas as as fol follolws:ows: £21,193, of which £15,105 was provided for in previous years, and irrecoverable tax reclaims of £953,130 which were 2014/152014/15 2014/152013/142013/14 2013/14 provided for in full in previous years. The PermanentPermanently PlyermanentOtheOtherlys rs Others TotTalotal TToottalTalotal Total 2014/15 2014/152013/14 2013/14 write off of the irrecoverable tax reclaims empemployledoy ed employed 2014/152014/15 2013/142013/14 Permanently PermanentOtherlys Others Total TToottalal Total required approval by the Department PPermanentermanentstaffstafflyly stOtheaffOthersrs ToTtoaltal ToTtoaltal of Finance and Personnel which was employed employed empemployloyeded received in June 2015. staff staff DirDiectrectly emply employDiedloyrectedly employed 53sts53afftaff 533 3 3 56 56 5652 52 52 OtherOther Other - - -2 2 2 2 2 21 1 1 Directly employDiedrectly employed 53 533 3 56 5652 52 (ii) Special payments TotTalDioDitralectrectlyl yemp empToloytlaloyeded 53 535353 535 533 5 58 585656 5853 535252 53 Other Other - -2 2 2 21 1 There were no special payments during OtherOther - - 22 22 11 Total Total 53 535 5 58 5853 53 the year. ToTtoaltal 5353 55 5858 5353 The Financial Statements were 19. Performance against key financial partner, found in favour of NILGOSC. the date of the original agreement. authorised for issue by the Accounting targets In June 2014 the applicant applied to Officer on 25 August 2015. the Supreme Court for leave to appeal 22. Related party transactions The Department of the Environment the decision and this was granted by the does not consider it appropriate to set Supreme Court in December 2014. NILGOSC is a Non-Departmental Public key financial targets for NILGOSC. The appeal is expected to be listed Body sponsored by the Department during the final quarter of 2015. If of the Environment. The Department 20. Contingent liabilities the application is successful and the of the Environment is regarded as a NILGOSC has contingent liabilities judgement is found in favour of the related party and transactions were not where the possibility of the liability applicant, the implications for NILGOSC considered to be material. crystallising is judged to be possible. are that there could be potential During the year one of the employers of Unless otherwise stated, the quantum of applications for pensions by survivors in the liability can either not be determined similar circumstances the Scheme rented property owned by with reasonable certainty or to quantify the Scheme for an amount of £626,000 it would jeopardise the outcome of the 21. Contractual commitments (2013/14: £571,000). case. Outstanding capital commitments None of the Committee members, (investments) at 31 March 2015 totalled Pension Entitlement members of the key management staff During 2013/14 a court hearing to £74m (31 March 2014: £14.9m). or other related parties have undertaken consider an appeal by NILGOSC and These relate to outstanding amounts any material transactions with NILGOSC the Department of the Environment committed, but not yet paid, to unquoted during the year. in respect of the outcome of a judicial limited partnership funds held in the review application challenging the private equity/infrastructure part of the decision of NILGOSC, by which it portfolio. The amounts requested by declined to pay a survivor’s pension these funds are variable in both size and following the death of a co-habiting timing over a period of 5-6 years from

