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NTMA – Administration Account
For the year ended 31 December 2014
Comptroller and Auditor General Report for presentation to the Houses of the Oireachtas
National Treasury Management Agency – Administration Account
I have audited the administration account of the National Treasury Management Agency for the year ended 31 December 2014 under the National Treasury Management Agency Act 1990. The administration account, which has been prepared under the accounting policies set out therein, comprises the accounting policies, the income and expenditure account, the statement of total recognised gains and losses, the balance sheet and the related notes. The financial statements have been prepared in the form prescribed under section 12 of the Act, and in accordance with generally accepted accounting practice in Ireland.
Responsibilities of the Agency
The Agency is responsible for the preparation of the administration account, for ensuring that it gives a true and fair view of the state of the Agency’s affairs and of its income and expenditure, and for ensuring the regularity of transactions.
Responsibilities of the Comptroller and Auditor General
My responsibility is to audit the administration account and report on it in accordance with applicable law.
My audit is conducted by reference to the special considerations which attach to State bodies in relation to their management and operation.
My audit is carried out in accordance with the International Standards on Auditing (UK and Ireland) and in compliance with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of audit of the administration account
An audit involves obtaining evidence about the amounts and disclosures in the administration account, sufficient to give reasonable assurance that the administration account is free from material misstatement, whether caused by fraud or error. This includes an assessment of
- whether the accounting policies are appropriate to the Agency’s circumstances, and have been consistently applied and adequately disclosed.
- the reasonableness of significant accounting estimates made in the preparation of the account, and
- the overall presentation of the account.
I also seek to obtain evidence about the regularity of financial transactions in the course of audit.
In addition, I read the Agency’s annual report to identify material inconsistencies with the audited administration account. If I become aware of any apparent material misstatements or inconsistencies, I consider the implications for my report.
Opinion on the administration account
In my opinion, the administration account, which has been properly prepared in accordance with generally accepted accounting practice in Ireland, gives a true and fair view of the state of the Agency’s affairs at 31 December 2014 and of its income and expenditure for 2014.
In my opinion, proper books of account have been kept by the Agency. The administration account is in agreement with the books of account.
Matters on which I report by exception
I report by exception if
- I have not received all the information and explanations I required for my audit, or
- my audit noted any material instance where public money has not been applied for the purposes intended or where the transactions did not conform to the authorities governing them, or
- the information given in the Agency’s annual report is not consistent with the related administration account, or
- the statement on internal financial control does not reflect the Agency’s compliance with the Code of Practice for the Governance of State Bodies, or
- I find there are other material matters relating to the manner in which public business has been conducted.
I have nothing to report in regard to those matters upon which reporting is by exception.
Seamus McCarthy
Comptroller and Auditor General
16 June 2015
Accounting Policies
(a) Background
The National Treasury Management Agency (the “Agency”) is a statutory body established under the National Treasury Management Agency Act, 1990. The Agency operates to provide asset and liability management services to Government. Businesses managed by the Agency include borrowing for the Exchequer and management of the National Debt, the Ireland Strategic Investment Fund (“ISIF”), the National Development Finance Agency (“NDFA”), NewERA and the State Claims Agency (“SCA”). The Agency also assigns staff to the National Asset Management Agency (“NAMA”) and to the Strategic Banking Corporation of Ireland (“SBCI”) and provides them with business support services and systems.
There were significant changes in the Agency’s governance structure and statutory remit in 2014. Previously, the Agency did not have a board structure and the Chief Executive reported directly to the Minister for Finance on the Agency’s funding and debt management, SCA and NewERA functions. The Agency’s governing legislation also provided for an Advisory Committee and a State Claims Policy Committee. The National Pensions Reserve Fund (“NPRF”), NDFA and NAMA were established as statutory bodies under their own governing legislation. The SBCI was established in September 2014 as a private limited company in order to perform certain statutory functions. Each of these bodies had their own board. The Agency acted as the executive in respect of the NPRF and the NDFA. It assigns staff to NAMA and the SBCI and also provides them with business and support services and systems.
