Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Teams video conference
Date
Tuesday, 14 February 2023 commencing at 1.00 pm
PRESENT Edward Schuck (Chair) *
Louise Edwards*
Graham Ansell*
Tracey Berry*
Lloyd Kavanagh*
ACT
Michelle Tsui*
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir (for secretariat function)
S9(2)(a)
(for item 5)
Fiona Morgan (for items 6.1 and 6.2)
Hadyn Hunt (for items 6.3 and 6.4)
S9(2)(a)
Peter McCaffrey, Sean Wakelin, S9(2)(a)
S9(2)(a) , and Lawrence Young (for item 3.3 and 4) (Investments
Team)
INFORMATION
Guests:
Treasury – S9(2)(a)
* (Manager, Commercial Performance
and Governance: Investment) and S9(2)(a)
* (Senior
Analyst, CPG: Investment), for item 3.2.
APOLOGIES
Sarah Park
OFFICIAL
* Denotes participants joined the meeting via MS Teams.
THE
BOARD ONLY TIME
Th
e Board met initially with the CE. Discussion centered primarily around the draft AML
s
trategic plan (see item 2.4). The Board
NOTED and
ENDORSED the CE's proposal t S9(2)(g)(i)
UNDER
S
PECIFIC INTERESTS
All Board members confirmed there were no specific interests to declare.
1.
MINUTES OF THE BOARD MEETINGS
RELEASED
1.1 Board Meeting Minutes
The Board
APPROVED the minutes of the Board meeting held on 8 December 2022.
1
2.
ADMINISTRATION
2.1 Interests Register
The Board
NOTED the Interests Register and
REQUESTED the Interest Register be updated to
record the following changes:
a)
S9(2)(a)
– record termination of interest in S9(2)(a)
.
b)
S9(2)(a)
- record termination of interest in S9(2)(a)
.
2.2 Matters Arising
The Board
NOTED the Matters Arising and there were no comments.
ACT
2.3 Long Term Work Plan
The Board:
a)
NOTED and
DISCUSSED the Long Term Work Plan.
b)
NOTED the March Board meeting is scheduled to consider amongst other matters, the
NPF Budget and the refreshed Capital Markets Assumptions, and afford an opportunity
for the Board to meet representatives of Datacom (Scheme Administrator).
c)
RECEIVED an update from the CE that as part of the strategic priorities and initiatives
referenced in the CE Report in item 2.4, the frequency of Board meetings would be
reviewed for greater alignment with GSFA’s Board meetings, potentially reduced to longer
INFORMATION
quarterly meetings supplemented by single purpose meetings (as required) with
consequential changes to the workplan.
d)
REQUESTED draft plans for meetings and a revised workplan be submitted to the Board
in due course and that all options be considered where practical, including those noted
below, provided legal obligations continue to be met and members’ interests and concerns
continue to be addressed appropriately:
OFFICIAL
i)
Potential for joint meetings with the GSFA Board and Investment Committee for
presentations and common interest discussions.
ii)
Delegation of quarterly investments reporting to the Investment Committee
THE
2.4 Chief Executive’s Report
The Board:
a)
NOTED the report.
UNDER
b)
NOTED the Preliminary Plan put forward by the CE marked as Appendix 1 had been
discussed in Board-only time with CE.
c)
DISCUSSED staff developments and
RECEIVED verbal update from CE that the
recruitment for a replacement General Manager Investment is scheduled for discussion
at the next Annuitas Management Limited (‘Annuitas’) board meeting, and confirmation
from CE that Annuitas remains comfortable that despite staff changes, it can continue to
deliver on Board’
RELEASED s expectations on the basis that:
(i)
The CE will act in an interim General Manager Investment role.
(ii)
Investments are structured so that day-to-day activities can be managed
effectively.
(iii)
There is potential to seek expertise from strategic partners.
d)
NOTED the Health and Safety Update and the dashboard included in the CE Report.
2
3.
KEY PAPERS
3.1 Minister of Finance - Annual Letter of Expectations
The Board:
a)
DISCUSSED the Minister of Finance’s Annual Letter of Expectations and the draft
response and
REQUESTED the following comments be taken into consideration in a
redraft to be provided to the Chair:
(i) Consider wording relating to Russian Sanctions and include confirmation that the
Board takes it responsibility for compliance seriously.
(ii) Under paragraph headed “Crown Risk” reconsider wording in relation to employer
interest being considered and reflect wording of S59A of the NPF legislation. ACT
(iii) Under paragraph headed “Crown Risk” with respect to “consultation if there is a
material change” consider setting expectation on what is meant by material change.
(iv) With respect to responsible investing include confirmation that the Board remains
mindful of its responsibilities to members.
(v) Review wording relating to use of derivatives.
b)
AUTHORISED the Chair to finalise the response.
3.2 Treasury Attendance
INFORMATION
The Board:
a)
DISCUSSED and
NOTED the background paper.
S9(2)(a)
from Treasury joined the meeting.
OFFICIAL
b)
WELCOMED S9(2)(a)
to the meeting.
THE
c)
DISCUSSED the following matters with the Treasury attendees:
(i) Revised structure of Treasury team.
(ii) Treasury’s priorities to be discussed with CE, namely, investment performance
acknowledging market volatility, personnel changes including continuity and
succession planning, and potential future consolidation of small schemes.
UNDER
(iii) Treasury’s expectations that the Board would continue to act in the best interest of
members, in accordance with legislative obligations and as a Crown associated
entity take into consideration key matters such as responsible investing.
(iv) Treasury’s role as a monitoring agent and adviser to the Minister of Finance, and
while it does not set investment risk appetite, there is an expectation that the
Board would continue to take a prudent and responsible approach.
RELEASED
(v) S9(2)(g)(i)
d)
THANKED S9(2)(a)
for their attendance and input.
S9(2)(a)
left the meeting.
3
S9(2)(a)
and the Investments Team joined the meeting.
The Board:
a)
WELCOMED S9(2)(a)
to the Investments Team.
b)
CONGRATULATED S9(2)(a)
on passing his CFA Level 2 examination.
3.3 C Fund Manager – Appointment of S9(2)(i)
The Board:
a)
DISCUSSED the paper and
REQUESTED the paper be redrafted to address comments
below and presented to the Board by circulation.
(i)
S9(2)(i)
ACT
(ii)
S9(2)(i)
(iii)
S9(2)(i)
(iv)
S9(2)(i)
INFORMATION
(v)
Does the proposed trust deed amendment limit investment into a managed
investment scheme or can direct investments continue to be undertaken?
b)
NOTED that the proposed trust deed amendment is for the Global Asset Trust only and
OFFICIAL
no changes are required to any of the other scheme trust deeds.
4. INVESTMENTS
THE
4.1 Quarterly Investment Review
The Board:
a)
NOTED the report and
RECEIVED a verbal update from Management:
UNDER
(i) The funds have outperformed against benchmarks with equities sector delivering
approx. S9(2)(i) outperformance.
(ii) The DAA added value prior to the DAA position being closed out.
(iii) The funds overall gained a S9(2)(i) return in January 2023 with YTD results
estimated at S9(2)(i).
b)
REQUESTED Management for future reports consider either combining the performance
RELEASED
results for S9(2)(i)
or reporting it as a separate line litem.
c)
S9(2)(i)
4
d)
REQUESTED Management consider whether the cumulative return in return charts is
required in future reports.
4.2 Investment Update
The Board
NOTED the report and
RECEIVED a verbal update from Management that the DAA
data is continuously maintained even though the DAA positions have been closed out, to
enable DAA to be reinstated at a future date.
4.3 Treasury Report to Minister of Finance
The Board:
a)
NOTED and
DISCUSSED the draft of the Treasury’s regular report to the Minister of
ACT
Finance summarising NPF’s investment progress and fiscal risk to the Crown.
b)
NOTED the input Management have had in developing this report in conjunction with
Treasury.
4.4 Review of Custodian and Other Fund Services
The Board:
a)
DISCUSSED and
NOTED the report.
b)
NOTED Management’s confirmation that securities lending is secured by overnight Repos
and indemnities, and that any revenue generated is allocated to the relevant funds.
INFORMATION
c)
REQUESTED Management consider and report back through usual Board papers the
Schemes’ costs associated with the internal changes required to meet the Custodian’s
systems change, with a view to minimising the Schemes’ cost and effort.
4.5 Investment Managers ESG Integration
The Board:
OFFICIAL
a)
NOTED that an annual survey for external investment managers about how they
integrate Environmental Social and Governance (ESG) considerations into their
THE
investment process has not been undertaken for 2022 because manager ESG ratings are
received from consultants, Russell and Mercer, and managers are self-reporting their ESG
activity.
b)
NOTED the paper describing the consultant’s processes and their scores for each
manager, including the summary of each manager’s ESG integration style.
UNDER
c)
RECEIVED verbal update from Management that that:
(i) Reporting to Minister of Finance on NPF’s carbon footprint is currently limited to
global public equities.
(ii) ESG Ratings are broad estimates only and not necessarily the same as those used
by other Crown Financial Institutions as they don’t use the same sources.
RELEASED
(iii) The research outlined in the paper provides an understanding of investment
managers’ ESG commitments and drives engagement with them, but further
direction may be required in future from the Board on its expectations.
(iv) The evidence on the relationship between ESG scores and investment returns is not
robust and is inconclusive.
5
4.6 Responsible Investment Update Q4 2022
The Board:
a)
DISCUSSED and
NOTED the report.
b)
RECEIVED an update from Management on carbon metrics for S9(2)(i)
:
S9(2)(i)
S9(2)(i)
S9(2)(i)
S9(2)(i)
S9(2)(i)
S9(2)(
c)
S9(2)(i)
ACT
d)
APPROVED the publishing of 2022 proxy voting statistics on the website and all new
proxy voting statistics 6-monthly starting June 2023.
4.7 Climate Change Engagement Project
The Board:
a)
NOTED the CFI climate change engagement project.
INFORMATION
b)
APPROVED the use of Appendix 1 (CFIs and NPF joint position statement for publishing
on each of their websites) and Appendix 2 (letter being sent to the chairs of companies
listed on the NZX50 drawing attention to the position statement).
5.
SCHEMES
OFFICIAL
5.1 Schemes Update
The Board:
a)
RECEIVED a verbal update from Management as follows:
THE
(i) S9(2)(i)
(ii) S9(2)(i)
UNDER
b)
REQUESTED the vulnerable customers paper be loaded on Diligent resources site.
c)
DISCUSSED unclaimed monies and
REQUESTED a paper on unclaimed monies
addressing legislative requirements and what actions are taken (further to the
explanations provided previously on extinguished liabilities in the 12 December 2022
Board papers).
5.2 Schemes Updat
RELEASED
e -Metrics
The Board:
a)
DISCUSSED and
NOTED the paper.
b)
NOTED the metrics now include the estimated dollar value for end-of-life of the DBPC
Scheme.
c)
RECEIVED verbal update from Management that NPPS’ funding level as of 15 February
2023 was approximately S9(2)(i).
6
d)
REQUESTED the preamble on the cover page be removed.
e)
NOTED the schemes’ membership metrics had been accidentally omitted and
REQUESTED the metrics continue to be included.
6.
FINANCE & RISK
6.1 Scheme Results to 31 December 2022
The Board
NOTED the report incorporating the Scheme Financial Statements for the nine months
to 31 December 2022.
6.2 Board and Board Reserves – Financial Statements to 31 December 2022 ACT
The Board:
a)
NOTED the financial information for the Board of Trustees for the nine months to 31
December 2022.
b)
NOTED the financial information for the Board Reserves for the nine months to 31
December 2022.
c) S9(2)(g)(i)
d) S9(2)(g)(i)
INFORMATION
.
6.3 Risk Profile and Risk Register
The Board:
a)
DISCUSSED and
APPROVED the current Key Risk Profile and Key Risk Register.
OFFICIAL
b)
NOTED Management is preparing a paper on emerging risks and
REQUESTED the first
draft be provided to S9(2)(a)
for comment.
THE
6.4 Acceptable Conduct Declaration
The Board
CONFIRMED that Board members will
SIGN the Acceptable Conduct Policy
declaration via Diligent.
UNDER
7.
DELEGATED DECISIONS
7.1 Use of Common Seal
The Board
NOTED the report.
7.2 Documents signed on behalf of the Board
The Board
NOTED the report.
RELEASED
7.3 Management decisions made under delegated authority
The Board
NOTED the report.
7
8.
OTHER BUSINESS
a) The CE advised that a brief survey would be sent to Board members to seek feedback on
key papers and quality of discussion.
b) There being no other business, the meeting finished at 4.46 pm.
NEXT MEETING: The next meeting of the Board will be held in Wellington and is
currently
scheduled (subject to confirmation) for Wednesday, 29 March 2023 commencing at 9.30
am.