77 78 ACTUARIAL STATEMENT

Introduction 2.The valuation also showed that the for the purpose of setting employer 6.The valuation results summarised 9. The report on the actuarial valuation aggregate level of contributions contribution rates. The resulting above are based on the financial as at 31 March 2013 is available on The Scheme Regulations require that required to be paid by participating contributions payable by each position and market levels at the the Fund’s website at the following a full actuarial valuation is carried out employers with effect from 1 April employer are set out in Aon Hewitt valuation date, 31 March 2013. As such address: www.nilgosc.org.uk. every third year. The purpose of this is to 2014 was: Limited’s report dated 31 March the results do not make allowance establish that the Northern Ireland Local 2014 (the actuarial valuation report). for changes which have occurred • 17.0% of pensionable pay. Government Officers’ Pension Fund (the In addition to the contributions subsequent to the valuation date. This is the rate calculated as Fund) is able to meet its liabilities to past shown above, payments to cover Aon Hewitt Limited being sufficient, together with and present contributors and to review additional liabilities arising from early 7.The formal actuarial valuation report 29 April 2015 contributions paid by members, employer contribution rates. The last full retirements (other than ill-health and the Rates and Adjustments to meet the liabilities arising actuarial investigation into the financial retirements) will be made to the Fund Certificate setting out the employer Aon Hewitt Limited in respect of service after the position of the Fund was completed as by the employers. contribution rates for the period from 25 Marsh Street valuation date after the at 31 March 2013 by Aon Hewitt Limited, 1 April 2014 to 31 March 2017 were Bristol changes to benefits proposed in accordance with Regulation 31 of the 4.The funding plan adopted in assessing signed on 31 March 2014. Contribution BS1 4AQ from 1 April 2015. Local Government Pension Scheme the contributions for each individual rates will be reviewed at the next (Administration) Regulations (Northern employer was in accordance with the actuarial valuation of the Fund due as Plus Ireland) 2009. Funding Strategy Statement in force at 31 March 2016 in accordance with at the time. The approach adopted, Regulation 68 of the Local Government • 3.6% of pensionable pay to Actuarial Position and the recovery period used for each Pension Scheme Regulations restore the assets to 100% of employer, is set out in the actuarial (Northern Ireland) 2014. the liabilities arising in respect 1.The valuation as at 31 March 2013 valuation report. of service prior to the valuation showed that the funding ratio of 8.This Statement has been prepared date over a recovery period of the Fund had increased since the 5.The valuation was carried out using by the current Actuary to the Fund, 20 years from 1 April 2014 (this previous valuation with the market the projected unit actuarial method Aon Hewitt Limited, for inclusion in assumes that the membership value of the Fund’s assets at that date for most employers and the main the accounts of the Fund. It provides remains broadly stable and (of £4,631.7M) covering 91% of the actuarial assumptions used for a summary of the results of their payroll increases by 3.9% p.a.). liabilities arising in respect of service assessing the funding target and the actuarial valuation which was carried prior to the valuation date allowing, 3.In practice, each individual employer’s contribution rates were as follows. out as at 31 March 2013. The valuation in the case of current contributors position is considered separately, provides a snapshot of the funding to the Fund, for future increases in although a large number of the position at the valuation date and pensionable pay. employers are grouped together is used to assess the future level of contributions required. Discount rate for periods in service Grouped employers 5.2% p.a. This Statement must not be Ungrouped employers 5.2% p.a. considered without reference to the Discount rate for periods after leaving service formal actuarial valuation report which Grouped employers 5.2% p.a. details fully the context and limitations Ungrouped employers 3.9% p.a. of the actuarial valuation. Rate of pay increases 3.9% p.a. (in addition to an allowance for promotional pay increases) Aon Hewitt Limited does not accept Rate of increase to pension accounts (post 2015) 2.4% p.a. any responsibility or liability to any Rate of increases in pensions in payment 2.4% p.a. party other than our client, Northern (in excess of Guaranteed Minimum Pension) Ireland Local Government Officers’ Superannuation Committee, in respect The key demographic assumption was the allowance made for longevity. The base longevity assumption made in the actuarial of this Statement. valuation was in line with standard SAPS mortality tables and included improvements based on the CMI Core Projections with a long term annual rate of improvement in mortality rates of 1.5% p.a. The resulting average future life expectancies at age 65 were:

Men Women Current pensioners aged 65 at the valuation date 22.0 24.5 Future pensioners aged 45 at the valuation date 24.2 26.8

The assets were valued at market value.

Further details of the assumptions adopted for the valuation were set out in the actuarial valuation report.

79 80 THE OPINION OF THE LOCAL GOVERNMENT AUDITOR TO THE ACCOUNTING OFFICER FOR THE Report NORTHERN IRELAND LOCAL GOVERNMENT OFFICERS’ SUPERANNUATION COMMITTEE I have no observations to make.

I have audited the financial statements Government Officers’ Superannuation Opinion on other matters of Northern Ireland Local Government Committee; and the overall presentation In my opinion: Officers’ Superannuation Committee of the financial statements. In addition I for the year ended 31 March 2015 read all the financial and non-financial • the part of the Remuneration Report to under Regulation 63(5) of the Local information in the Annual Report to be audited has been properly prepared Louise Mason Government Pension Scheme identify material inconsistencies with in accordance with Regulation 63(3) of Local Government Auditor Regulations (Northern Ireland) 2014. the audited financial statements and Local Government Pension Scheme Northern Ireland Audit Office These comprise the Fund Account, Net to identify any information that is Regulations (Northern Ireland) 2014; 106 University Street Assets Statement, Statement of Cash apparently materially incorrect based and Belfast Flows and the related notes. These on, or materially inconsistent with, BT7 1EU financial statements have been prepared the knowledge acquired by me in the • the information given in the Executive under the accounting policies set out course of performing the audit. If I Summary, Foreword and Management within them. I have also audited the become aware of any apparent material Commentary for the financial year 26 August 2015 information in the Remuneration Report misstatements or inconsistencies for which the financial statements that is described in that report as being I consider the implications for my are prepared is consistent with the audited. certificate. financial statements. I am required to obtain evidence Respective responsibilities of the Opinion on the Statement about sufficient to give reasonable assurance Accounting Officer and auditor Contributions payable that the expenditure and income As explained more fully in the Statement In my opinion the contributions reported in the financial statements have of Accounting Officer’s Responsibilities, payable to the Northern Ireland Local been applied to the purposes intended the Northern Ireland Local Government Government Officers’ Superannuation by the Assembly and the financial Officers’ Superannuation Committee Committee during the year ended transactions conform to the authorities through the Accounting Officer is 31 March 2015 have in all material which govern them. responsible for the preparation of the respects been paid in accordance with financial statements and for being the rules of the Scheme and with the Opinion on regularity satisfied that they give a true and fair recommendation of the Actuary. In my opinion in all material respects view. My responsibility is to audit and the expenditure and income recorded express an opinion on the financial Matters on which I report by exception in the financial statements have been statements in accordance with applied to the purposes intended by the I have nothing to report in respect of the Local Government Pension Scheme Assembly and the financial transactions following matters which I report to you if, Regulations (Northern Ireland) 2014. I recorded in the financial statements in my opinion: conducted my audit in accordance with conform to the authorities which govern International Standards on Auditing them. • I have not received all of the (UK and Ireland). Those standards information and explanations that I require me and my staff to comply with Opinion on financial statements require for my audit; or the Auditing Practice Board’s Ethical In my opinion: Standards for Auditors. • adequate accounting records have not • the financial statements give a been kept; or Scope of the audit of the financial true and fair view of the state of the statements Northern Ireland Local Government • the financial statements and the part An audit involves obtaining evidence Officers’ Superannuation Committee’s of the Remuneration Report to be about the amounts and disclosures affairs as at 31 March 2015 and of the audited are not in agreement with the in the financial statements sufficient net increase in the scheme during the accounting records; or to give reasonable assurance that the year and of the amount and disposition financial statements are free from at that date of the assets and liabilities • the Governance Statement does not material misstatement, whether other than liabilities to pay pensions reflect compliance with the Department caused by fraud or error. This includes and benefits after the Scheme of Finance and Personnel’s guidance. an assessment of: whether the year end; and accounting policies are appropriate to the Northern Ireland Local Government • the financial statements have been Officers’ Superannuation Committee’s properly prepared in accordance circumstances and have been with the Local Government Pension consistently applied and adequately Scheme Regulations (Northern disclosed; the reasonableness of Ireland) 2014 and Department of the significant accounting estimates Environment Directions issued. made by the Northern Ireland Local