The National Treasury Management Agency (Amendment) Act 2014 (the “Act”) streamlined and simplified the Agency’s governance structures to enable a more integrated approach to the performance of its functions. On 22 December 2014 the Agency was reconstituted as a body with a Chairperson and eight other members reporting to the Minister for Finance with over-arching responsibility for all of the Agency’s functions (excluding NAMA and the SBCI which will continue to have their own separate boards).
The Advisory Committee and State Claims Policy Committee were dissolved on 22 December 2014. The NPRF Commission was reduced to one member (the NTMA Chief Executive) on that date pending the transfer of all of the NPRF’s assets to the ISIF when it too will be dissolved. The NDFA was dissolved on 27 January 2015.
(b) Reporting Currency
The reporting currency is the euro, which is denoted by the symbol €.
(c) Basis of Accounting
The financial statements have been prepared on an accruals basis under the historical cost convention. The form of the financial statements has been approved by the Minister for Finance under section 12 of the National Treasury Management Agency Act, 1990 as amended.
(d) Fixed Assets and Depreciation
Fixed assets are stated at cost less accumulated depreciation. Fixed assets are depreciated by annual instalments over their estimated useful lives.
(e) Leasing
Rentals under operating leases are charged to the Income and Expenditure Account on an accruals basis.
(f) Pensions
The Agency operates a defined benefit pension scheme, and for staff who choose not to join the scheme it makes contributions to Personal Retirement Savings Accounts (“PRSA”). Contributions are funded out of the Agency’s administration budget.
The defined benefit pension scheme costs are accounted for under FRS 17. Pension scheme assets are measured at fair value. Pension scheme liabilities are measured on an actuarial basis using the projected unit method. An excess of scheme liabilities over scheme assets is presented on the Balance Sheet as a liability. Deferred pension funding represents the corresponding asset to be recovered in future periods from the Central Fund.
The defined benefit pension charge in the Income and Expenditure Account comprises the current service cost and past service cost plus the difference between the expected return on scheme assets and the interest cost on the scheme liabilities. An amount corresponding to the pension charge is recognised as income recoverable from the Central Fund in future periods.
Actuarial gains and losses arising from changes in actuarial assumptions and from experience are recognised in the Statement of Total Recognised Gains and Losses for the year in which they occur and a corresponding adjustment is recognised in the amount recoverable from the Central Fund.
The cost of contributions by the Agency to PRSAs is recognised as a charge to the Administration Account in the financial year to which the employee service relates.
(g) Software
Computer software costs are charged to the Income and Expenditure Account in the period in which they are incurred.
(h) Capital Account
The capital account represents receipts from the Central Fund which have been allocated for the purchase of fixed assets. The receipts are amortised in line with depreciation on the related fixed assets.
Income and Expenditure Account
Year ended 31 December
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Income |
|||
|
Central Fund Income |
1(a) |
43,262 |
41,915 |
|
Other Income |
2 |
55,501 |
41,847 |
|
Net Deferred Pension Funding |
4(a) |
720 |
1,049 |
|
Transfer from Capital Account |
9 |
224 |
47 |
|
99,707 |
84,858 |
||
|
Expenditure |
|||
|
Agency Costs |
3(a) |
(99,707) |
(84,858) |
|
Net Income/(Expenditure) |
– |
– |
Statement of Total Recognised Gains and Losses
Year ended 31 December
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Actuarial loss recognised on Pension Liabilities |
5(f) |
(21,268) |
(1,630) |
|
Movement in Deferred Pension Funding |
4(b) |
21,268 |
1,630 |
|
Total Recognised (Loss)\Gain |
– |
– |
Notes 1 to 14 form part of these financial statements.