ACT
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
8
ACT
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Teams video conference and Level 12
Date
Wednesday, 29 March 2023 commencing at 9.40 am.
PRESENT Edward Schuck (Chair) *
Louise Edwards*
Graham Ansell*
Tracey Berry
Lloyd Kavanagh*
ACT
Michelle Tsui*
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir (for secretariat function)
S9(2)(a)
(for item 3.4)
Fiona Morgan* (for item 3.3)
S9(2)(a) (for items 3.1 and 3.2)
Guests:
Christine Ormrod, Actuary, PWC for item 3.4.
INFORMATION
APOLOGIES
Sarah Park
* Denotes participants joined the meeting via MS Teams.
OFFICIAL
BOARD ONLY TIME
Th
e Board met initially with the CE. Discussion centered around the following topics: staff
i
ssues within Annuitas, particularly recruiting
THE for the CIO and Manager Asset Allocation roles;
en
suring the Board would continue to have visibility on important issues, both at an NPF and
A
ML level, in the period between planned quarterly meetings; and, assurance that investment
po
rtfolio oversight would continue, particularly during the interim period before a new CIO and
M
anager Asset Allocation are appointed.
SPECIFIC INTERESTS
UNDER
All Board members confirmed there were no specific interests to declare.
1.
MINUTES OF THE BOARD MEETINGS
1.1 Board Meeting Minutes
The Board
APPROVED the minutes of the Board meetings held on 14 February 2023 and by
RELEASED
circulation on 23 February 2023.
2.
ADMINISTRATION
2.1 Interests Register
The Board
NOTED the Interests Register and no changes were requested.
1
2.2 Revised Work Plan
The Board:
a)
AGREED to the revised Board workplan including timing of 2023 meetings and
REQUESTED the December 2023 placeholder for a Board meeting be retained.
b)
REQUESTED confirmation on which Board committee would consider the climaterelated
disclosures.
c)
NOTED that the CEO would investigate the feasibility of providing monthly updates on
investments and scheme metrics on Diligent for the months outside of the scheduled
quarterly Board meeting.
d)
NOTED that time critical matters would continue to be subject to papers by circulation.
ACT
3.
KEY PAPERS
3.1 Capital Market Assumptions
The Board:
a)
DISCUSSED the paper and
RECEIVED verbal update from S9(2)(a) as follows:
(i) The methodology for deriving the estimates is as per that approved in 2019.
(ii) Asset class returns have previously been compared against annual Horizon survey
results, but the survey data is as of January, published in August and used by
Annuitas the following year. The time lag therefore makes it less useful for
INFORMATION
comparison. With the significant increase in bond yields this year, the returns have
also been compared against more recent forecasts from a range of providers.
(iii) Annuitas’ New Zealand equity return estimates are lower than S9(2)(i)
S9(2)(i)
. While the details of S9(2)(i)
methodology for estimating return is not known, the difference is likely due to their
inflation rate expectations being higher than the RBNZ’s expectation which is
OFFICIAL
required to be used by Annuitas.
(iv) The New Zealand equity market assumptions do not drive asset allocation
strategies and the schemes’ exposure to New Zealand equities is already
THE
constrained.
(v) Returns shown are nominal (not real) and New Zealand bond returns are close to
current hedged global returns.
b)
S9(2)(i)
UNDER
c)
REQUESTED clarification of the 10-year expected returns for global equities before tax
as shown on page 3 of the paper compared to that shown in Appendix 3.
d)
NOTED the Annuitas Capital Market Assumptions as of 31 December 2022.
e)
NOTED the Annuitas Capital Market Assumptions will be shared with the Actuary and
Russell Investments.
RELEASED
3.2 Low carbon Constraints NZ Equity Managers
The Board:
a)
DISCUSSED the paper and
RECEIVED additional verbal update fromS9(2)(a) as
follows:
(i) The investment managers have already been decarbonising the portfolio. The global
asset managers already have constraints in place with respect to carbon intensity
2
and these constraints are being extended to underlying New Zealand equity
managers.
(ii) S9(2)(i)
(iii) S9(2)(g)(i)
ACT
(iv) S9(2)(i)
b)
NOTED the balancing of duties to members with respect to returns and the goals to
reduce carbon intensity, and that currently we are able to deliver on carbon emission
goals without compromising member returns materially.
c)
REQUESTED, the impact of the carbon intensity cap on the returns and investment
INFORMATION
managers’ decisions on stock selection be continuously monitored.
d)
APPROVED and
DELEGATED two Board members (Mr. Schuck and Ms. Berry) to have
their electronic signatures affixed to the letter to modify each of the Investment
Management Agreements with S9(2)(i)
, requiring them to reduce the carbon
intensity of their investment portfolios progressively S9(2)(i)
S9(2)(i)
and to report progress against that objective quarterly.
OFFICIAL
e)
NOTED the current projection of the constraints on S9(2)(i)
S9(2)(i) are expected to result in the global equity portfolio’s carbon intensity reducing
by two-thirds by June 2025 and that it has almost halved already.
THE
f)
THANKED S9(2)(a) for his long service of over 18 years to the Board, for sharing his
deep understanding and expertise in investment management and
WISHED him well for
his future.
S9(2)(a)
left the meeting.
UNDER
3.3 NPF Budget
The Board:
a)
REVIEWED and
DISCUSSED the proposed budget for the year to 31 March 2024.
b)
RECEIVED a verbal update from S9(2)(a)
as follows:
(i)
Investment fees are impacted by investment performance and can be difficult to
estimate and budget.
RELEASED
(ii)
Custodial fees include transaction and settlement costs, and the number of
transactions can only be estimated. Other costs include futures fees which are
also estimated.
(iii)
Professional fees include accounting, audit, legal, actuarial and investment
consulting. Extra allowances have been made for one-off additional services to be
provided by the Actuary and investment consultant.
3
(iv)
Capex includes costs associated with a new photocopier, six new laptops, six
docking stations and new screens as required. The new laptops will be of higher
specifications to allow for future proofing and higher spec software if required.
(v)
Allowance has been made for upgrades to PIMS of a maintenance and operational
nature which had been allowed for previously but was not utilised. The allowance
does not include replacement.
(vi)
S9(2)(i)
c)
NOTED that while personnel (and associated) costs are for AML to manage, any
material impact on NPF would be considered and brought to the attention of the Board.
ACT
d)
APPROVED the Gross Expense Budget of $11.236 million and a Capital Budget of
$40,000 for the year to 31 March 2024.
3.4
Aircrew and DBP Contributors Schemes – Allowance for future admin expenses
and other recommendations
The Board:
a)
RECEIVED a verbal update from S9(2)(a) as follows:
(i)
The Chair had provided initial feedback on the Actuary’s letter which due to time
INFORMATION
constraints could not be incorporated into the Actuary’s letter in time for the
meeting. The comments have been incorporated into the recommendations in the
covering paper. A marked-up version of the Actuary’s letter will be placed on the
Diligent Resource Centre.
(ii)
S9(2)(g)(i)
OFFICIAL
THE
(iii)
S9(2)(g)(i)
Christine Ormrod joined the meeting.
UNDER
b)
WELCOMED Ms. Ormrod to the meeting.
c)
DISCUSSED the Actuary’s recommendations and rationale for the recommendations for
the Aircrew and DBPC Schemes.
Aircrew Scheme
d)
RECEIVED confirmation from Actuary that:
RELEASED
(i)
Expenses for Aircrew are substantially allocated to past service.
(ii)
Expenses are of a fixed nature and do not reduce materially with any decline in
membership.
(iii)
Under the current methodology members who transfer out take a share of the
provision for future expenses.
(iv)
S9(2)(g)(i)
4
S9(2)(g)(i)
(v)
The change in methodology does not have a negative impact on members.
e)
ACCEPTED the Actuary’s recommendations as summarised below:
(i)
S9(2)(j)
ACT
(ii)
S9(2)(j)
DBPC Scheme
f)
RECEIVED confirmation from Actuary that:
INFORMATION
(i)
S9(2)(g)(i), S9(2)(j)
(ii)
Currently non-contributing members under the age of 65 who may have ceased
contributions are unable to elect a pension as they have not ceased service. The
proposed amendment would allow these members to elect to take benefits without
OFFICIAL
having to cease employment.
(iii)
Expenses are of a fixed nature and do not reduce materially with decline or
change in membership. THE
(iv)
The proposed change to the Trust Deed, if members do exercise their right to
elect a benefit, will significantly reduce the number of current and future non-
contributory members in the scheme. S9(2)(g)(i)
g)
NOTED the proposed Trust Deed amendment is subject to FMA approval and appropriate
UNDER
opinions and certificates from the legal adviser.
h)
NOTED that after due consideration the Board is of the opinion the proposed amendment
does not have a material adverse effect on the members and beneficiaries of the DBPC
Scheme or the DBPA Scheme.
i)
DELEGATED two Board members (Mr. Schuck and Ms. Edwards) to consider the form of
the amending deed and sign the same by having their electronic signatures affixed.
j)
ACCEPTED the Actuary’s recommendations as summarised below:
RELEASED
(i)
S9(2)(j)
(ii)
S9(2)(j)
5
S9(2)(j)
(iii)
The Trust Deed for the DBPC Scheme is amended so that members can become
entitled to a retirement pension, without having to cease employment, from the
age of S9(2)(g)(i)instead of age 65.
In practice this will enable all members to leave the DBPC Scheme, S9(2)(g)(i)
. The primary objective of the
change is to enable various non-contributory members (including any new non-
contributory members) who are still employed to transfer to the DBPA Scheme
and commence their pension benefit.
(iv)
That where a member does not make an election within a reasonable period of
ACT
time, and the member has received at least six months’ written notice, the Board
exercise its right under the Trust Deed for the DBPC Scheme and determine
certain benefits on behalf of the member.
The Trust Deed provides that if a Defined Benefit Plan Section member has not
elected which benefit they wish to receive within six months of leaving service, the
Board has the right to determine certain benefits on the member’s behalf. The
primary objective is to avoid employers being required to meet the cost of
administering the benefits of members who are not and have never been their
employees. Once the member leaves service, there is no mechanism for their own
employer to meet the future costs of administering the member’s benefits.
INFORMATION
(v)
S9(2)(i)
OFFICIAL
4.
GENERAL BUSINESS
THE
4.1
AML Chief Executive’s 2023 objectives
The Board:
a)
NOTED the AML Chief Executive’s objectives for 2023.
b)
NOTED quarterly progress reports would be provided by the CE to the AML Board and
UNDER
summarised in an AML Report to the NPF and GSFA Boards.
c)
NOTED that Board members will be surveyed on their satisfaction with various aspects
of AML’s performance.
The first such survey is expected to be circulated in late April
2023.
d)
NOTED the AML Board report will replace the previous CE report and provide an
opportunity to the NPF Board to question and hold the AML Board accountable.
RELEASED
4.2
Other business
The Board:
a)
RECEIVED a verbal update fromS9(2)(a)
that the TCFD report was removed from
the website and will be republished as soon as possible once the baseline issue and
consistency of data has been addressed.
b)
There being no other business, the meeting finished at 12.03 pm.
6
NEXT MEETING: The next meeting of the Board will be held in Wellington and is scheduled
for
Wednesday, 17 May 2023 commencing at 9.30 am (time yet to be confirmed).
ACT
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
7
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
By circulation
Date
26 April 2023
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Graham Ansell
Louise Edwards
Tracey Berry
Lloyd Kavanagh
ACT
APOLOGIES
Nil
CFI LETTER TO MINISTERS RE CLIMATE CHANGE ENGAGEMENT
1.
The Board
RECEIVED a paper from Management seeking approval of a joint letter to be
sent by CFIs to the Ministers of Finance and ACC to inform them about the climate change
engagement project and progress within the Crown RI Framework. The letter gives the
Ministers insight into each CFI’s actions taken regarding climate change and the
objectives and plan for the collaborative engagement. It also noted that the Board will
INFORMATION
report on aggregate information about the engagement in its annual reports and in
updates to Ministers.
2. The Board:
(i)
APPROVED the letter to Minsters.
(ii)
APPROVED the Chair signing the letter to Ministers.
OFFICIAL
THE
Ireen Muir,
Manager Schemes
UNDER
RELEASED
1
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Teams video conference and Level 12
Date
Wednesday, 17 May 2023 commencing at 9.30 am.
PRESENT Edward Schuck (Chair)
Louise Edwards*
Sarah Park
Graham Ansell
Lloyd Kavanagh
ACT
Michelle Tsui
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir (for secretariat function and item 5)
Fiona Morgan (for items 3.2, 5.4, 6.1,6.2 and 6.3)
Hadyn Hunt (For items 3.2, 5.4, 6.1, 6.2 and 6.3)
Peter McCaffrey, Lawrence Young and Sean Wakelin (for item 4)
APOLOGIES
Tracey Berry
INFORMATION
* Denotes participants joined the meeting via video conference.