81 82 ANNUAL REPORT OF THE AUDIT AND RISK ASSURANCE COMMITTEE FOR YEAR ENDED 31 MARCH 2015 1 Purpose governance requirements for the Auditor retained responsibility for organisation. signing the audit report and providing APPENDICES 1.1 The purpose of this report is to • proposals for tendering for Internal an annual opinion. provide the Management Committee audit services. with an annual report on the activity • anti-fraud policies, whistle-blowing 4.2 The NIAO presented its Report to of the Audit & Risk Assurance processes, and arrangements for Those Charged with Governance for Committee during the year ended 31 special investigations. 2013/14 (RTTCWG) to the Audit & March 2015. Risk Assurance Committee on 11 2.4 Following each meeting, the August 2014. 1.2 This report provides a summary Chairperson of the Audit & Risk of the main areas and issues Assurance Committee provides a 4.3 The External Auditor advised the considered by the Audit & Risk verbal report to the Management Audit & Risk Assurance Committee Assurance Committee during Committee, providing an overview that an issue had arisen in relation 2014/15. of the discussions and highlighting to the eligibility of the admission any issues that are considered to be and membership of certain current 2 Constitution of the Audit and Risk significant. and former staff of the Youth Justice Assurance Committee Agency of Northern Ireland (YJANI) 3 Financial Reporting to the NILGOSC Scheme. External 2.1 The Management Committee audit had been unable to obtain established an Audit & Risk 3.1 The Annual Report and Accounts sufficient appropriate audit evidence Assurance Committee to act in an 2013/14 were prepared in accordance regarding the regularity of pension advisory capacity. with the FReM and presented to the contributions received and pension Audit & Risk Assurance Committee benefits paid in respect of YJANI 2.2 Celine McCartan stepped down as on 11 August 2014. In line with members and the consequent impact Chairperson of the Audit & Risk DAO (DFP) 10/12 ‘Requirement to on the financial statements. Except Assurance Committee in July 2014 Complete a Governance Statement’, for the possible effects of the YJANI due to a planned rotation to the the Chief Executive prepared his issue, the opinion of the External Staffing Committee. Linda Neilan Governance Statement for 2013/14, Auditors was that the financial took up the position of Chairperson which was considered and endorsed statements had been properly and chaired her first meeting in by the Audit & Risk Assurance prepared and provided a true and fair August 2014. There were no other Committee for inclusion in the statement of NILGOSC’s affairs as at membership changes to the Audit & 2013/14 Annual Report. 31 March 2014. Risk Assurance Committee during the 2014/15 period. There were five 3.2 In addition to the Governance 4.4 The Local Government Auditor issued members as at 31 March 2015. Statement, the Annual Report a qualified audit opinion for the year 2013/14 also included the Annual ended 31 March 2014: qualified 2.3 The Audit & Risk Assurance Report of the Audit & Risk opinion on regularity; qualified Committee is charged with advising Assurance Committee. On the opinion on financial statements; and the Management Committee on: recommendation of the Audit & Risk qualified opinion on the statement of Assurance Committee, the Annual contributions payable. • the strategic processes for risk, Report 2013/14 was approved by control and governance and the the Management Committee at its 4.5 The Audit & Risk Assurance Governance Statement. meeting on 26 August 2014 and laid Committee received a progress • the accounting policies, the accounts, before the Assembly on update in respect of the three and the annual report of the 8 September 2014. recommendations made within the organisation, including the process RTTCWG 2013/14 in its meetings of for review of the accounts prior to 4 External Audit 25 November 2014 and 23 February submission for audit, levels of errors 2015. identified, and management’s letter 4.1 As a non-departmental public body, of representation to the external NILGOSC is required to use the 4.6 KMPG presented its Audit Strategy auditors. Northern Ireland Audit Office (NIAO) 2014/15 to the Audit & Risk • the planned activity and results of for the provision of its external Assurance Committee at its meeting both internal and external audits. audit service. In January 2012, the on 23 February 2015, which was • adequacy of management response NIAO appointed KPMG to provide an subsequently approved. to issues identified by audit external audit function on its behalf. activity, including external audit’s KPMG has been sub-contracted management letter. to carry out the external audit for • assurances relating to the corporate NILGOSC. The Local Government