Conor O’Kelly, Chief Executive
National Treasury Management Agency
Willie Walsh, Chairperson
National Treasury Management Agency
15 June 2015
Balance Sheet
31 December
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Fixed Assets |
|||
|
Fixed Assets |
6 |
2,978 |
3,202 |
|
Current Assets |
|||
|
Debtors |
7 |
5,636 |
9,130 |
|
Cash at Bank and in Hand |
1,009 |
3,180 |
|
|
Total Current Assets |
6,645 |
12,310 |
|
|
Current Liabilities |
|||
|
Creditors |
8 |
(6,645) |
(12,310) |
|
Current Assets less Current Liabilities |
– |
– |
|
|
Total Assets less Current Liabilities before Pensions |
2,978 |
3,202 |
|
|
Deferred Pension Funding |
5(d) |
25,537 |
3,549 |
|
Pension Liability |
5(d) |
(25,537) |
(3,549) |
|
– |
– |
||
|
Total Assets less Current Liabilities |
2,978 |
3,202 |
|
|
Representing: |
|||
|
Capital Account |
9 |
2,978 |
3,202 |
Notes 1 to 14 form part of these financial statements.
Conor O’Kelly, Chief Executive
National Treasury Management Agency
Willie Walsh, Chairperson
National Treasury Management Agency
15 June 2015
Notes to the Financial Statements
1. Central Fund Income
(a) The Central Fund operates on a receipts and payments basis whereas these financial statements have been prepared on an accruals basis. The following table sets out the reconciling items:
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Opening balance at 1 January |
5,442 |
9,419 |
|
|
Net amounts received from Central Fund |
37,905 |
37,938 |
|
|
Closing balance at 31 December |
8 |
(85) |
(5,442) |
|
Central Fund Receivable for year |
43,262 |
41,915 |
(b) The total amount recognised as (payable to)/recoverable from the Central Fund is:
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Payable to the Central Fund |
8 |
(85) |
(5,442) |
|
Deferred pension funding |
5(d) |
25,537 |
3,549 |
|
25,452 |
(1,893) |
2. Other Income
|
2014 |
2013 |
|
|
€000 |
€000 |
|
|
Recovery of Expenses from NAMA |
53,838 |
40,768 |
|
Recovery of expenses from SBCI |
676 |
– |
|
Recovery of expenses from ISIF |
182 |
– |
|
Other Income |
415 |
237 |
|
Asset Covered Securities income |
390 |
811 |
|
Recovery of Expenses from Covered Credit Institutions |
– |
31 |
|
55,501 |
41,847 |
The Agency is required to provide business and support services and systems in addition to assigning staff to a number of functions under prescribed legislation as follows:
- To NAMA under sections 41 and 42 of the National Asset Management Agency Act 2009. The cost of these services for the year ended 31 December 2014 was €53.8m (2013: €40.8m).
- To the SBCI under section 10 of the Strategic Banking Corporation of Ireland Act 2014. The cost of these services for the year ended 31 December 2014 was €0.7m (2013: Nil).
In addition, under section 48 of the National Treasury Management Agency (Amendment) Act 2014, the expenses of the Agency with regard to the ISIF are defrayed from the ISIF.
Asset Covered Securities are issued under the Asset Covered Securities Act, 2001 as amended by the Asset Covered Securities (Amendment) Act 2007. The Act (as amended) provides that in the event of a default by a bank registered as a designated mortgage credit institution or as a designated public credit institution under the Act (as amended), the Agency must in the following order, (i) attempt to secure an alternative service provider to manage the relevant asset pools, (ii) secure an appropriate body corporate to become the parent entity of the relevant pools or, (iii) manage the pools itself. In return, the Agency receives asset covered securities income based on the nominal amount of each asset covered bond in issue.
No professional fees were recovered in 2014 (2013: €0.03m) relating to banking system functions.
Other income primarily comprises an annual service fee charged to the Housing Finance Agency for borrowing on its behalf under a Commercial Paper Programme. In 2014 it also includes the recovery of certain secondment, administrative and professional fees.
3. Agency Costs
| (a) Agency Costs |
2014 |
2013 |
|
|
Note |
€000 |
€000 |
|
|
Employment Costs |
71,387 |
57,831 |
|
|
Operating Expenses |
13,781 |
13,371 |
|
|
Defined Benefit Annual Pension Cost |
5(e) |
9,280 |
6,617 |
|
Professional Fees |
3,829 |
5,803 |
|
|
Depreciation |
6 |
1,384 |
1,088 |
|
PRSA Pension Costs |
3(d) |
46 |
148 |
|
Total Expenses |
99,707 |
84,858 |
Employment costs include remuneration and other staff related costs. Operating expenses include technology costs, occupancy costs, business services costs and staff travel expenses.