BOARD ONLY TIME
OFFICIAL
Th
e Board met initially with the CE. Discussion centered around AML’s strategic priorities and
th
e Chief Executive’s vision for AML.
THE
S
PECIFIC INTERESTS
All
Board members confirmed there were no specific interests to declare.
1.
MINUTES OF THE BOARD MEETINGS
UNDER
1.1 Board Meeting Minutes
The Board
APPROVED the minutes of the Board meetings held on 29 March 2023 and by
circulation on 26 April 2023.
1.2 ALCO Meeting Minutes
The Board
NOTED the minutes of the meeting held on 20 April 2023.
RELEASED
1.3 Committee Meeting Minutes
The Board:
a)
NOTED the draft minutes of the ARRC committee meeting held on 29 March 2023 and
that it would be approved by the Committee at its next meeting.
b)
REQUESTED paragraph 3.1.3 of the draft minutes be amended by incorporating the
words “residual risk”.
1
c)
REQUESTED the Key Risk Profile be included as a standing agenda item for Board
meetings.
d)
NOTED S9(2)(a)
advice that she is working on creating a risk workshop for the Board
withS9(2)(a) .
2.
ADMINISTRATION
2.1 Interests Register
The Board
NOTED the Interests Register and
REQUESTED S9(2)(a)
interest relating to
S9(2)(a) be removed effective 31 March 2023.
2.2 Matters Arising
ACT
The Board:
a)
NOTED the paper and that the majority of matters arising had been completed.
b)
NOTED the following open items:
(i) Log item 148 – ongoing item that would be reported back to the board in due
course. The new IT provider relationship is working well, in particular with respect
to the quarantine services for emails.
(ii) Log 162 – As approved by the Board, cash is held with the Custodian rather than in
a cash management fund. Management is currently considering alternatives for
INFORMATION
managing cash, including costs and returns. Given a cash manager may still be
required, the GAT’s trust deed will be amended to refer to underlying investment
fund generally rather than specifically by name.
REQUESTED the Management
paper on cash alternatives and GAT’s trust deed amendment be presented at the
August Board meeting.
2.3 Revised Work Plan
OFFICIAL
The Board:
a)
NOTED the paper and the revised workplan.
THE
b)
RECEIVED a verbal update from the CE that Russell Investments will be assisting with
the SAA reviews and consideration will be given to a two-stage approach so risk
tolerances and objectives can also be reviewed and remain achievable.
c)
REQUESTED a summary ‘quick reference’ paper be drafted and placed on Diligent
resource centre showing all scheme’s objectives, risk tolerances, impact of changes in
UNDER
investment returns and funding levels being less than 100% on different stakeholders.
2.4 Annuitas Management Report
The Board:
a)
NOTED the paper and
COMPLIMENTED the CE on the clarity of the paper and change in
focus to report initiatives underway with Annuitas.
b)
DISCUSSED the paper and
RECEIVED a verbal update from the CE on AML’s strategic
RELEASED
plan and identity, the competitive advantages that AML brings through strong
governance, internal expertise and value for money, and initiatives relating to staff
recruitment, succession planning, office culture and environment.
c)
REQUESTED the mission and vision statements for Annuitas be amended to
acknowledge the NPF Board and GSFA as foundation cornerstone clients.
2
3.
KEY PAPERS
3.1 SIPSP Review – Russell Investments
The Board:
a)
DISCUSSED the paper and
RECEIVED a verbal update from the CE that while the
current changes are minor, additional consideration will be given to the SIPSP as part of
the Practices review, which will look at the construction of all foundational documents.
b)
AGREED that schemes’ global equity returns should be compared to two benchmarks
i.e., the reduced carbon benchmark and the all-cap benchmark to consider impact on
returns from low carbon strategy, however,
NOTED the difference in returns may not
necessarily be statistically attributable to low carbon strategy.
c)
APPROVED the changes to the SIPSP, and
REQUESTED Management consider whether
ACT
the reference to “Corporate Governance Statement” needs to be removed.
3.2
Audit Engagement Letters
The Board:
a)
NOTED the Audit engagement letters for the annual audit of the NPF Financial
Statements and Register of Members.
b)
APPROVED the Engagement letters.
c)
AUTHORISED the use of the Audit and Risk Review Committee (ARRC) Chair’s electronic
INFORMATION
signature on the letters of engagement to acknowledge their receipt and terms.
4.
INVESTMENTS
4.1 Quarterly Investment Review
The Board:
OFFICIAL
a)
RECEIVED a verbal update from the CE on the paper.
b)
DISCUSSED and
NOTED the paper.
THE
c)
REQUESTED Management review and report back to the Board on the out-performance
of the F2 Fund compared to index and the performance of NPPS vs its SAA benchmark.
d)
REQUESTED Management review and discuss, as part of the next Global Equities review,
at the Board’s Investment Committee the performance of investment manager S9(2)(i)
when reviewing global investment managers, and in particular address S9(2)(i)
UNDER
S9(2)(i) role as part of the global manager line up, how it is performing compared to
other S9(2)(i)
managers and whether it is continuing to perform to mandate.
4.2 Responsible Investment Update Q1 2023
The Board:
a)
RECEIVED a verbal update from the CE on the paper.
b)
DISCUSSED and
NOTED the paper.
RELEASED
c)
NOTED the significant reduction in carbon intensity of the listed equities portfolio was
attributed to S9(2)(i)
which had a material reduction in carbon
intensity between Q4 2022 to Q1 2023. The Board further
NOTED that portfolio carbon
intensity is quite sensitive to relatively small changes in portfolio composition so the
carbon intensity readings can be expected to be somewhat volatile.
d)
REQUESTED the Board be provided a S9(2)(i)
paper on fixed interest carbon
measures as part of the next monthly download of interesting reading.
3
e)
REQUESTED management consider incorporating into future reports the carbon intensity
for the whole portfolio (including fixed interest) and consider the impact on the portfolio
resulting from negative screening for carbon intensity and proactive initiatives. The Board
also sought an explanation for the inconsistency between the WACI figures shown in
Management's cover memo and the dashboard generated using MSCI data.
5.
SCHEMES
5.1 Schemes Update
The Board:
a)
DISCUSSED and
NOTED the paper.
b)
NOTED that:
ACT
(i) DBP Contributors Scheme – draft amended deed has been received from legal
advisers and reviewed. It is expected to be finalised by mid-June 2023 with FMA
approval. S9(2)(g)(i)
(ii) S9(2)(g)(i)
(iii) Anti Money Laundering and Countering Financing of Terrorism Act 2009 - Ministerial
exemption will be issued on the same basis as the current exemption.
INFORMATION
5.2 Schemes - Metrics
The Board:
a)
DISCUSSED and
NOTED the paper.
b)
REQUESTED an update on the process, and associated timing, to change the strategic
OFFICIAL
asset allocation of DBPC or NPPS if a trigger to change a scheme’s risk level is activated.
c)
NOTED The financial management framework for DBP Contributors Scheme is currently
being reviewed.
THE
5.3 Schemes – Unclaimed Money
The Board:
a)
DISCUSSED the report and
NOTED verbal confirmation from S9(2)(a) that fully
UNDER
extinguishing the liability for relevant unclaimed monies will result in reallocation of the
fully extinguished liability reserve to Scheme reserves and will continue to be for the
benefit of the whole scheme. Based on actuarial advice, a 2.2% reinstatement reserve is
currently allocated to member funds across all schemes except DBP Annuitants and
National Provident Pension Schemes (being schemes where extinguishing provisions do
not apply). A reinstatement reserve will continue to apply for liabilities not fully
extinguished.
b)
With respect to all
NPF Schemes (excluding DBP Annuitants and the National Provident
RELEASED
Pension Schemes):
(i) S9(2)(i)
(ii) S9(2)(i)
4
(iii) S9(2)(i)
5.4 Schemes – Update on 2023 Financial Year End Matters
The Board:
a)
S9(2)(g)(i)
b)
DISCUSSED the paper and
AGREED that the ARRC meeting scheduled for 15 June 2023
can be used to meet with the Actuary to discuss the Pensioner Mortality Review and
actuarial valuations for DBP Annuitants and National Provident Pension Schemes (and if
ACT
available the actuarial valuation reports for DBP Contributors and Aircrew Schemes).
c)
NOTED that, due to the already busy agenda for the ARRC meeting, the Actuary would
be asked to focus on the key points of her review.
d)
REQUESTED that the Actuary provide comments on how pensioner mortality has
changed, the reasons why and what the impact of the change is on schemes.
6.
FINANCE AND RISK
6.1 Scheme Results to 31 March 2023
INFORMATION
The Board:
a)
RECEIVED verbal update from S9(2)(a)
on the results for the year ended 31 March
2023, S9(2)(i)
b)
NOTED the report.
OFFICIAL
6.2 Board and Board Reserves Financial Statements to 31 March 2023
The Board
NOTED the draft results for the Board and Board Reserves for the year ended 31
March 2023.
THE
6.3 Policy Review – Procurement Policy
The Board:
a)
RECEIVED verbal update from S9(2)(a) noting that the previous procurement policy was
UNDER
specifically a GSFA policy, which has now been rewritten and extended to GSFA, AML and
NPF. The new Procurement and Outsourcing Policy was presented and approved at the AML
Board meeting held on 3 April 2023.
b)
NOTED the new Procurement and Outsourcing Policy
7.
DELEGATED DECISIONS
RELEASED
7.1 Use of Common Seal
The Board
NOTED the report.
7.2 Documents signed on behalf of the Board
The Board
NOTED the report.
7.3 Management decisions made under delegated authority
The Board
NOTED the report.
5
8.
OTHER BUSINESS
The Board:
a)
NOTED CE’s advice that a brief survey has been sent to Board members to seek feedback
on key papers and quality of discussion at this meeting and a six-monthly survey would
be sent by 19 May 2023.
b)
REQUESTED:
(i) Confirmation of the timing and length of the 30 June 2023 Board meeting.
(ii) An Investment Committee meeting be arranged prior to the 30 June 2023 Board
meeting to consider specific items such as the SAA review.
ACT
There being no other business, the meeting finished at 12.18 pm.
NEXT MEETING: The next meeting of the Board will be held in Wellington and on video
conference and is
currently scheduled for Wednesday, 30 June 2023 commencing at 8.00
am.
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
6
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
By circulation
Date
12 June 2023
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Graham Ansell
Louise Edwards
Tracey Berry
Lloyd Kavanagh
ACT
APOLOGIES
Nil
NPF DEFINED CONTRIBUTION SCHEMES AND LUMP SUM CASH ACCUMULATION
SCHEME - EARNINGS RATES AND SECTION 72 CLAIMS
INFORMATION
1.
The Board
RECEIVED for its consideration the Actuary’s recommendations, with respect to
the Pension National, Lump Sum National and Meat Industry Schemes (the Defined
Contribution Schemes)
and the Lump Sum Cash Accumulation Scheme (
LSCAS) in relation
to:
a)
Earnings Rates for the Defined Contribution Schemes.
b)
Basis for al ocating earnings on contributions intra year for the Defined Contribution
Schemes.
OFFICIAL
c)
Transfer Value Earnings Rates for the Defined Contribution Schemes.
d)
Section 72 claims for the Defined Contribution Schemes.
e)
Earnings Rates and Transfer Value Earnings Rates for LSCAS.
THE
f)
Al owance for administration costs for the Defined Contribution Schemes and LSCAS
2.
Defined Contributions Schemes - Earnings Rates
The Board, based on the advice of the Actuary,
RESOLVED to
DECLARE, Earnings Rates
be applied to each Contributor'
UNDER s Total Credit as at 1 April 2022 as follows:
Scheme
In accordance
Earnings
with Trust Deed
Rate per
provision
annum
Pension National
16.1
4.0%
Scheme
Lump Sum National
14.1
4.0%
Scheme
RELEASED
Meat Industry Scheme
16.1
4.0%
2023 06 12 NPF Board Minutes by Circ
1
3. Defined Contributions Schemes - Basis for allocating earnings on contributions
intra year
The Board, based on the advice of the Actuary,
RESOLVED to
DETERMINE, the basis
for allocating earnings on contributions made during the period 1 April 2022 to
31 March 2023 as follows:
Scheme
In accordance with
Rate per annum
Trust Deed provision
Pension National Scheme
16.2
1.6%
Lump Sum National Scheme
14.2
1.6%
Meat Industry Scheme
16.3
2.0%
4. Defined Contributions Schemes - Transfer Value Earnings Rates
ACT
The Board, based on the advice of the Actuary,
RESOLVED to
DETERMINE, the
Transfer Value Earnings Rates (to apply from the effect date of transfer to the date of
payment of the transfer value) from 12 June 2023 until further notice as follows:
Scheme
In accordance with
Rate per annum
Trust Deed provision
Pension National Scheme
31B.3 and 31B.4
4.0%
Lump Sum National Scheme
22B.3 and 22B.4
4.0%
Meat Industry Scheme
27B.3 and 27B.4
4.0%
5. Defined Contributions Schemes - Section 72 Claims
INFORMATION
The Board:
a)
RESOLVED in terms of section 72 of the National Provident Fund Restructuring
Act 1990,
TO MAKE A CLAIM on the Minister for those deficits (and increased
deficits) arising from the application of the 4.0% minimum Earnings Rates to
the Schemes listed below in the year ended 31 March 2023:
OFFICIAL
Scheme
S72 Claim as at
S72 Claim for
Total
31 March 2023 exited members
Pension National Scheme 4,761,000 497,041 5,258,041
Lump Sum National
THE
6,390,000 806,802 7,196,802
Scheme
Meat Industry Scheme
441,000 34,857 475,857
Totals
11,
592,000
1,
338,700
12,930,700
The $11,592,000 relates to current members of the Schemes at 31 March 2023.