83 84 5 Internal Audit and the Chair of the Audit & Risk summarising the operation of the 7 Fraud Assurance Committee as part of his risk management process during 5.1 The Internal Auditor presented the 5.2 The internal audit reviews conducted review. The final report was provided each three month period. The 7.1 On 3 June 2014, the Audit & Risk final audit plan for 2014/15 to the during 2014/15 and the assurance in December 2014 and concluded quarterly report includes any Assurance Committee was content to Audit & Risk Assurance Committee opinion provided in respect of each is that Internal Audit had provided a significant control issues identified recommend for approval the revised on 11 August 2014 and confirmed set out in the table below: satisfactory service to NILGOSC, during the quarter together with Whistle-blowing Policy and the that the plan was established within conforming with the requirements any proposed changes to the risk revised Anti-Bribery Policy. the context of NILGOSC’s Internal of the Public Sector Internal Audit register. The report sets out all Audit Strategy which covers the five Standards. The Audit & Risk key and strategic risks on the risk 7.2 The Audit & Risk Assurance year period from 1 April 2010 to Assurance Committee noted the DRD register and details any action taken Committee considered the revised 31 March 2015. The Audit & Risk report at its meeting of 23 February in respect of these risks during the Anti-Fraud Policy and Fraud and Assurance Committee approved the 2015. review period. The quarterly reports Corruption Response Plan at its Internal Audit Plan 2014/15. provide the Audit & Risk Assurance meeting on 25 November 2014. 6 Risk, Control and Governance Committee with assurance that The members of the Audit & Risk Review Assurance Opinion the risk management process is Assurance Committee requested Interim records management arrangements Satisfactory 6.1 During the annual review of the risk operating effectively and that any that the policy and plan be sent to register in May 2014, the risk register internal control weaknesses are the Department of the Environment Pensions development Substantial was extensively reviewed, with risks promptly and adequately addressed. for review and comment. The Human resource management Satisfactory being re-assessed and re-evaluated. An abbreviated version of the Department reviewed the Information security and business continuity planning Substantial No new risks were added to the quarterly report is circulated to documentation and at its meeting on Other financial systems Substantial register. The Audit & Risk Assurance the Management Committee for 23 February 2015, the Audit & Risk Committee reviewed the risk register information at the next available Assurance Committee was content to Pensions administration and payments Satisfactory 2014/15 and approved the content. meeting. approve the revised policy and plan. Pensioners’ payroll Substantial 6.2 At its meeting in June 2014, the 6.4 The quarterly risk reviews and 7.3 The Annual Fraud Report 2014/15 5.3 ‘Substantial’ is the highest level Governance Statement for the year 1 April 2015 (the contract in place Audit & Risk Assurance Committee subsequent reports provided during outlined that no cases of suspected of assurance that can be provided ended 31 March 2015. expired on 31 March 2015). The reviewed NILGOSC’s updated Risk 2014/15 resulted in an increase in fraud had been identified during the and the Audit & Risk Assurance Audit & Risk Assurance Committee Management Policy. The policy had the inherent risk score of two risks year ended 31 March 2015. Committee was pleased to note 5.7 In June 2014, the Audit & Risk recommended the documentation been amended to reflect current (R7 and C5) and an increase in the that this had been achieved in four Assurance Committee approved the to the Management Committee best practice and NILGOSC’s risk net risk score of three risks (G11, R7 7.4 Any cases of fraud are reported to the areas and that Internal Audit did not Internal Audit Charter. The Charter for approval. The Selection Panel appetite, which was developed and C5) on the risk register. These Audit & Risk Assurance Committee identify any significant issues arising had been updated to bring it into established to evaluate and score by the Management Committee changes to the risk register were through a quarterly Fraud and as a result of any of the internal audit line with the Public Sector Internal each tender submission included the in April 2014 and approved at its all approved by the Audit & Risk Whistleblowing Report, presented reviews undertaken during 2014/15. Audit Standards, which replaced the Chairperson and two other members meeting on 23 June 2014. The Assurance Committee. No new at each meeting. This report also Government Internal Audit Standards of the Audit & Risk Assurance Audit & Risk Assurance Committee risks were added to the risk register provides an update on progress 5.4 The Audit & Risk Assurance in 2013. Committee. The Audit & Risk agreed to recommend the policy during 2014/15. against investigation of matches Committee receives bi-annual Assurance Committee was provided to the Management Committee for identified through the National reports on the progress against 5.8 In November 2014, the Audit & Risk with a summary report, together approval. On approval of the policy, 6.5 Following the information risk Fraud Initiative and mortality tracing implementation of Internal Audit Assurance Committee considered FD with details of the successful tender the risk register was updated to assessment carried out by the exercises and advises whether any recommendations. These reports (DFP) 09/14 ‘Inclusion of Complaints applicant, at its meeting on 25 incorporate risk appetite. Each management team in May 2013, cases have been reported through were provided in August 2014 and Handling in Internal Audit November 2014. risk was assigned a risk category an ‘Information Risk Action Plan’ NILGOSC’s Whistleblowing Policy. February 2015 and the Audit & Risk Programmes’ issued on 6 October and appetite. The format of the was established. Although the Assurance Committee was pleased 2014. A report on ‘Complaints 5.10 The Public Sector Internal Audit register was changed to group risks assessment identified NILGOSC’s 8 Other to note that good progress had been Handling Across Government’ had Standards require that an external according to their risk category. potential exposure to information risk made. been accepted by the Permanent quality assessment (EQA) is carried Some risks were reworded and as low, some areas for improvement 8.1 The Terms of Reference for the Audit Secretaries Group and included a out on the internal audit service every all risks were rescored using the were noted. The Action Plan included & Risk Assurance Committee are 5.5 In their Annual Assurance Report, the recommendation that complaints five years by a qualified, independent appropriate risk appetite matrix. any priority risk areas and included reviewed annually. The scope and Internal Auditors stated that, during handling should be included in assessor or assessment team from The revised register contained 43 appropriate action to address each content of the Terms of Reference the twelve month period ended 31 internal audit work programmes. outside the organisation, the results risks in total, ten of which were risk. Progress against the action were amended to comply with best March 2015, NILGOSC’s systems in The Internal Auditor advised that this of which should be reported to senior categorised as strategic and five as plan is reviewed bi-annually and was practice as set out in DFP’s Audit relation to risk management, control is being considered by internal audit management and the Board. In key. The Audit & Risk Assurance considered at the meeting of the and Risk Assurance Committee and governance were adequate departments across the Northern accordance with the DAO, ‘Internal Committee welcomed the thorough Audit & Risk Assurance Committee Handbook (NI), which was updated and operated effectively, thereby Ireland Civil Service. The Audit & Audit Arrangements – Relationships review undertaken and was content on 3 June 2014 and 25 November and reissued in March 2014. The providing substantial assurance Risk Assurance Committee noted the between Departments and Arms to recommend the revised register 2014. The Audit & Risk Assurance amendments were minor in nature, in relation to the effective and content of FD (DFP) 09/14. Length Bodies’, the sponsor to the Management Committee for Committee was pleased to note that for example, to make reference to efficient achievement of NILGOSC’s Department’s internal audit function approval. good progress was being made. This the process of issuing appointment objectives. 5.9 The Audit & Risk Assurance has responsibility for conducting will continue to be monitored on a letters and the induction training to Committee reviewed the business these EQAs. The Department of the 6.3 The Audit & Risk Assurance bi-annual basis until all actions have be provided to new members by the 5.6 Internal Audit did not consider there case and tender documentation for Environment outsources its internal Committee receives a quarterly been completed. Chairperson. At its meeting on 25 to be any significant control issues the appointment of a new outsourced audit function to DRD. The DRD report from the executive officers November 2014, the Audit & Risk relevant to the preparation of the internal audit service provider from Audit Manager met with the Officers