Under the direction issued to the Agency under Statutory Instrument (S.I.) No. 115 of 2010, the Minister for Finance delegated a number of banking system functions to the Agency. This delegation was revoked with effect from 5 August 2011 under S.I. No. 395 of 2011 and since then Agency staff have been seconded to the Department of Finance. At the direction of the Minister, the staff costs where incurred and professional adviser costs continue to be met by the Agency. No professional adviser costs were incurred in this regard during 2014 (2013: €2.1m).
| (b) Expenses of the Agency for Specified Functions |
2014 €m |
2013 €m |
|
National Asset Management Agency |
53.8 |
40.8 |
|
State Claims Agency |
13.5 |
11.5 |
|
National Development Finance Agency |
8.4 |
7.1 |
|
National Pensions Reserve Fund |
6.2 |
3.9 |
|
Ireland Strategic Investment Fund |
0.2 |
0.0 |
|
Strategic Banking Corporation of Ireland |
0.7 |
0.0 |
(c) Remuneration and Expenses
Advisory Committee and Agency Member Fees
Remuneration of Advisory Committee and Agency members is determined by the Minister for Finance. The Advisory Committee was dissolved on 22 December 2014 and Agency members were appointed on this date. Remuneration of Advisory Committee and Agency members is set out below:
| Advisory Committee |
2014 € |
2013 € |
|
Brendan McDonagh |
21,889 |
22,500 |
|
Tytti Noras |
21,889 |
22,500 |
|
Donald Roth |
21,889 |
22,500 |
|
Advisory Committee Fees |
65,667 |
67,500 |
The Chairperson of the Advisory Committee (Willie Walsh) waived his remuneration for 2013 and 2014.
John Moran (resigned 14 August 2014) and Derek Moran (from 3 September 2014 to 21 December 2014) each served on the Committee in an ex officio capacity as Secretary General of the Department of Finance. They received no remuneration in respect of their membership.
| Agency Member Fees |
2014 € |
|
Maeve Carton |
815 |
|
Brendan McDonagh |
815 |
|
Martin Murphy |
815 |
|
Mary Walsh |
815 |
|
Susan Webb |
815 |
|
Agency Fees |
4,075 |
Remuneration attached to the position of Chairperson is €45,000 per annum and €30,000 for an Ordinary Member. The Chairperson of the Agency (Willie Walsh) waived his remuneration for 2014.
Derek Moran and Robert Watt serve on the Agency in an ex officio capacity as Secretary General of the Department of Finance and the Department of Public Expenditure and Reform respectively. John Corrigan served in an ex officio capacity as Chief Executive of the Agency. They received no remuneration in respect of their membership.
Advisory Committee and Agency Member Expenses
Expenses incurred in respect of Committee members are set out below:
| Committee Member1 |
Travel |
Accommodation & Subsistence |
Total 2014 |
Total 2013 |
|
€ |
€ |
€ |
€ |
|
|
Brendan McDonagh |
15,249 |
2,986 |
18,235 |
19,159 |
|
Tytti Noras |
4,529 |
1,830 |
6,359 |
8,021 |
|
Donald Roth |
34,112 |
3,636 |
37,748 |
21,398 |
|
53,890 |
8,452 |
62,342 |
48,578 |
Advisory Committee members are reimbursed approved expenses on a vouched basis. The 2014 tax payable by the Agency to the Revenue Commissioners in relation to the reimbursed expenses is €59,839 (2013: €29,266).
Agency members incurred no expenses in respect of 2014.
1 Brendan McDonagh lives in Bermuda, Tytti Noras lives in Finland and Donald Roth lives in the USA. Expenses relate to travel and accommodation costs to attend Advisory Committee meetings in the Agency’s offices in Dublin.
| Chief Executive Remuneration |
2014 |
2013 |
|
Salary |
€416,500 |
€416,500 |
|
Taxable benefits |
29,075 |
29,129 |
The Chief Executive’s pension entitlements are within the standard entitlements in the model public sector defined benefit superannuation scheme.