Exited members ($1,338,
UNDER
700) are members who left the Schemes during the financial
year.
b)
APPROVED the form of the letter to the Minister of Finance.
c)
AUTHORISED Management to progress the claims with the Minister and
Treasury.
6. LSCAS - Earnings Rate and Transfer Value Earnings Rate
RELEASED
The Board, based on the advice of the Actuary,
RESOLVED to:
a)
DECLARE, in accordance with Clause 11.1 of the Lump Sum Cash Accumulation
Scheme trust deed, an Earnings Rate of 4.0% per annum to apply from 1 April
2023 until further notice.
b)
DETERMINE, for the purposes of clauses 19B.3 and 19B.4 of the Lump Sum Cash
Accumulation Scheme trust deed, the Transfer Value Earnings Rate (to apply from
the effective date of transfer to the date of payment of the transfer value) for the
Lump Sum Cash Accumulation Scheme from 12 June 2023 until further notice shall
be at the rate of
4.0% per annum.
2023 06 12 NPF Board Minutes by Circ
2
7. S9(2)(g)(i)
Prepared by:
Ireen Muir,
Manager Schemes
ACT
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
2023 06 12 NPF Board Minutes by Circ
3
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
By circulation
Date
19 June 2023
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Graham Ansell
Louise Edwards
Tracey Berry
Lloyd Kavanagh
ACT
APOLOGIES
Nil
NATIONAL PROVIDENT PENSION SCHEME (NPPS) - PENSION INCREASE
RECOMMENDATION
The Board:
INFORMATION
1.
RECEIVED a paper from Management to consider whether to grant a pension increase for
NPPS by reference to the NPPS Financial Management Policy (NPPS Policy) and having
regard to the advice of the Actuary.
2.
NOTED that under the NPPS Policy, the Minimum Funding Level above which pension
increases will be considered, is 108% and that as at 31 March 2023, the funding level for
NPPS as confirmed by the Actuary was 107.8%.
3.
In line with the NPPS Policy, and after taking into conside
OFFICIAL ration the 31 March 2023
funding level,
RESOLVED to not grant a pension increase for NPPS as at 31 March 2023.
4.
REQUESTED the 8% trigger level be considered when determining any pension increase
THE
in 2024, taking into account the updated 2023 mortality assumption and the confidence
level in asset/liability tracking through F2 Fund.
Ireen Muir
UNDER
Manager, Schemes.
RELEASED
2023 06 XX NPF Board Minutes by Circ
1
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Teams video conference and Level 12
Date
Wednesday, 30 June 2023 commencing at 8.00 am.
PRESENT Sarah Park (Deputy Chair) *
Tracey Berry*
Lloyd Kavanagh*
ACT
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir* (for secretariat function and items 3.8 and 3.10)
Fiona Morgan
Michelle Tsui*
APOLOGIES
Edward Schuck (Chair), Louise Edwards, Graham Ansell
* Denotes participants joined the meeting via video conference.
INFORMATION
S PECIFIC INTERESTS
All
Board members confirmed there were no specific interests to declare.
OFFICIAL
1.
MINUTES OF THE BOARD MEETINGS
1.1 Board Meeting Minutes
THE
Th e Board
NOTED the draft minutes for the Audit and Risk Review Committee (ARRC) meeting
held on 15 June 2023 and
APPROVED the minutes of the Board meetings held on:
1.1.1
17 May 2023.
1.1.2
12 June 2023 by circulation (Earnings Rate and Section 72).
1.1.3
19 June 2023 by circulatio
UNDER n (NPPS Pension increase).
1.2 ALCO Meeting Minutes
The Board
NOTED the minutes of the meeting held on 22 May 2023.
2.
ADMINISTRATION
2.1 Interests Register
RELEASED
The Board
NOTED the Interests Register and no changes were requested.
1
3.
KEY PAPERS
3.1 Financial Statements Review Process
The Board:
a)
NOTED the report on the Financial Statement review process.
b)
NOTED the Audit & Risk Review Committee (ARRC) met on Thursday 15 June to
review the draft Financial Statements of the Board of Trustees, Global Asset Trust;
four sets of Scheme Financial Statements as a representation of al eight sets.
c)
NOTED the Committee also met with the Appointed Auditor in the absence of
Management and no matters of concern regarding the information or disclosures
within the financial statements were raised.
ACT
d)
NOTED the draft minutes of the Audit & Risk Review Committee meeting held on
Thursday 15 June 2023 (see Agenda item 1.1).
e)
NOTED a verbal update from S9(2)(a)
that the auditors on 29 June 2023 had
raised a potential issue with the section 72 claim. The issue was being investigated
and may result in changes to financial statements for some of the schemes,
therefore approval of the scheme financial statements is being delayed. The issue
and impact would be discussed further under item 3.6.
3.2
Report from Auditor
The Board:
INFORMATION
a)
NOTED and DISCUSSED the Audit Report which had been updated since the ARRC
meeting on 15 June 2023 to reflect the updated status of the financial statements and
reviews conducted by Deloitte.
b)
NOTED the auditors had been invited to the Board meeting but were not attending given
their attendance at the ARRC meeting.
c)
NOTED that no major areas of concern were raised in th
OFFICIAL e report but on 29 June 2023 the
auditors had raised two issues – a potential issue with the section 72 claim, impacting on
scheme financial statements and an issue with regards to transfer of two members from
Pension National.
THE
3.3
Representations
The Board:
a)
NOTED the representations from Management and
RECEIVED verbal confirmation
UNDER
from S9(2)(a)
that the section 72 issue raised does not impact on representations
made.
b)
CONSIDERED Management’s answers to section 1-13 of the questionnaire,
COMPLETED section 14 of the questionnaire, and
AUTHORISED the Board Chair, and
Chair of ARRC to sign on behalf of the Board.
c)
CONSIDERED and
AUTHORISED the Board Chair, and Chair of ARRC to
SIGN the
representation letters to the Appointed Auditor and that these should be dated on the
signing of all the financial statements.
RELEASED
d)
REQUESTED that the form of questionnaire be reviewed prior to the 2024 financial
year end process to consider whether it remains fit for purpose.
2
3.4
Financial Statements 2023 – Board of Trustees
The Board:
a)
NOTED the financial statements of the Board of Trustees of the National Provident Fund
for the year ended 31 March 2023.
b)
RESOLVED to:
i)
APPROVE and
ADOPT the Board of Trustees of the National Provident Fund
financial statements for the year ending 31 March 2023, subject to resolving the
outstanding scheme issues.
ii)
AUTHORISE the Board Chair and the Chair of the ARRC to sign (via electronic
signature) on behalf of the Board, the Board of Trustees of the National
Provident Fund financial statements for the year ended 31 March 2023, subject
ACT
to the above.
iii)
AGREED that all financial statements be signed on the same day.
3.5
Financial Statements 2023 – Global Asset Trust
The Board:
a)
NOTED the review undertaken of the 2023 GAT Financial Statements by the Audit and
Risk Review Committee.
b)
RESOLVED to:
INFORMATION
i)
APPROVE and
ADOPT the financial statements of the Global Asset Trust for the
year ending 31 March 2023, subject to resolving the outstanding scheme issues.
ii)
AUTHORISE the Board Chair and the Chair of the ARRC to sign (via electronic
signature) on behalf of the Board, the the Global Asset Trust financial statements
for the year ended 31 March 2023, subject to the above.
iii)
AGREED that all financial statements be signed on the same day.
OFFICIAL
3.6
Financial Statements 2023 – Schemes
a)
RECEIVED the Financial statements for the Schemes listed below as representative of the
THE
eight schemes.
i)
Pension National Scheme (Defined Contribution Scheme)
ii)
Lump Sum Cash Accumulation Scheme (Personal Scheme)
iii)
National Provident Pension Scheme (Pension Scheme)
UNDER
iv)
Aircrew Superannuation Scheme (Defined Benefit Scheme)
b)
NOTED Financial Statements for al the schemes have been completed and sent to Deloitte
for final review.
c)
NOTED the review (and subsequent recommendation for approval) undertaken by the
ARRC of the Schemes’ financial statements for the year ended 31 March 2023.
d)
RECEIVED advice from Management that on 29 June 2023, that subsequent to the ARRC
review, the auditors had raised an inquiry regarding the value of section 72 claims and
RELEASED
the accounting treatment of two transfers from the Pension National Scheme.
e)
NOTED that any change to the section 72 claim will impact the financial statements for
the Pension National, Lump Sum National and Meat Industry Schemes.
f)
The Board
POSTPONED the approval and adoption of the financial statements for the
Schemes and
REQUESTED a further meeting of the Board be called once the issue raised
by the Auditor has been resolved to consider and approve any amendments required to
the section 72 claims and financial statements.
3
g)
REQUESTED that future ARRC meetings, when considering annual financial statements,
would focus in detail on impacts on schemes resulting from changes in mortality
assumptions, increasing costs for schemes, and changes in inflation.
3.7
Section 67(1A) Report
a)
RECEIVED a verbal update from S9(2)(a)
on the process followed for preparation
and review of the report.
b)
RECEIVED a verbal confirmation of accuracy fromS9(2)(a)
.
c)
REQUESTED Management consider including in future reports longer term actual
and benchmark results for the schemes and individual asset classes, given the long-
term investment focus for the schemes.
d)
NOTED and
APPROVED the Section 67(1A) report for the year ending 31 March
ACT
2023 subject to the value ascribed to Section 72 claims in paragraph (E) being
amended, if required (refer discussion in item 3.6).
3.8
DBPC to DBPA Pension Purchase Factors
The Board:
a)
NOTED the Actuary’s report on the basis for determining the transfer of assets
between the DBP Contributors Scheme and the DBP Annuitants Scheme.
b)
Based on the recommendations of the Actuary,
RESOLVED to:
INFORMATION
i)
ADOPT the 2023/2024 transfer basis, set out in the Actuary’s report, and the
transfer factors, calculated using the transfer basis as set out in Appendix A of
the report, with effect from 1 July 2023 to 30 June 2024, for the purposes of
clause F9 of the trust deed of the DBP Contributors Scheme and clause 8 of the
trust deed of the DBP Annuitants Scheme.
ii)
Continue to
REVIEW the transfer basis on an annual basis.
iii)
REVIEW the notional asset allocation prior to th
OFFICIAL e 2024/2025 transfer factors
being determined.
c)
REQUESTED Management discuss the impact of changes on DBPC with Ms Tsui and
THE
provide an update at the August Board meeting.
3.9
Chair’s Letter
The Board:
a)
NOTED that each year members receive an annual report package that includes a
UNDER
letter from the Chair of the Board and a summarised annual report.
b)
CONSIDERED the draft Chair’s letter and
REQUESTED the following comments be
considered in finalising the letter:
i)
Acknowledge S9(2)(a)
departure.
ii)
Acknowledge Ms Tsui joining the Board as an adviser under Treasury’s future
directors’ programme.
RELEASED
iii)
Given there have been quite a few changes in personnel and Board include a
statement of comfort.
c)
REQUESTED that key messaging for the 2024 Chair’s letter be considered early in
2024.
d)
Subject to the above comments,
CONFIRMED the content and format for the Chair’s
letter and
AUTHORISED the Chair to finalise the letter.
4
3.10 Summarised Financial Statements
The Board:
a)
RECEIVED for its consideration drafts of the 2023 summarised annual reports for the
following schemes:
i)
Pension National Scheme - (DC Scheme)
ii)
Lump Sum Cash Accumulation Scheme (Personal Scheme)
iii)
National Provident Pension Scheme (Pension Scheme)
iv)
Aircrew Superannuation Scheme (DB Scheme)
b)
RECEIVED confirmation from S9(2)(a) that the reports would be updated as necessary
pending outcome of investigation of issue noted in item 3.6, updated with the final
ACT
opinions received from the Auditors and the PIE charts updated to provided information
as at the last effective date of change in strategic asset allocation and current as at 31
March 2023.
c)
CONFIRMED the format of the summarised annual reports for 2023.