85 86 Assurance Committee reviewed 9.3 Under its Terms of Reference, the 10 Opinion EMPLOYING AUTHORITIES CONTRIBUTING TO THE SCHEME AT 31 MARCH 2015 and considered the changes made Audit & Risk Assurance Committee is to the Audit & Risk Assurance required to periodically review its own 10.1 Based on the assurances and Councils Committee Terms of Reference effectiveness and report the results information provided during the year Antrim and Newtownabbey Borough Council since the last review in October 2013 of that review to the Committee. In ended 31 March 2015, the Audit & Armagh, Banbridge and Craigavon District Council and was content to recommend accordance with best practice, the Risk Committee is satisfied that the Belfast City Council the revised Terms of Reference to Audit & Risk Assurance Committee Management Committee can rely Causeway Coast and Glens District Council the Management Committee for adopted and tailored the National on the risk management, internal Derry City and Strabane District Council approval. The approved Terms of Audit Office (NAO) ‘Self-Assessment control and corporate governance Fermanagh and Omagh District Council Reference are available to view on Checklist’ published in January 2012 arrangements currently in operation. Lisburn and Castlereagh City Council NILGOSC’s website. to assist in undertaking this review. Mid and East Antrim District Council Mid Ulster District Council 8.2 In May 2009, the DoE advised the 9.4 The Audit & Risk Assurance Newry, Mourne and Down District Council Ards and North Down Borough Council Secretary of its intention to attend Committee met on 28 April 2015 Audit & Risk Assurance Committee to discuss the questions on the meetings as an observer. A checklist and record its findings. Education and Library Authorities Departmental representative was in The outcome of the assessment Education Authority attendance at all of the four Audit & demonstrated that the Audit & Risk Libraries NI Risk Assurance Committee meetings Assurance Committee is compliant held in 2014/15. with the five good practice principles set out in the checklist and that Restricted Membership 9 Effectiveness of the Audit & Risk there is an effective Chairperson Alpha Housing Association Assurance Committee and appropriate support from the Amey Community Limited Secretariat. Apex Housing 9.1 The Audit & Risk Assurance Ards Citizens’ Advice Bureau Committee met four times during Capita Managed IT Solutions Limited 2014/15 in accordance with the Choice Housing Ireland Limited Citizens’ Advice Bureau planned work programme. City of Derry Airport Fold Housing Association 9.2 The following table sets out the Graham Asset Management attendance record for 2014/15 (refer Greenwich Leisure Limited to section 2.2 for membership HSG Zander Ireland Facilities Services Limited changes): Northern Community Leisure Trust South Ulster Housing Association Limited Member Meetings Called Meetings Attended Attendance % Celine McCartan* 1 1 100% Associated Bodies Bumper Graham 4 3 75% Arc21 Joint Committee Linda Neilan 4 4 100% Ark Housing Association Northern Ireland Limited Armagh Observatory Ciaran Quigley 4 2 50% Armagh Planetarium Tom Irvine 4 4 100% Arts Council of Northern Ireland Lindsay Todd 4 3 75% Belfast Charitable Society Belfast Visitor & Convention Bureau * Rotation from Audit & Risk Assurance Committee to Staffing Committee in July 2014. Citybus Limited Coleraine Harbour Commissioners Comhairle Na Gaelscolaiochta Community Relations Council Connswater Housing Association Limited Construction Industry Training Board Council for Catholic Maintained Schools Council for the Curriculum, Examinations and Assessment Covenanter Residential Association Limited Derry Visitor and Convention Bureau Down District Citizens’ Advice Bureau Engineering Training Council (NI) Limited General Teaching Council for Northern Ireland Glenmona Resource Centre Grove Housing Association Limited Habinteg Housing Association (Ulster) Limited Harmony Homes (NI) Ltd Hearth Housing Association Limited Helm Housing Note: this list refers to the newly merged councils and Education Authority