In 2012, the Chief Executive agreed to waive 15 per cent of his salary following a request by the Minister for Finance. The pay reductions provided for in the Financial Emergency Measures in the Public Interest Act 2013, which came into effect from 1 July 2013, apply to the Agency’s staff. Notwithstanding the reductions imposed by this Act, the Chief Executive continued to waive such amount that his annual base salary remained as it was under the original waiver arrangement.
The remuneration of the Chief Executive consisted of basic remuneration, taxable benefits (car and health insurance) and a performance related payment of up to 80 per cent of annual salary. The Chief Executive waived any consideration for performance related pay in respect of 2013 and 2014.
The remuneration details above relate to John Corrigan who retired as Chief Executive on 4 January 2015.
Gardening Leave
18 Agency staff (inclusive of staff assigned to NAMA) were placed on gardening leave during 2014 with an attributable 2014 cost of approximately €0.4m. This does not represent an incremental cost for the Agency but instead forms part of the overall Agency remuneration cost that would have been incurred regardless of the decision to place the relevant staff on gardening leave. The decision on whether or not to place staff on gardening leave is made on a case-by-case basis and would include consideration, inter alia, of the person’s role within the Agency and the person’s new employer. The average period of gardening leave for the 18 staff was for 8.8 weeks.
(d) Superannuation
Superannuation entitlements of staff are conferred under a defined benefit superannuation scheme set up under section 8 of the National Treasury Management Agency Act, 1990. Contributions are transferred to an externally managed fund. The Agency contribution is determined on the advice of an independent actuary. Following an actuarial review at the end of 2013, the Agency contribution was set at a level of 14.2 per cent of salary in respect of members of the Scheme. Contributions to the defined benefit scheme by the Agency for the year ended 31 December 2014 amounted to €8.6m (2013: €5.6m).
Liabilities arising under the defined benefit scheme are provided for under the above arrangements, except for entitlements arising in respect of the service of certain members of the Agency’s staff recruited from other areas of the public sector. On 7 April 1997 the Minister for Finance designated the Agency as an approved organisation for the purposes of the Public Sector (Transfer of Service) Scheme. This designation provides for, inter alia, contributions to be paid out of the Exchequer, as and when benefits fall due for payment in the normal course, in respect of prior service of former civil servants employed by the Agency. No provision has been made for funding the payment of such entitlements.
The Agency also contributed €46,416 (2013: €147,791) to PRSAs for a number of employees who are not members of the defined benefit scheme in 2014.
4. Net Deferred Pension Funding
| (a) Net Deferred Pension Reserve Funding in respect of the Year |
2014 |
2013 |
|
|
Note |
€000 |
€000 |
|
|
Funding Recoverable in Respect of Current Year Pension Costs |
5(e) |
9,280 |
6,617 |
|
Income Applied To Pay Contributions to Pension Fund |
3(d) |
(8,560) |
(5,568) |
|
Net Deferred Pension Funding |
720 |
1,049 |
| (b) Movement in the Deferred Pension Funding |
2014 |
2013 |
|
|
Note |
€000 |
€000 |
|
|
Movement in amount recoverable in respect of current year actuarial loss |
5(f) |
21,268 |
1,630 |
5. Retirement Benefits
(a) Defined Benefit Pension Scheme
The valuation of the defined benefit scheme used for the purposes of FRS 17 disclosures has been based on data provided by the scheme administrator, Mercer (Ireland) Limited. The valuation has been determined by an independent actuary to take account of the requirements of FRS 17 in order to assess the liabilities at the balance sheet date. Scheme assets are stated at their market value at the balance sheet date.