3.11 Request for increase in fixed asset budget
The Board:
a)
RECEIVED an update from S9(2)(a)
on capital expenditure to date and confirmation
that staff work from the office approximately 80% of the time.
INFORMATION
b)
NOTED the expenditure to date on fixed assets.
c)
APPROVED an additional $20,000 in the fixed asset budget.
3.12 NPF Greenhouse Gas Inventory Report 2023
The Board:
OFFICIAL
a)
DISCUSSED and
NOTED the corporate Greenhouse Gas Emissions Inventory Report
for the NPF Board for the year ending March 2023.
b)
RECEIVED a verbal update from S9(2)(a)
that main contributors to emission levels
THE
are travel and electricity and the outcome of the report would be incorporated into
climate related disclosures.
c)
NOTED Management will continue to use this report as the basis for identifying possible
reductions in corporate emissions.
d)
NOTED that this report has not been independently verified.
UNDER
e)
REQUESTED consideration be given in the future to the value of the report, its
incorporation into the climate related disclosures and future verification in light of
materiality of emissions and cost effectiveness.
f)
EXPRESSED its appreciation for the report and
THANKED the finance team for their
great work with this.
3.13 GSFA Notice of appointment of Director to Annuitas Management Limited
Board
RELEASED
The Board
RECEIVED GSFA Board’s notice of Mr. Hugh Duncan Stevens’ appointment to the
Annuitas Board and
NOTED that Mr Stevens had joined the last Annuitas’ board meeting as an
observer.
5
4.
GENERAL BUSINESS
The Board:
a)
RECEIVED a verbal update from S9(2)(a)
that the Board strategy meeting is scheduled
9 August 2023 followed by a full board meeting on 10 August. The agenda for strategy
meeting is yet be finalised and suggestions from Board members are welcome.
b)
REQUESTED:
(i) Strategy meeting agenda include a planning discussion on professional
development and knowledge gaps.
(ii) Induction paper on why the NPF Board is not a Crown Entity be placed on Diligent
resource and if it is already placed in Diligent, circulate a link to the relevant page.
ACT
There being no other business, the meeting finished at 9.50 am.
NEXT MEETING: The next meeting of the Board will be held in Wellington on
Thursday, 10
August 2023 commencing at 10.00 am.
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
6
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Teams video conference and Level 12
Date
Thursday, 6 July 2023 commencing at 8.00 am.
PRESENT Sarah Park (Deputy Chair) *
Tracey Berry*
Lloyd Kavanagh*
Louise Edwards*
Graham Ansell*
ACT
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir* (for secretariat function)
Fiona Morgan
S9(2)(a)
Michelle Tsui*
APOLOGIES
Edward Schuck (Chair)
INFORMATION
* Denotes participants joined the meeting via video conference.
S PECIFIC INTERESTS
OFFICIAL
All
Board members confirmed there were no specific interests to declare.
1.
KEY PAPERS
THE
1.1 Financial Statements Review Process
Th e Board:
a)
RECEIVED a paper from Management confirming that following discussions with the
UNDER
Auditor, the Actuary, and the Scheme Administrator:
i)
The section 72 claims were calculated correctly for the Pension National, Lump Sum
National and Meat Industry Schemes and no change to the claims was required.
ii)
A change has been made to the financial statements for the Pension National
Scheme to reverse an accrual relating to two transfers out of that scheme.
b)
RECEIVED a verbal update from S9(2)(a)
and S9(2)(a) on the process followed to
enable the above confirmations to be provided, a summary of changes made to the
RELEASED
financial statements for the Pension National Scheme S9(2)(g)(i)
c)
RESOLVED to
AFFIRM the approvals and authorisations given by the Board on 12 June
2023 relating to the section 72 claims for the Pension National, Lump Sum National and
Meat Industry Schemes for the year ended 31 March 2023.
d)
RESOLVED to:
1
i)
NOTE the amended financial statements for the year ended 31 March 2023 for
Pension National Scheme.
ii)
APPROVE and
ADOPT financial statements for the year ended 31 March 2023 for
all the Schemes.
iii)
CONFIRM the Board’s approval and adoption of the financial statements for the
year ended 31 March 2023 for the Board of Trustees of the National Provident Fund
and for the Global Asset Trust.
iv)
AUTHORISE the Board Chair and the Chair of the Audit and Risk Review
Committee to sign (via electronic signature) on behalf of the Board, the Schemes’
financial statements for the year ended 31 March 2023 for the Schemes, the Board
of Trustees of the National Provident Fund and Global Asset Trust.
e)
CONFIRMED that all financial statements be dated 6 July 2023.
ACT
f)
RECEIVED confirmation from S9(2)(a) that the annual report wil be sent to members of
the Schemes by 31 July 2023
g)
CLARIFIED its request from the Board meeting held on 30 June 2023 (refer item 3.3
(d)) relating to review of the questionnaire, in particular section 14, that is completed by
the Board in order to provide representations to the Auditors and
REQUESTED that the
form of questionnaire be reviewed by the Audit and Risk Review Committee at its next
meeting to consider whether it remains fit for purpose, whether any additional
confirmations are required from management and to add any necessary clarifications, for
example which third party contracts are being referenced.
h)
THANKED Management for resolving the auditor’s query in a very timely manner
INFORMATION
and identifying process changes to ensure queries from auditors can be received and
resolved in a timelier manner and clarify the accounting treatment of transfers out of
schemes that to be given effect in the new financial year.
2.
GENERAL BUSINESS
OFFICIAL
There being no other business, the meeting finished at 8.18 am.
NEXT MEETING: The next meeting of the Board will be held in Wellington on
Thursday, 10
THE
August 2023 commencing at 10.00 am.
UNDER
RELEASED
2
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board) – Strategy Day
Venue
Level 12, The Todd Building, 95 Customhouse Quay, Wellington
Date
Wednesday, 9 August 2023 commencing at 3.00 pm.
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Tracey Berry
Lloyd Kavanagh
Louise Edwards
ACT
Graham Ansell
IN ATTENDANCE
Tim Mitchell, CE
Ireen Muir (for secretariat function)
Fiona Morgan
S9(2)(a)
Hadyn Hunt
Anthony Halls
Michelle Tsui
APOLOGIES
Nil
INFORMATION
1. BOARD SELF REVIEW
Th
e Board met initially to discuss the results of its self-review exercise and identify areas of
OFFICIAL
de
velopment.
2.
NPF RELATIONSHIP TO CROWN
THE
M
atters
DISCUSSED by the Board included:
a)
The importance of considering the interests of the Crown with each decision, noting that
the Crown’s interests vary according to the type of scheme - i.e., defined benefit, defined
contribution, or pension.
REQUESTED Management recommendations to the Board be
framed to consider the impact on members and Crown.
UNDER
b)
S 9(2)(h)
c)
NOTED with respect to defined contribution schemes:
i) The Board sets the strategic asset allocation.
ii) Pursuant to th
RELEASED eir trust deeds the schemes have the benefit of the 4% (after tax and
fees) minimum earnings rate supported by Section 72.
iii) The value to members of the minimum earnings rate, supported by section 72, varies
according to the economic conditions in any given year.
iv) The Crown guarantee under section 60 of the NPF Act.
v) Because of the Crown guarantee, members rationally desire a higher level of risk-
taking.
2023 08 09 NPF Board Strategy Meeting
1
vi) The Board must take account of the interests of the Crown and a clear manifestation
of this duty is the reserving policy that has been in place for some time, under
Ministerial directive.
d)
NOTED with respect to defined benefit schemes:
i) Members’ benefits are defined as per legislation and the Trust Deeds.
ii) Members are subject to the investment risk when they take a transfer-out option as
they take a share of the investment return/loss.
iii) The Board acts on behalf of members to ensure schemes are fully funded by way of
employer contributions and investment returns until such time that investment risk-
taking is no longer appropriate.
iv) The schemes on wind-up have a Crown guarantee.
ACT
v) The Board recommends contribution rates to the Minister of Finance, who has final
approval. In making the recommendation, the Board considers reasonableness of the
rate and balances this with the interest of the Crown –
REQUESTED Management
prepare a short paper on this topic.
e)
NOTED with respect to climate related disclosures:
i) The Ministerial expectation on responsible investment framework is extended to NPF
along with Crown Financial Institutions. While the expectation is not binding, the
Minister has the right to issue directions or require a report on any matter. In any
case, the expectation has been accepted and relates to decarbonising and reporting.
INFORMATION
ii) There remains a potential that decarbonising may yield a lower return which may
impact on the Crown through the guarantee. Returns are measured against both the
low carbon index and carbon index thus providing transparency.
iii) The cost of TCFD/CRD reporting is an operating expense of the schemes which
impacts on funding levels and employer contribution rates. The costs are internal
(e.g., resource costs) and external (e.g., index costs, audit).
OFFICIAL
iv) In future Ministerial expectations need to be considered in light of expense/cost of
meeting the expectation and impact on members. Future responses to Ministerial
Letters of Expectation might need to spell out the cost of meeting expectations.
THE
3.
NPF HIGH LEVEL STRATEGY
The Board
THANKED management for the scheme summaries and
DEFERRED discussion on
“strategy on a page” to 8.30 am 10 August 2023 (at Board meeting).
4.
RISK SESSION – BRAIN STO
UNDER
RMING AND EMERGING RISKS
This session was led by S9(2)(a)
and the following records high-level notes from the session.
a)
Key Objectives
Members undertook a whiteboard exercise to identify key objectives. The following were
identified:
i)
S9(2)(g)(i)
RELEASED
ii)
S9(2)(g)(i)
iii) S9(2)(g)(i)
iv) S9(2)(g)(i)
v)
S9(2)(g)(i)
.
vi) S9(2)(g)(i)
vii) S9(2)(g)(i)
viii) S9(2)(g)(i)
2023 08 09 NPF Board Strategy Meeting
2
ACT
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
d)
Emerging risks
Members undertook a whiteboard exercise to identify emerging risks. S9(2)(g)(i)
i)
S9(2)(g)(i)
ii)
S9(2)(g)(i)
iii) S9(2)(g)(i)
iv) S9(2)(g)(i)
v)
S9(2)(g)(i)
ACT
vi) S9(2)(g)(i)
vii) S9(2)(g)(i)
e)
REQUESTS (Action items)
Following on from the whiteboard exercises described above, members
REQUESTED
INFORMATION
that Management consider the following:
i)
Map key risks to current risk register, identify gaps and present findings to Audit
and Risk Review Committee (ARRC).
ii)
Consider emerging risks and controls – report back to ARRC.
iii) Consider controls’ effectiveness (and residual risk) – report back to ARRC.
iv) Arrange a paper/discussion on managing asset -liability risk – report back to ARRC
OFFICIAL
or Board.
v)
Arrange annual meetings (outside of formal board meetings) to consider risks and
strategy.
THE
vi) Continue providing Risk Register at each Board meeting.
vii) Provide greater clarity on assurance programmes.
viii) Broader impacts of changes in mortality (as identified through mortality review
completed by the Actuary).
ix) Impact of inflation on schemes (taking into consideration Treasury’s forecast short
UNDER
and long-term term inflation).
GENERAL BUSINESS
The meeting finished at 5.45 pm.
NEXT MEETING: The next meeting of the Board will be held in Wellington on
Thursday, 10
August 2023 commencing at 8.30 am.
RELEASED
2023 08 09 NPF Board Strategy Meeting
4
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Level 12, The Todd Building, 95 Customhouse Quay, Wellington.
Date
Thursday, 10 August 2023 commencing at 8.30 am.
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Tracey Berry
Lloyd Kavanagh
Louise Edwards
ACT
Graham Ansell
IN ATTENDANCE
Tim Mitchell, CE
Michelle Tsui
Ireen Muir (for secretariat function)
Anthony Halls, Holly Marshall for item 3 and 4
Sean Wakelin and Lawrence Young for items 3.2-3.9 and 4
Fiona Morgan, for item 5
Hadyn Hunt for item 5
S9(2)(a)
for item 6
INFORMATION
APOLOGIES
Nil
VISITORS
The Actuary, Ms. Christine Ormrod* from PWC for items 5.3 and
5.4
* Denotes participants joined the meeting via video conference.
OFFICIAL
THE
BOARD ONLY TIME
Th
e Board met initially on its own. Discussion centered around recrafting “strategy on a page”
(b
eing a follow on from strategy discussion on 9 August 2023). The Board
NOTED that Ms.
B
erry will prepare first draft and will contact Management for Word version and notes from
ea
rlier discussion on 9 August 2023.