87 88 Ilex URC Limited Lagan College Linen Hall Library Larne Grammar School Livestock & Meat Commission for Northern Ireland Loreto College Local Government Staff Commission Loreto Grammar School Middletown Centre for Autism Loughview Integrated Primary School Millennium Forum Lumen Christi College Mourne Heritage Trust Maine Integrated Primary School Newington Housing Association (1975) Limited Malone College North Belfast Housing Association Methodist College Northern Ireland Co-Ownership Housing Association Limited Millennium Integrated Primary School Northern Ireland Council for Integrated Education Mill Strand Integrated Primary School Northern Ireland Federation of Housing Associations Mount Lourdes Grammar School Northern Ireland Fire & Rescue Service New-Bridge Integrated College Northern Ireland Fishery Harbour Authority North Coast Integrated College Northern Ireland Hospice Oakgrove Integrated College Northern Ireland Housing Executive Oakgrove Integrated Primary School Northern Ireland Local Government Association Oakwood Integrated Primary School Northern Ireland Local Government Officers’ Superannuation Committee Omagh Integrated Primary School Northern Ireland Railway Company Limited Our Lady & St Patrick’s College Northern Ireland Screen Our Lady’s Grammar School Northern Ireland Tourist Board Phoenix Integrated Primary School Northern Ireland Transport Holding Company Portadown Integrated Primary School Outdoor Recreation (NI) Rainey Endowed School Probation Board for Northern Ireland Rathmore Grammar School Rural Development Council for Northern Ireland Roe Valley Integrated Primary School Rural Housing Association Rowandale Integrated Primary School Sports Council for Northern Ireland Royal Belfast Academical Institution St Matthew’s Housing Association Limited Royal School, Armagh Ulidia Housing Association Limited Royal School, Dungannon Ulsterbus Limited Sacred Heart Grammar School Youth Council for Northern Ireland Saints and Scholars Integrated Primary School Youthnet Shimna Integrated College Slemish Integrated College Sperrin Integrated College Schools and Colleges Spires Integrated Primary School Abbey Christian Brothers Grammar School St Colman’s College Acorn Integrated Primary School St Columb’s College Aquinas Diocesan Grammar School St Dominic’s High School Assumption Grammar School St Joseph’s Grammar School Ballymena Academy St Louis Grammar School Bangor Grammar School St Malachy’s College Belfast High School St Mary’s Christian Brothers Belfast Royal Academy St Mary’s Grammar School Blackwater Integrated College St Michael’s College Braidside Integrated Primary & Nursery School St Patrick’s Academy Bridge Integrated Primary School St Patrick’s Grammar School Campbell College Strangford College Cedar Integrated Primary School Strathearn School Christian Brothers Grammar School Sullivan Upper School Coleraine Academical Institution Thornhill College Corran Integrated Primary School Ulidia Integrated College Cranmore Integrated Primary School Victoria College Dalriada School Wallace High School Dominican College – Belfast Windmill Integrated Primary School Dominican College – Portstewart Drumragh Integrated College Further and Higher Education Colleges and Universities Drumlins Integrated Primary School Belfast Metropolitan College Enniskillen Integrated Primary School North West Regional College Erne Integrated College Northern Regional College Foyle and Londonderry College South Eastern Regional College Friends School South West College Hazelwood College Southern Regional College Hazelwood Integrated Primary School Stranmillis University College Hunterhouse College St Mary’s University College Integrated College Dungannon University of Ulster Jordanstown Schools