| (b) Change in the Present Value of Defined Benefit Obligations |
2014 €000 |
2013 €000 |
|
Benefit Obligations at Beginning of Year |
79,490 |
63,254 |
|
Service Cost |
10,651 |
7,616 |
|
Interest Cost |
3,610 |
3,034 |
|
Actuarial Loss |
29,263 |
6,060 |
|
Transfers received / (benefits paid) |
458 |
(344) |
|
Premiums Paid |
(130) |
(130) |
|
Benefit Obligations at End of Year |
123,342 |
79,490 |
| (c) Change in the Fair Value of Scheme Assets |
2014 €000 |
2013 €000 |
|
Fair Value of Scheme Assets at Beginning of Year |
75,941 |
62,384 |
|
Expected Return on Scheme Assets |
3,639 |
2,921 |
|
Actuarial Gain |
7,995 |
4,430 |
|
Employer Contributions |
8,560 |
5,568 |
|
Member Contributions |
1,342 |
1,112 |
|
Transfers received / (benefits paid) |
458 |
(344) |
|
Premiums Paid |
(130) |
(130) |
|
Fair value of Scheme Assets at End of Year |
97,805 |
75,941 |
|
Scheme assets |
% |
% |
|
The Asset Allocations at the Year End were as Follows: |
||
|
Equities |
51.01 |
51.20 |
|
Debt securities |
34.33 |
34.31 |
|
Property |
4.30 |
4.19 |
|
Alternatives |
9.87 |
9.93 |
|
Cash |
0.49 |
0.37 |
|
100.00 |
100.00 |
To develop the assumption for the expected long-term rate of return on assets, consideration was given to the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the actual asset allocation to develop the assumption for the expected long-term rate of return on assets for the portfolio.
|
2014 €000 |
2013 €000 |
|
|
Actual Return on Scheme Assets |
11,634 |
7,351 |
| (d) Scheme Surplus/(Deficit) |
2014 €000 |
2013 €000 |
|
Fair Value of Scheme Assets |
97,805 |
75,941 |
|
Present Value of Funded Obligations |
(123,342) |
(79,490) |
|
Deficit at year end |
(25,537) |
(3,549) |
|
Amounts in the Balance Sheet |
||
|
Deferred Pension Funding |
25,537 |
3,549 |
|
Pension Liability |
(25,537) |
(3,549) |
(e) Components of Pension Expense
The amount recognised in the Income and Expenditure Account is as follows:
|
2014 |
2013 |
||
|
Note |
€000 |
€000 |
|
|
Total Service Cost |
10,651 |
7,616 |
|
|
Less Employee Contributions |
(1,342) |
(1,112) |
|
|
Employer Current Service Cost |
9,309 |
6,504 |
|
|
Interest Cost |
3,610 |
3,034 |
|
|
Expected Return on Scheme Assets |
(3,639) |
(2,921) |
|
|
Income and Expenditure Charge |
3(a) |
9,280 |
6,617 |
(f) Actuarial gain/(loss)
The actuarial recognised in the statement of total recognised gains and losses is as follows:
|
2014 €000 |
2013 €000 |
|
|
Actuarial Loss on Scheme Obligations |
(29,263) |
(6,060) |
|
Actuarial Gain on Scheme Assets |
7,995 |
4,430 |
|
Actuarial Loss on Scheme Liabilities |
(21,268) |
(1,630) |
(g) Principal Actuarial Assumptions
The principal actuarial assumptions used were as follows:
|
2014 % |
2013 % |
|
|
Weighted average assumptions used to determine benefit obligations: |
||
|
Discount rate |
2.30 |
4.00 |
|
Rate of salary increase |
2.50 |
3.00 |
|
Rate of price inflation |
1.50 |
2.00 |
|
Rate of pension increase |
1.50/2.50 |
2.00/3.00 |
|
Weighted average assumptions used to determine pension expense: |
||
|
Discount rate |
4.00 |
4.30 |
|
Expected long-term return on scheme assets |
4.49 |
4.46 |
|
Rate of salary increase |
3.00 |
3.00 |
|
Rate of price inflation |
2.00 |
2.00 |
|
Rate of pension increase |
2.00/3.00 |
2.00/3.00 |
|
Years |
Years |
|
|
Weighted average life expectancy at age 60 for mortality tables used |
||
|
Future Pensioners |
||
|
– Male (current age 45) |
30.6 |
30.5 |
|
– Female (current age 45) |
31.7 |
31.6 |
|
Current Pensioners |
||
|
– Male (current age 60) |
28.7 |
28.6 |
|
– Female (current age 60) |
30.1 |
30.0 |
|
Weighted average life expectancy at age 65 for mortality tables used |
||
|
Future Pensioners |
||
|
– Male (current age 45) |
26.1 |
26.0 |
|
– Female (current age 45) |
27.1 |
27.0 |
|
Current Pensioners |
||
|
– Male (current age 65) |
23.7 |
23.5 |
|
– Female (current age 65) |
25.0 |
24.9 |
|
Expected return on assets by asset allocation: |
% |
% |
|
Equity securities |
5.30 |
6.50 |
|
Debt securities |
1.80 |
3.00 |
|
Property |
4.30 |
5.50 |
|
Cash |
0.00 |
1.00 |
|
Alternatives |
5.30 |
6.50 |
|
Weighted average return based on asset allocation |
3.88 |
4.49 |
The estimated pension expense for the year ended 31 December 2015 is €16.308m (2014: €8.871m).