UNDER
Th
e Board met with CE. Discussion centred around Annuitas’ capacity to undertake asset-
lia bility work: in-house resource vs contracted-in specialist advice.
SPECIFIC INTERESTS
All Board members confirmed there were no specific interests to declare.
1.
MINUTES OF TH
RELEASED
E BOARD MEETINGS
1.1 Board Meeting Minutes
The Board
APPROVED the minutes of the Board meetings held on 30 June 2023 and 6 July
2023 (subject to apologies in the minutes being amended).
2023 08 10 NPF Board Meeting
1
1.2 ALCO Meeting Minutes
The Board:
a)
NOTED the minutes of the meetings held on 20 June 2023 and 20 July 2023.
b)
AGREED that minutes of ALCO meetings do not have to be provided to the Board and
that any material issues would be considered and reported to the Board by S9(2)(a) .
1.3 Committee Meeting Minutes
The Board
NOTED the draft minutes of the Investment Committee meeting held on 27 July
2023.
2.
ADMINISTRATION
ACT
2.1 Interests Register
The Board
NOTED the Interests Register and
REQUESTED the following changes:
a)
S9(2)(a)
retired from S9(2)(a)
- end date 3 August 2023.
b)
S9(2)(a)
appointment on S9(2)(a) does not commence until 2024.
2.2 Matters Arising
The Board:
INFORMATION
a)
NOTED the great progress made on matters arising.
b)
NOTED verbal
update from the CE that:
(i) Responsible investing is on top of agenda for S9(2)(a)
(Senior Responsible
Investment Strategist) and a new suite of reporting will be provided to the Board at
its November 2023 meeting.
OFFICIAL
(ii) The responsible investing resource at NZ Super for which NPF pays a pro rata share
of costs is working well.
(iii) GHG inventory is included in financial reporting and the TCFD agenda item. The
THE
decision on how to move forward with offsets is still being considered.
2.3 Work Plan
The Board
NOTED the paper.
UNDER
2.4 Annuitas Management Report
The Board:
a)
NOTED the paper and
RECEIVED a verbal update from the CE on following key items:
(i) Human resource architecture
(ii) Culture survey results to be discussed with staff and work undertaken to consider
how can we bridge the gap from where we are to where we would like to be.
RELEASED
(iii) Staff training and development aspirations – plans and budget are in place.
Annuitas’ objective is to develop career pathways.
(iv) Annuitas’ skills matrix is to be considered at its next board meeting and members
of both NPF Board and GSFA were invited to provide feedback for incorporation into
the matrix.
2023 08 10 NPF Board Meeting
2
b)
DISCUSSED the update from CE that Annuitas constitutional documents (being its
constitution, joint venture agreement and management services agreement) are to be
reviewed with a view to modernising and simplifying and
REQUESTED the following be
considered as part of the review and reported back to the Board with any draft
amendments:
(i) Difference in proposed model where Annuitas becomes a service provider and
Annuitas workforce would not be considered NPF personnel.
(ii) Challenges of shared legal advice.
(iii) Continued compliance with the NPF legislation under the new model.
2.5 Board Meeting Dates for 2024
The Board
NOTED the paper and
REQUESTED the clash in dates for March and June 2024 for
ACT
Ms. Park and Ms. Edwards be discussed offline with the CE.
2.6 Board Training
The Board:
a)
NOTED the paper and
REQUESTED the list of regular staff-led refreshers be updated
to include a session providing a short overview regarding Climate Related Disclosures
and on Asset/Liability matching.
b)
DISCUSSED the process for Board members arranging training – in summary: identify
development areas, consider if they can be Annuitas-led sessions or if external provider
INFORMATION
then subject to budget, and approval from Chair.
c)
NOTED that it is valuable for each Board member to maintain a schedule of training.
d)
NOTED that current budget may not be sufficient but can be reviewed when final spend
amounts are reviewed.
2.7 Directors and Officers Insurance OFFICIAL
The
Board:
a)
NOTED the paper and legal advice.
THE
b)
NOTED S9(2)(g)(i)
UNDER
2.8 Amendments to Management Services Agreement
The Board:
a)
APPROVED the amendments to the Management Services Agreement with the NPF and
with the Authority, both dated 9 December 2021, as provided for in the following:
(i) A Deed of Amendment which amend the Management Services Agreement dated 9
December 2021 with the Board of Trustees of the National Provident Fund (the NPF
Deed of Amendment); and
RELEASED
(ii) A Deed of Amendment which amends the Management Services Agreement dated 9
December 2021 with the Government Superannuation Fund Authority (the GSFA
Deed of Amendment).
b)
DELEGATED Dr. Schuck and Ms. Edwards to
EXECUTE the Annuitas’ shareholders’
resolution providing approval for Annuitas to execute the NPF Deed of Amendment and
the GSF Deed of Amendment.
2023 08 10 NPF Board Meeting
3
c)
DELEGATED Dr. Schuck and Ms. Edwards to
EXECUTE the NPF Deed of Amendment.
d)
NOTED that Dr. Schuck and Ms. Edwards provided consent for their electronic
signatures to be used for execution of the documents referred to in paragraphs (b) and
(c) above.
3.
KEY PAPERS
3.1 Introduction to Anthony Halls and Holly Marshall
Anthony Halls and Holly Marshall joined the meeting.
The Board
WELCOMED Mr. Halls and Ms. Marshall.
Mr. Halls joined Annuitas on 24 July 2023 as a General Manager Investments (soon to be ACT
amended to Chief Investments Officer).
Ms. Marshall joined Annuitas on 3 July 2023 as a Senior Responsible Investment Strategist.
Mr. Halls and Ms. Marshall spoke of their prior roles and experiences and their perspectives on
the challenges and opportunities of their new roles.
3.2 ALCO Event Review
The Board:
a)
NOTED it was pleased with report and comfortable with learnings and actions taken
INFORMATION .
b)
REQUESTED the Board be kept updated on improvements being made and the rebuild of
the model by S9(2)(i)
to ensure it is consistent with current best practices in
model design.
c)
DISCUSSED the current review and inventory of models used within the business and
REQUESTED an assurance programme which considers the key controls, testing
schedule, and validation.
OFFICIAL
3.3 SAA for Aircrew Superannuation Scheme and LSCA Scheme
THE
The Board
NOTED the paper and
AGREED with S9(2)(j)
conclusion that given the
funded status and the capital market assumptions utilised, the SAAs for Aircrew and LSCA do
not warrant mid-cycle adjustment prior to the next review, scheduled for 2024.
3.4 Draft TCFD Report
UNDER
The Board:
a)
NOTED the paper.
b)
APPROVED the draft TCFD report for publication, subject to completion of the
operational data sections highlighted and
REQUESTED: (i) Final approval to be given by the Chair of the Audit and Risk Review Committee.
(ii) At the time of final approval, management provide an attestation that all
RELEASED
representations are substantiated, the statements made are fair and accurate, and
jargon and technical language have been minimised but where used, it is correct.
(iii) Confirmation from management on application of the Fair-Trading Act 1986 and
Part 2 of the FMC Act to the published TCFD report.
2023 08 10 NPF Board Meeting
4
3.5 Climate Related Disclosures Update
The Board
NOTED the Paper and update on the planning to ensure NPF is positioned to meet
the objectives of the new Climate Related Disclosure regime.
3.6 Cash Management – C Unit Fund and Board Reserves
The Board
NOTED the report and, with respect to NPF cash investments:
a)
APPROVED investment of the C Fund assets into a BNZ Money Market Call Account.
b)
APPROVED continued investment of Board Reserves into Term Deposits and
NOTED the
maturity of these will be laddered to increase liquidity and smooth returns over interest
rate cycles.
ACT
3.7 GAT Trust Deed Amendment
The Board:
a)
CONFIRMED its opinion that the proposed amendments to the Second Schedule of the
Trust Deed for the Global Asset Trust are not materially and adversely prejudicial to the
Investors (as per clause 10.1.1.4),
APPROVED the proposed amendments, and
AUTHORISED Management to seek approval from the FMA and give the Minister of
Finance 20 Business Days' notice of any proposed amendment:
b)
AUTHORISED execution of the amending deed under Common Seal by two authorised
signatories, subject to receiving approval from the FMA and on receiving no direction
INFORMATION
from the Minister of Finance or on expiry of the 20 Business Days' notice period.
c)
DELEGATED Dr. Schuck and Ms. Park to
EXECUTE the amending deed in due course,
subject to matters stated in paragraigh b) above.
d)
NOTED that Dr. Schuck and Ms. Park provided consent for their electronic signatures to
be used for execution of the documents in due course.
OFFICIAL
3.8 Dynamic Asset Allocation Review
The Board:
THE
a)
NOTED the paper and complimented S9(2)(a)
on his paper.
b)
APPROVED restarting the DAA programme, subject to the new CIO’s satisfaction with it.
3.9 SIPSP Compliance Assurance Programme
UNDER
The Board:
a)
The Board
APPROVED independent
SIPSP compliance assurance moving from an annual
cycle to a rolling programme that is spread over three years.
b)
NOTED that the Chief Investment Officer will provide quarterly attestation that the SIPSP
has been complied with in all material respects, subject to appropriate compliance
assurance programme being put in place to support the attestation.
RELEASED
4.
INVESTMENTS
4.1 Investment Report
The Board:
a)
RECEIVED a verbal update fromS9(2)(a) on the paper.
b)
DISCUSSED and
NOTED the paper.
2023 08 10 NPF Board Meeting
5
c)
DISCUSSED the F2 Unit fund issue noting confirmation from S9(2)(a) that performance
will be calculated internally and monitored, and that the methodology used is aligned.
d)
REQUESTED future statements on compliance breaches to be more specific.
e)
REQUESTED Management report to the Board the outcome of the research visit with
S9(2)(i)
f)
REQUESTED commentary on changes in market outlook be included in future reports.
4.2 Global Bonds Portfolio Review
The Board:
a)
DISCUSSED and
NOTED the paper.
b)
REQUESTED future reviews to focus on the “why” so as to provide additional insights on
ACT
why an investment manager may not be meeting performance expectations, why we
have appointed the specific investment managers, what are their investment styles, and
provide granular details on assessment of credit quality as an average may not indicate
that the fund is holding below average stocks.
4.3 Currency Hedge Ratio
The Board:
a)
DISCUSSED and
NOTED the paper.
b)
NOTED that S9(2)(i)
had undertaken this review and concluded that the
INFORMATION
hedge ratio for the global equity O Unit, is broadly consistent with their advice to New
Zealand clients, and further that while there exists scope in the NPF’s investment process
to alter the hedge ratio on a tactical basis, they do not believe it is necessary to revisit
the strategic foreign currency policy at this point, less than 12 months after the most
recent review.
c)
NOTED that separate advice has been sought on alternative tax treatments and is yet to
be considered.
OFFICIAL
5.
SCHEMES
THE
5.1 Schemes Update
The Board
DISCUSSED and
NOTED the paper.
5.2 Schemes - Metrics
UNDER
The Board
DISCUSSED and
NOTED the paper.
The Actuary, Christine Ormrod from PWC joined the meeting.
5.3 DBPC – Employer Contribution Rates
The Board:
RELEASED
a)
NOTED the paper on the actuarial review for the DBPC Scheme, as at 31 March 2023
b)
DISCUSSED the actuarial review and recommendations.
c)
DISCUSSED the investment strategy of the scheme, options on when to de-risk the
portfolio, impacts of de-risking the portfolio on members, employers, and Crown.
2023 08 10 NPF Board Meeting
6
d)
S9(2)(j)
(i) S9(2)(j)
(ii) S9(2)(j)
ACT
(iii) proceeds with the DBPC Scheme trust deed amendment to enable members to elect
to take their pension from age 60 but does not amend the trust deed to increase the
benefits payable from the DBPC Scheme.
e)
DELEGATED to the Board Chair the authority to approve the letter to go to the Minister
of Finance.
f)
ACCEPTED the Actuary’s recommendations that the Board:
(i) undertake a statutory actuarial examination of the DBPC Scheme as at 31 March
2024 to determine the employer contribution rate from 1 April 2025.
(ii) continue to periodically review the asset allocation to ensure it remains appropriate.
INFORMATION
g)
S9(2)(j)
It is further noted that:
OFFICIAL
(i) the mortality assumptions were reviewed as at 31 March 2023 and the 2023/2024
transfer factors incorporate the results of this mortality review. These will next be
THE
reviewed as at 31 March 2026
(ii) the Board considered and determined that no change is required to the notional
asset allocation for the DBPA Scheme. This will be reviewed prior to 30 June 2026.
h)
NOTED the employer contribution rate is set on the assumption that any deficit in the
DBPC when the last member leaves would be met by the Crown (either by way of the
UNDER
Section 60 guarantee or by asking the Minister of Finance to approve the use of the Free
Reserves for this purpose).
i)
REQUESTED that Management submit a paper at the Board’s November meeting (or
earlier if warranted) reviewing the strategic asset allocation with a view to de-risking.