89 90 GLOSSARY Term Definition

The following is a glossary of pension terms used throughout this annual report and accounts: Coupon The nominal interest a bond will pay at each payment date. Death Benefit This may be paid to a member’s dependants if the member Term Definition dies. It may be a pension or a one−off payment. Deferred Benefits Benefits which are calculated at the time an individual leaves Accrual rate This is the rate at which pension benefits build up for the the scheme and are payable at a later date. member e.g. 1/49th times pensionable pay for each year of Deferred Member An individual who has left the scheme but will get pension membership. benefits when they reach their normal retirement age. Active Member Current member of the pension scheme who is building up Defined Benefit Scheme A pension scheme which states in advance the level of benefits retirement benefits from their present job. that will be paid on retirement, usually based on the service Active Management A style of investment management whereby the manager and earnings. seeks to add value to the fund by actively buying and selling Dependant This is someone who is dependent on a member of the shares. pension scheme (or on a pensioner of the scheme). Actuary Expert on pension scheme assets, liabilities, life Eligible Child A child is an eligible child of a deceased member if the child is expectancy and probabilities. An actuary works out whether wholly or mainly dependent on the member and is less than 18 enough money is being paid into a pension scheme to pay the years of age at the date of the member’s death. If the child is pensions when they are due. continuing in full-time education, he/ she will be treated as a Actuarial Valuation An assessment performed by an actuary, usually every three dependant until he/she reaches the age of 23 (or earlier if he/ years, to determine how much money needs to be put into a she completes his/ her course of study). pension scheme to ensure that there are sufficient funds available to meet future pension payments. A child who is disabled within the meaning of the Disability Discrimination Act 1995, that is, has “a physical or mental Additional Voluntary Contributions (AVC’s) Contributions made by an individual over and above the impairment which has a substantial and long-term adverse normal contribution level to increase the level of benefits effect on his ability to carry out normal day-to-day activities” available on retirement. These contributions are paid to an and has a condition that is sufficiently serious to prevent him/ insurance company. her following a normal employment or which would seriously Asset Allocation The decision as to which mix of assets to buy – shares, bonds, impair his/her earning capacity may be treated as an property or cash. eligible child. It will be necessary for the child to have a medical assessment with the Committee’s doctor. Automatic Enrolment The process whereby employers must automatically enrol workers that meet specified eligibility conditions into a Expression of wish An expression of wish enables a member to tell NILGOSC qualifying pension scheme. Workers have the option to opt who they would like to receive any death grant due if they die. out. NILGOSC does not have to follow the member’s wish but will take it into account. Balanced Management A traditional approach to investment whereby a manager buys a combination of shares and bonds to provide both income and Final Pensionable Pay The pensionable earnings on which the benefits are capital appreciation while avoiding excessive risk. calculated. This may be based on how much an individual is earning when they retire or the best pensionable earnings in Benchmark A standard against which investment performance is the last three years. measured. A common benchmark is the FTSE All-Share Index which includes a large percentage of all quoted shares. Final Salary Scheme A defined benefit scheme where the pension benefits paid on retirement are based on how much an individual is earning Benefit Statement A statement showing an individual the pension benefits they when they retire. have earned so far together with a forecast of what their final pension might be. Fund Manager A professional manager of investments often employed by a pension scheme to manage assets on their behalf. Career Average Revalued A defined benefit scheme in which pension benefits are based Earnings (CARE) on a career average pay and length of membership in the Gilts Bonds issued by the Government. Scheme and re-valued to retirement. Ill−health early retirement This arises when a member retires early because of ill−health. Cohabiting Partner Couples who live together but do not marry or enter a civil They may get enhanced pension benefits if they meet the partnership. If the member wishes for their partner to receive qualifying criteria for ill-heath retirement. any benefits in the event of their death they must both Index In the stock market, an index is a device that measures complete a Nomination of Cohabiting Partner Form (LGS 21). changes in the prices of a basket of shares, and represents the Consumer Price Index (CPI) CPI forms the basiss for the Government’s inflation target. It changes using a single figure. The purpose is to give investors is an index published by the Government each month reporting an easy way to see the general direction of Shares in the index. the change in the price of a ‘basket of goods, commodities and Index Linked Gilts A type of bond where the interest payment is guaranteed to services’ and a measure of inflation within the UK. It excludes rise in line with the Retail Prices Index. housing costs and mortgage interest payments. CPI can be used for revaluing pensions in deferment and increases to Index Tracking Fund Investments are made to match closely the performance of retirement income. a market index such as the FTSE All-Share Index. It does not aim to outperform the market like active management does. Contributions The money paid by an individual or his/her employer into a pension fund. Inflation The general rate of increase in prices and wages over a period of time. Corporate Bonds Loan stock issued by companies which offer a fixed rate of interest paid over the duration of the loan, together with Occupational Pension Scheme A pension scheme established by an employer to provide repayment on maturity at a predetermined rate. pension benefits to its employees on their retirement.

