Beneficiary Fund Work Group

<typohead type="2">Synopsis

</typohead>

The Committee reports on the accounts of the Beneficiary Fund for the period 1 July 2002 to 3o June 2004 and on the results of the Actuarial Investigation into the Beneficiary Fund covering the three years to 30 June 2003.

<typohead type="2">Report

</typohead>

The membership of the Committee in the period reviewed was:

Mrs Margaret L Inch (Convenor), Revs Lynn Russell, Tom Etuata and Allan Shaw, Mrs Morag Gray and Messrs Arthur Davis, Jim Thomson and John Molloy Church Property Trustee). The Secretary was Geoffrey Bell (Manager, Financial Services).

1. Accounts for the years ended 30 June 2003 and 30 June 2004

1.1 The financial statements covering the two periods are appended to the report of The Church Property Trustees.

1.2 The report of the Trustees notes the difficulty of the financial markets during the period of this review and the accounts record the loss in value sustained. It is pleasing that the past year has seen some improvement. We look to this trend continuing.

1.3 As required by the Superannuation Schemes Act 1989, the Trustees, in association with the Committee, have reported to members and annuitants. A copy of the 2003 report is appended for the information of Commissioners.

2. Actuarial Valuation of the Fund

2.1 As required by the Trust Deed the Fund was actuarially investigated as at 30 June 2003. Given the difficulties being experienced during the term, an interim investigation was commissioned as at 30 June 2002 to assist the Trustees in their investment decisions.

2.2 The interim report at 30 June 2002 confirmed that at that date it would have been possible to provide all future benefits without and further parish/employer contributions being made. The changes in the investment market in the succeeding year resulted in a position where parish/employer contributions would have to be increased to 43% of stipend to fund all future benefits, and increase of over four times the present level.

2.3 The value of the benefits was in fact sufficient to meet the benefits that contributing and frozen members had earned in respect of past service and to continue to provide benefits for current annuitants. The concern lay in respect of members’ benefits in respect of future service. The actuary’s recommendation was that steps should be taken without delay to restoring the Fund to an actuarial balance.

2.4 The major recommendations of the actuary were:

Parishes and employers be required to make contributions of at least 9.7% of stipend for the next three years

The Committee give notice to members that the Fund would cease to provide medical insurance benefits in their present form with effect from 30 June 2004.

The Committee investigate options for outsourcing administration services, with regard to both reducing costs and improving the robustness of the management of information relating to members of the Fund.

The Committee discuss with a professional claims manager the services that could be provided to ensure disability claims paid by the Fund are closely managed in the best interests of the members concerned and with regard to the financial position of the Fund.

</typolist>

2.5 In respect of these recommendations, the Committee has adopted each of the three recommendations noted and continues to consider the implications of the fourth recommendation above.

2.6 The Committee spent considerable time and effort in reviewing the medical benefits scheme and seeking an alternative that might have enabled the scheme to continue in at least, a modified form. Unfortunately we were not successful in this objective.

2.7 Information relating to the appointment of Aon Consulting as the future administrators of the Fund has been circulated to all members. The experience that Aon Consulting brings to this specialist area of administration will be of benefit to all members. The savings in cost associated with this change assists restoring the Fund to an actuarial balance as recommended by the Actuary.

3. General

3.1 The Committee is mindful of the dependence that annuitants have on the Fund for supplementing their income. In determining changes in the level of annuities, the Committee is conscious of retaining a balance between granting an increase and managing the overall spend on annuities within the resources available. To this end the increase granted as at 1 July last had to be moderated. Annuitants may be assured that their interests will be carefully considered at each annual review having regard both to the effect that any change has on the Funds and on income prospects.

3.2 We have endeavoured to inform all members of the fund as fully and as timely as possible of the changes which have taken place in the last year. Three detailed letters have been sent to members to ensure that everyone is aware of what is happening.

Margaret L Inch
Convenor

Presbyterian Church of Aotearoa New Zealand

Beneficiary Fund Work Group

Appendices