5.4 Aircrew - Employer Contribution Rates
The Board:
RELEASED
a)
NOTED the report on the actuarial review for the Aircrew Scheme, as at 31 March 2023.
b)
DISCUSSED the actuarial review and recommendations.
c)
RESOLVED to
ACCEPT the Actuary’s recommendations that the Board:
(i) S9(2)(j)
2023 08 10 NPF Board Meeting
7
(ii) S9(2)(j)
(iii) continues to periodically review the asset allocation to ensure it remains
appropriate.
d)
NOTED there will be a statutory actuarial examination of the Scheme as at 31 March 2024
to determine the employer contribution rate from 1 April 2025.
Christine Ormrod left the meeting.
6.
FINANCE AND RISK
6.1 Scheme Results to 30 June 2023
ACT
The Board
RECEIVED verbal update from S9(2)(a)
on the results for the three months to
30 June 2023 and
NOTED the report.
6.2 Board and Board Reserves Financial Statements to 30 June 2023
The Board:
a)
NOTED the financial statements of the Board of Trustees for the three months ending 30
June 2023.
b)
NOTED the financial statements of the Board Reserves, for the three months ending 30
June 2023.
INFORMATION
6.3 Legislative Compliance
The Board:
a)
RECEIVED verbal update from S9(2)(a) that the review of the legislative compliance
framework and updated the legislative compliance risk assessment had been reported to
the 15 June 2023 Audit, Risk and Review Committee as part of the financial statements
OFFICIAL
review, where it was noted and recommended to be presented to the Board for approval.
b)
APPROVED the legislative compliance profile and risk assessment as set out in Appendix
2 of the paper.
THE
c)
REQUESTED the framework be reviewed to ensure that legislation applying to reports
published on the website is incorporated into the framework and risk assessment.
6.4 Key Risk Profile and Register
UNDER
The Board:
a)
NOTED the report.
b)
APPROVED the current Key Risk Profile and Key Risk Register and the amendments.
c)
REQUESTED the following be reconsidered:
(i) PIMS systems – looking at age of the system, support, and backup.
(ii) Residual risk for information security.
RELEASED
(iii) Where would the ALCO model issue sit within the key risks.
7.
DELEGATED DECISIONS
7.1 Use of Common Seal
The Board
NOTED the report.
7.2 Documents signed on behalf of the Board
2023 08 10 NPF Board Meeting
8
The Board
NOTED the report.
7.3 Management decisions made under delegated authority
The Board
NOTED the report.
8.
OTHER BUSINESS
The Board
NOTED CE’s advice that a brief survey has been sent to Board members to seek
feedback on key papers and quality of discussion at this meeting.
There being no other business, the meeting finished at 12.30 pm.
ACT
NEXT MEETING: The next meeting of the Board will be held in Wellington and is currently
scheduled for
Wednesday, 15 November 2023 commencing at 9.30 am.
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
2023 08 10 NPF Board Meeting
9
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Level 12, The Todd Building, 95 Customhouse Quay, Wellington and Teams
video conference.
Date
Wednesday, 13 September 2023 commencing at 10.00 am.
PRESENT Edward Schuck (Chair)*
Sarah Park (Deputy Chair)*
Lloyd Kavanagh*
ACT
Graham Ansell*
IN ATTENDANCE
Tim Mitchell, CE
S9(2)(a)
Ireen Muir (for secretariat function)
APOLOGIES
Tracey Berry, Louise Edwards, Michelle Tsui
INFORMATION
VISITORS
Datacom Connect Limited – S9(2)(a)
S9(2)(a)
*
* Denotes participants joined the meeting via video conference.
OFFICIAL
S
THE
PECIFIC INTERESTS
All
Board members confirmed there were no specific interests to declare.
D atacom representatives joined the meeting.
1.
DATACOM PRESENTATION
UNDER
Th
e Board
1. 1
RECEIVED a presentation from Datacom on its administration services for the NPF
Schemes. Matters DISCUSSED included:
a) Team numbers, structure, and staff training.
b) Service levels attained.
c) Administration systems – PIMS.
d) Process documentation and controls.
e) Cyber security.
RELEASED
f) Audits.
g) Levels of membership and work undertaken for the schemes.
1.2
THANKED Datacom for their attendance and presentation.
Datacom representatives left the meeting.
2.
OTHER BUSINESS
There being no other business, the meeting finished at 12.30 pm.
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
By circulation
Date
15 September 2023
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Graham Ansell
Louise Edwards
Tracey Berry
ACT
Lloyd Kavanagh
APOLOGIES
Nil
CLIMATE-RELATED DISCLOSURES PROJECT The Board:
a)
RECEIVED a paper from Management updating the Board on the project
INFORMATION
planning to ensure we can meet the deadlines associated with producing the
Climate Related Disclosures, alongside 2024 year-end reporting, in line with the
Aotearoa New Zealand Climate Standards.
b)
NOTED the report and the project plan.
OFFICIAL
Ireen Muir
Manager Schemes
THE
UNDER
RELEASED
2023 11 15 NPF Board Paper
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Level 12, The Todd Building, 95 Customhouse Quay, Wellington and by
Teams video conference.
Date
Wednesday, 15 November 2023 commencing at 10.00 am.
PRESENT Edward Schuck (Chair)
Sarah Park (Deputy Chair)
Tracey Berry
Lloyd Kavanagh
ACT
Louise Edwards
Graham Ansell
IN ATTENDANCE
Tim Mitchell, CE
Michelle Tsui
Ireen Muir (for secretariat function and for item 5)
Fiona Morgan, for items 3 and 4
Hadyn Hunt for items 3 and 4
Anthony Halls* and Sean Wakelin for items 5 and 6
Lawrence Young for item 5.5 and 6
INFORMATION
APOLOGIES
S9(2)(a)
VISITORS
Nil
* Denotes participants joined the meeting via video conference.
OFFICIAL
BOARD ONLY TIME
THE
Th
e Board met initially on its own. The Board discussed how to approach significant agenda
it
ems and decided that further discussion of items 6.3 (RI Progress Report) and 6.4 (CRD
Pr
oject update) should be deferred until the 6th of December meeting to ensure sufficient time
is
allowed for discussion. The Board
RECEIVED training from Ms. Tsui on how DB Schemes
w
ork with a focus on DBPC and Aircrew.
UNDER
Th e Board met with the CE. The Board
REQUESTED a revised version of the one-page NPF
Strategy document prepared in September.
SPECIFIC INTERESTS
All Board members confirmed there were no specific interests to declare.
1.
MINUTES
RELEASED
1.1 Board Meeting Minutes
The Board
APPROVED the minutes of the Board meetings held on 10 August 2023, 13
September 2023, and 15 September 2023.
1.2 Noting of Board Strategy Meeting Notes
The Board:
a)
NOTED the notes from the Board Strategy meeting held on 9 August 2023.
1
b)
RECEIVED confirmation from CE that the draft one-page strategy provided by Ms. Berry
will be circulated to all Board members.
1.3 Committee Meeting Minutes
The Board
NOTED the draft minutes of the Investment Committee meeting held on 26 October
2023.
2.
ADMINISTRATION
2.1 Interests Register
The Board
NOTED the Interests Register and
REQUESTED the following changes:
ACT
a)
S9(2)(a)
appointment as S9(2)(a)
S9(2)(a)
ceased in September 2023.
b)
S9(2)(a)
appointment on the investment committee for S9(2)(a)
which is yet to
commence.
2.2 Matters Arising
The Board:
a)
NOTED the matters arising.
b)
RECEIVED confirmation from the CE that the items arising from the Strategy Day h
INFORMATION ave
been recorded as preliminary items and will be rationalised when they are considered in
detail at Management’s strategy day.
2.3 Work Plan
The Board:
OFFICIAL
a)
NOTED the work plan and that the schedule for February 2024 includes a high workload.
b)
RECEIVED confirmation from the CE that most items scheduled for February 2024 relate
to the Investment Framework review and it is likely that they will be combined.
THE
c)
NOTED that Minister of Finance’s letter of expectations is usually received in December
but may be delayed due to change in Government and that Treasury representatives are
currently scheduled to attend the February 2024 Board meeting.
2.4 Delegated Decisions
UNDER
The Board
NOTED the following papers:
a)
Use of Common Seal.
b)
Documents signed on behalf of the Board.
2.5 Annuitas Management Report
The Board:
RELEASED
a)
NOTED the paper and
RECEIVED a verbal update from the CE on the progress made on
human resource architecture and constitutional document review.
b)
ACKNOWLEDGED S9(2)(a)
long service and passed on their gratitude for her
commitment and service.
2
3.
FINANCE
3.1 Scheme Accounts as at 30 September 2023
The Board:
a)
RECEIVED a verbal overview from S9(2)(a)
on the results to 30 September 2023.
b)
NOTED and
DISCUSSED the report incorporating the Scheme Financial Statements for
the six months to 30 September 2023.
3.2 BOT and Board Reserves as at 30 September 2023
The Board:
ACT
a)
RECEIVED a verbal overview fromS9(2)(a)
on the results to 30 September 2023.
b)
NOTED the financial statements of the Board of Trustees for the six months ending
30 September 2023.
c)
NOTED the financial statements of the Board Reserves, for the six months ending
30 September 2023.
3.3 Taxation of Hedging Gains and Losses
The Board:
INFORMATION
a)
NOTED and
DISCUSSED the report.
b)
AGREED that the Global Asset Trust (GAT) continue to treat the gains and losses on the
hedges under the financial arrangement rules rather than Fair Dividend Rate method.
3.4 Annuitas Annual Report Resolutions
The Board
CONFIRMED Dr. Ed Schuck and Ms. Sarah Park as the Board’s representatives at
OFFICIAL
the Annual General Meeting of Annuitas to be held on 21 November.
4.
RISK
THE
4.1 CRO Report
The Board:
a)
DISCUSSED and
NOTED the paper.
UNDER
b)
RECEIVED confirmation from S9(2)(a) that guidance had been issued to staff on use of
AI, and while use of AI is permitted, no proprietary information can be input, and results
need to be checked for accuracy and reasonableness.
4.2 Key Risk Profile and Register
The Board:
a)
RECEIVED a verbal update fromS9(2)(a) that there have been no changes to existing
RELEASED
risks. While there are assurance programmes in place for some artefacts, additional work
is required, and an initial report will be presented to the Audit and Risk Review
Committee (ARRC) in Q1 2024.
b)
REQUESTED the development of the assurance programme include prioritising by
reference to key and critical risks, with ARRC and the Board having an opportunity to
provide input into the prioritising. Also requested the risk of fraud be assessed for
inclusion in the assurance programme.
3
5.
SCHEMES
5.1 National Provident Pension Scheme (NPPS) -2023 Projections
The Board:
a)
RECEIVED a verbal overview of the paper from S9(2)(a) .
b)
DISCUSSED and
NOTED the paper and following matters:
(i)
Pension increases are at the discretion of the Board and made by reference to the
NPPS’s Financial Management Policy (Policy).
(ii)
The Policy permits a pension increase to be considered if the funding level is
above 108% as at financial year end and is not required to take CPI into
consideration.
ACT
(iii)
If a pension increase is given, it would take effect at the date determined by the
Board, but that date would need to be post the finalisation of the annual audited
financial statements.
(iv)
The Policy will be reviewed in 2025, and there is scope to revise the funding level
threshold above which pension increase can be considered.
(v)
Management will continue to monitor NPPS’ funding level, investment strategy,
membership, and costs.
5.2 Defined Contribution Schemes – 2023 Projections INFORMATION
The Board:
a)
NOTED the paper covers the following schemes:
(i)
Pension National Scheme (PNS);
(ii)
Lump Sum National Scheme (LSN);
(iii)
Meat Industry Scheme (Meat). OFFICIAL
b)
RECEIVED a verbal overview of the paper from S9(2)(a) .
c)
DISCUSSED and
NOTED the paper and following matters:
THE
(i)
The schemes have diminishing membership and increasing costs as a percentage
of assets.
(ii)
S9(2)(i)
UNDER
(iii)
S9(2)(i)
(iv)
The next SAA review as scheduled in 2025.
(v)
Management will continue monitoring membership and costs annually.
(vi)
Management will, through the scheme administrator, make additional efforts to
RELEASED
locate members without a current address S9(2)(i)
(vii) S9(2)(i)
4
5.3 Lump Sum Cash Accumulation Scheme – 2023 Projections
The Board:
a)
RECEIVED a verbal overview of the paper from S9(2)(a) .
b)
DISCUSSED and
NOTED the paper and following matters:
(i)
The next SAA review is scheduled in 2025.