91 92 Term Definition Term Definition

Opting Out This is when an employee leaves a pension scheme or State Pension Age This is the age people normally start getting the basic state chooses not to join one. pension. From April 2010, the age at which women become entitled to State Pension will gradually increase, to reach 65 Under automatic enrolment you must be signed up to the by November 2018, bringing it into line with State Pension age Scheme before you can opt out. If you opt out within three for men. State pension age is then to increase to age 66 by months of joining you are entitled to a refund of contributions; October 2020, age 67 between 2026 and 2028 and to age 68 by an opt-out after three months of joining entitles you to 2046. deferred pension benefits payable from your normal retirement age. The Pensions Act 2014 provides for a regular review of the Passive Management A style of investment management where no active State Pension Age, at least once every five years. The management is required, instead investments are made in line Government is not planning to revise the existing timetables with an index. for the equalisation of State Pension age to 65 or the rise in State Pension Age to 66 or 67. However, the timetable for the Pension A regular income paid to an individual on their retirement. increase in the State Pension age from 67 to 68 could change Pensions Increase In April each year NILGOSC increases pensions to reflect rises as a result of the review. in the cost of living. Stock Selection The process of selecting which individual shares and bonds to Pensionable pay These are the earnings used to work out a member’s benefits buy and sell. and contributions. They might not include overtime. Superannuation A term used to describe contributions made to a pension Pensionable Service The period of employment that is taken into account when scheme, particularly in the public sector. calculating pension benefits. Transfer Value The value of an individual's pension rights, which can be Retail Prices Index (RPI) An index published by the Government each month reporting transferred to another pension scheme to provide the change in the price of a ‘basket of goods, commodities and alternative benefits if they have left the Local Government services’ and is the accepted measure of inflation within the Pension Scheme. UK. This is a slightly different ‘basket of goods, commodities and services’ from those used to calculate CPI as it includes housing costs such as mortgage interest payments. RPI can be used for revaluing pensions in deferment and increases to retirement income. Rule of 85 The Rule of 85 refers to a provision of the Scheme which allowed members who retired early to take their pension entitlements without penalty if the sum of their age and length of membership equalled 85 years or more. This rule was abolished on 1st October 2006 however members who joined before this have some protections:

- All existing members at 30 September 2006 are protected until 31 March 2008 i.e. the benefits you accrue up to 31 March 2008 will be protected under the 85 year rule.

- Those existing members at 30 September 2006 who will be 60 or over and meet the 85 year rule by 31 March 2016 are fully protected i.e. the benefits you accrue up to 31 March 2016 will be protected under the 85 year rule.

- Those existing members at 30 September 2006 who will be 60 or over and meet the 85 year rule between 1 April 2016 and 31 March 2020 will have full 85 year rule protection to 31 March 2008 and have some 85 year rule protection, on a sliding scale, to 31 March 2020. Securities A general name for shares, stocks and bonds issued to investors. Shares Sold by companies looking to raise money. Shares give the holders an interest in the company and a right to share in the profits.

93 94 NILGOSC Templeton House 411 Holywood Road Belfast BT4 2LP Telephone: 0845 308 7345 Fax: 0845 308 7344 Email: [email protected] Typetalk: 18001 0845 308 7345 (for people using a text phone) Website: www.nilgosc.org.uk

Published by NILGOSC ©NILGOSC copyright 2015

The text of this document (excluding logos) may be reproduced free of charge in any format or medium provided that it is reproduced accurately and not in a misleading context.

The material must be acknowledged as NILGOSC copyright and the document title specified. Where third party material has been identified, permission from the respective copyright holder must be sought.

Any enquiries related to this publication should be sent to us at NILGOSC, Templeton House, 411 Holywood Road, Belfast, BT4 2LP.

This publication is also available at www.nilgosc.org.uk.

ISBN 978-0-9557290-8-9