(ii)
Management will continue monitoring membership and costs annually.
c)
REQUESTED the assurance programme (refer item 4.2) include assurance on calculation
methodologies generally and in particular the calculation of member’s share of any
reserves in the LSCA, in that the share is determined at the time the member’s benefit
becomes payable and will not include amounts accumulated within the LSCAS before the
ACT
member joined.
5.4 DBP Contributors Scheme – 2023 Projections and SAA Review
The Board:
a)
RECEIVED a verbal overview of the paper from S9(2)(a) .
b)
DISCUSSED and
NOTED the paper and following matters:
(i)
The Trust Deed for the DBPC was amended in 2023 to allow contributors to
receive a retirement benefit without having to leave service at an earlier age of 60
INFORMATION
rather than 65. Additional provisions were included to clarify the Board’s right to
make an election on behalf of non-contributing members by giving six months’
notice if no election is made by the age of 65. There is no adjustment to the
retirement pension factors for the reduced life expectancy of contributors who
elect to take their pension after the age of 65. S9(2)(g)(i)
(ii)
S9(2)(g)(i)
OFFICIAL
A notice of the trust deed
amendments and bespoke letters advising members of their entitlements will be
sent out by the end of the year.
THE
(iii)
DBPC is short duration, very cashflow negative, and has relatively less predictable
future cashflows due to the small number of members. DBPC’s short duration
means there is less time to take advantage of any future investment gains. Given
DBPC has a current funding level just above 100% and will require liquidity in the
near term it is appropriate to amend the asset allocation.
UNDER
(iv)
Where DBPC has insufficient assets to meet the benefits payable by it, a call may
be made on the Crown guarantee under section 60 of the NPF Act. With approval
from the Minister of Finance, the Board Reserves may be used to assist with the
closure of a scheme where there is a deficit at end of life.
(v)
Management will, through the scheme administrator, make additional efforts to
locate members without a current address. The associated reasonable costs will
be offset against the relevant members’ interests.
RELEASED
c)
CONSIDERED amending the SAA to 100% cash or a combination of cash and NZ fixed
interest with a view to matching the duration of portfolio to that estimated by the
Actuary. Received confirmation from Management that since the last actuarial review the
Trust Deed has been amended to allow members to be able to elect their retirement
options at an earlier age of 60 years without having to cease employment. As a result,
the duration of the liabilities is uncertain and shorter than that estimated by the Actuary
given the majority of members are S9(2)(g)(i)
. If a member elects a pension,
their entitlement and future pension liability is transferred to the DBPA Scheme. In
addition, non-contributing members who are over 65 can be moved the DBPA on giving 6
5
months’ notice. Accordingly, the Board
CONCLUDED that investing 100% of the assets
of DBPC in cash was appropriate.
d)
APPROVED changing the asset allocation to 100% Cash Unit Fund) effective 1 December
2023:
Current
New
C Unit
43%
100%
F2 Unit
27%
0%
O Unit
24%
0%
E Unit
6%
0%
5.5 Aircrew Superannuation Scheme – 2023 Projections and SAA Review
ACT
The Board:
a)
RECEIVED a verbal overview of the paper from S9(2)(a) .
b)
DISCUSSED and
NOTED the paper, including:
(i)
The fund size being S9(2)(i) as at 31 October 2023;
(ii)
S9(2)(i)
(iii)
Requirements under Section 44 of the National Provident Fund Restructuring Act
1990 when recommending employer contribution rates or other actions to the
INFORMATION
Minister of Finance.
(iv)
Members can elect different entitlement options under the Trust Deed.
(v)
The current funding level and TA/TB ratio estimates as per the report and the
Actuary’s projections to 2025 in her valuation report as at 31 March 2023.
c)
APPROVED no immediate change to the current SAA of 60% F Unit, 32% O Unit, and
8% E Unit.
OFFICIAL
d)
S9(2)(j)
e)
APPROVED continuing to target a TA
THE /TB ratio of 100% as the investment objective for
Aircrew.
f)
APPROVED amending the Financial Management Policy (Policy) effective 15 November
2023,
to replace the current 105% TA/TB ratio for de risking the Scheme with a
discretion on Management to de-risk the asset allocation if/and when the TA/TB ratio
reaches a level at which the de-risked asset allocation is expected to deliver a return
UNDER
that reaches 100% TA/TB ratio
over the projected weighted average maturity. This
discretion may be exercised without the upper limit of 105% being triggered and
REQUESTED that the Chair of the Investment Committee be advised before this
discretion is exercised.
g)
APPROVED the new de-risked asset allocation as shown below and
REQUESTED the
Policy be amended to reflect the Board’s approvals.
Current SAA
De-risked SAA in the
Replacement De-risked SAA
RELEASED
Policy (to be
to be incorporated in the
implemented if TA/TB
Policy subject to condition
ratio reaches 105%
shown below*
C Unit
-
42%
60%
F Unit
60
-
-
F2 Unit
-
38%
40%
O Unit
32%
15%
0%
E Unit
8&
5%
0%
* Discretion conferred upon Management to de-risk the asset allocation if/and when the TA/TB
ratio reaches a level at which the de-risked asset allocation is expected to deliver a return that
reaches 100% TA/TB ratio
over the projected weighted average maturity.
6
5.5 Schemes Update
The Board
DISCUSSED and
NOTED the paper.
5.6 Schemes - Metrics
The Board
DISCUSSED and
NOTED the paper.
5.7 Insurance Renewal Update 2023
The Board:
a)
NOTED the paper and the renewal of the insurance policies to 2024.
b)
NOTED a correction to the paper – the increase in insurance costs to NPF from 2023 is
ACT
lower at $4308.29.
c)
S9(2)(i)
5.8
Management decisions made under delegations
The Board
NOTED the paper.
6.
INVESTMENTS
INFORMATION
6.1
Review of SIPSP Compliance
The Board:
a)
RECEIVED verbal update from S9(2)(a) that an evidence-based substantiation process
has been developed for the full SIPSP and there was no substantive non-compliance
with the SIPSP.
OFFICIAL
b)
NOTED Russell Investments provided an independent report on SIPSP compliance and
did not find any instances of non-compliance.
c)
NOTED that on the basis of a review o
THE f all requirements of the SIPSP, S9(2)(a)
attested that he is satisfied the SIPSP has been complied with.
6.2
CIO Report
The Board:
UNDER
a)
RECEIVED a verbal overview of the report from S9(2)(a) .
b)
NOTED the report.
c)
AUTHORISED the granting of the Power of Attorney to Standard Chartered Bank Korea
Limited and execution of the Power of Attorney under its common seal using the
electronic signatures of Dr. Schuck and Mr. Ansell (both consented to the use of their
electronic signature).
RELEASED
6.3
Responsible Investments Progress Update
The Board
NOTED this paper will be presented at the Board meeting scheduled for 6
December 2023.
6.4
Climate Related Disclosures Project Update
The Board
NOTED this paper will be presented at the Board meeting scheduled for 6
December 2023.
7
8.
OTHER BUSINESS
The Board:
a)
NOTED CE’s advice that a shorter version of the survey has been sent to Board
members to seek feedback on papers and quality of discussion at this meeting.
b)
NOTED that in future there will be a sharper delineation of meaning when using the
terms “Management” and “Annuitas”.
There being no other business, the meeting finished at 1.43 pm.
NEXT MEETING: The next meeting of the Board will be held in Wellington and by Teams video
conference, and is currently scheduled for
Wednesday, 6 December 2023 commencing at
ACT
9.30 am.
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
8
Minutes of a
BOARD OF TRUSTEES OF THE NATIONAL PROVIDENT FUND
meeting of
(the Board)
Venue
Level 12, The Todd Building, 95 Customhouse Quay, Wellington and by
Teams video conference.
Date
Wednesday, 6 December 2023 commencing at 9.30 am.
PRESENT Edward Schuck* (Chair)
Sarah Park* (Deputy Chair)
Tracey Berry*
Lloyd Kavanagh*
ACT
Louise Edwards*
Graham Ansell*
IN ATTENDANCE
Tim Mitchell, CE
Michelle Tsui*
Ireen Muir (for secretariat function)
Fiona Morgan, Hadyn Hunt*, Anthony Halls, Holly Marshall and
Chandra Quarmby
APOLOGIES
Nil
INFORMATION
VISITORS
Nil
* Denotes participants joined the meeting via video conference.
S
PECIFIC INTERESTS
OFFICIAL
All
Board members confirmed there were no specific interests to declare.
1.
KEY PAPERS
THE
1.1 Climate Related Disclosures Project Update
The Board:
a)
NOTED the report and
RECEIVED an overview from the CE that the paper provides an
UNDER
update only on how the disclosures are being approached structurally. It includes
narrative, where it could be provided currently, and another iteration will be provided to
the Board in February 2024.
b)
NOTED and
DISCUSSED the draft disclosures: summary of comments is noted below.
(i) Include statements that reflect current position rather than forward-looking
statements on what we will do in the future.
(ii) Provide to the Board for its consideration additional detail on scenario analysis,
RELEASED
together with information on how scenario planning has been approached, and
comparative against disclosures made by other entities who are doing so
voluntarily.
(iii) Provide the whole of document format, such as the cover page and introduction.
(iv) Include a clear narrative at the beginning of the report that it has been produced
using whole of organisation approach and that disclosures are being made
voluntarily.
(v) Provide due diligence substantiating all statements.
(vi) Provide clarity on which entity is doing what i.e. NPF portfolios vs Board of Trustees
of NPF.
2024 02 15 NPF Board Paper
1
(vii) Provide additional information on cost of compliance as the costs are borne by
members and have an impact on the Crown guarantee.
(viii) Consider following guidance issued by the Financial Markets Authority on record
keeping.
c)
NOTED comments and clarification from Management that most matters noted above
are being addressed and will be incorporated in the next update.
d)
NOTED the Board is yet to approve the scenarios to be adopted for reporting and the
associated narrative.
NOTED that management have been working closely with XRB,
the Guardians of New Zealand Super (GNZS), Parliamentary Commission for
Environment, other CFIs, and the Boutique Investment Group on scenario planning.
XRB has set two scenarios which would be accepted. S9(2)(g)(i)
ACT
e)
NOTED that as part of the project, consideration needs to be given to content of
investment management agreements and directions given to investment managers to
ensure there is a clear alignment to the Board’s climate related strategies.
f)
THANKED the team for the considerable effort with this project.
1.2 Responsible Investment (RI) Progress Report
The Board:
a)
NOTED the report.
INFORMATION
b)
NOTED the proposed Reporting Framework aligned across existing public commitments
on the Crown Responsible Investment Framework and as Paris-Aligned Asset Owner
signatories.
c)
NOTED NPF will be listed as an Asset Owner signatory of Climate Action 100+ on their
website alongside more than 600 institutional investors as a participant (including GNZS
and Government Superannuation Fund Authority), and other approved public
commitments pertaining to RI will be published on NPF’s
OFFICIAL website under Investment
Publications.
d)
NOTED that S9(2)(g)(i)
THE
e)
DISCUSSED the letter sent to the top 50 companies listed on the New Zealand Stock
Exchange as noted in the Reporting Framework and
NOTED that letter is advocacy
based.
REQUESTED the word “engagement” in the heading “Emerging: CFI Climate
Change Engagement” in the Reporting Framework be amended to “advocacy”.
UNDER
f)
REQUESTED management clearly communicate with the appointed NZ Investment
Managers to ensure they understand the Board’s responsible investment commitment.
g)
THANKED S9(2)(a)
on her commitment on RI initiative.
1.3 Policy Approval – Acceptable Conduct Policy
The Board:
a)
APPROVED the policy
subject to the following:
RELEASED
(i) Under Clause 3 Conflicts of interest paragraph 5 – expand to include trusts and
other corporate interests.
(ii) Incorporating additional wording provided by Ms. Park in relation to social media.
b)
REQUESTED management confirm via email when the last acceptable conduct
declaration was completed by the Board.
2024 02 15 NPF Board Paper
2
1.4 Audit & Risk Review Committee (ARRC) Terms of Reference Approval
The Board:
a)
NOTED that while Climate Related Disclosures will be reviewed by ARRC, they will be
presented to the Board for approval.
b)
APPROVED the updated ARRC Terms of Reference subject to the following change
(shown in italics) being incorporated:
“Recommend
(or not) the appointment of the auditor to provide assurance of Climate
Related Disclosures.”
2.
GENERAL BUSINESS
ACT
There being no other business, the meeting finished at 10.50 am.
NEXT MEETING: The next meeting of the Board will be held in Wellington and by Teams video
conference, and is currently scheduled for
Thursday, 15 February 2024 commencing at 10.00
am.
INFORMATION
OFFICIAL
THE
UNDER
RELEASED
2023 12 06 NPF Board Minutes
3