| (h) History of Defined Benefit Obligations, Assets and Experience Gains and Losses |
2014 €000 |
2013 €000 |
2012 €000 |
2011 €000 |
2010 €000 |
|
Defined Benefit Obligation |
123,342 |
79,490 |
63,254 |
52,560 |
42,829 |
|
Fair Value of Scheme Assets |
97,805 |
75,941 |
62,384 |
49,223 |
44,492 |
|
Deficit/(Surplus) |
25,537 |
3,549 |
870 |
3,337 |
(1,663) |
|
Difference between Expected and Actual Return on Scheme Assets: |
|||||
|
Amount |
(7,995) |
(4,430) |
(5,626) |
3,528 |
224 |
|
Expressed as a % of Scheme Assets |
(8.17%) |
(5.83%) |
(9.02%) |
7.17% |
0.50% |
|
Experience (Gain)/Losses on Scheme Liabilities: |
|||||
|
Amount |
(1,791) |
532 |
(1,128) |
(821) |
(1,814) |
|
Expressed as a % of Scheme Liabilities |
(1.45%) |
0.67% |
(1.78%) |
(1.56%) |
(4.24%) |
6. Fixed Assets
|
Leasehold improvements |
Furniture, Equipment & Motor Vehicles | Total | |
|
|
€000 |
€000 |
€000 |
|
Cost: |
|||
|
Opening Balance at 1 January 2014 |
2,818 |
7,966 |
10,784 |
|
Additions at Cost |
462 |
732 |
1,194 |
|
Disposals |
– |
(1,417) |
(1,417) |
|
Balance at 31 December 2014 |
3,280 |
7,281 |
10,561 |
|
Accumulated Depreciation: |
|||
|
Opening Balance at 1 January 2014 |
1,464 |
6,118 |
7,582 |
|
Depreciation for the year |
449 |
935 |
1,384 |
|
Disposals1 |
– |
(1,383) |
(1,383) |
|
Balance at 31 December 2014 |
1,913 |
5,670 |
7,583 |
|
Net Book Value at 31 December 2014 |
1,367 |
1,611 |
2,978 |
|
Net Book Value at 31 December 2013 |
1,354 |
1,848 |
3,202 |
1Disposals include €1.1m relating to the retirement of IT and Office Equipment which had a zero net book value.
The estimated useful life of fixed assets by reference to which depreciation is calculated is as follows:
| Leasehold Improvements | 10 years |
| Equipment & Motor Vehicles | 3 to 5 years |
| Furniture | 10 years |
The estimated useful life of leasehold improvements was reduced from 20 years in 2013 to 10 years in 2014. This resulted in an additional depreciation charge of €0.3m in 2014.
The capitalised leasehold costs relate to the fit-out costs of the office space occupied by the Agency. The property is leased under long-term leases, as referred to in Note 10.
7. Debtors
|
2014 €000 |
2013 €000 |
|
|
Amounts Receivable from NAMA |
1,344 |
5,351 |
|
Amounts receivable from ISIF |
182 |
– |
|
Amounts receivable from SBCI |
676 |
– |
|
Other Debtors |
2,107 |
2,315 |
|
Prepayments |
1,327 |
1,464 |
|
5,636 |
9,130 |
Other debtors primarily comprise reimbursements due from the State Claims Agency, Asset Covered Securities income and income due from the Housing Finance Agency.
8. Creditors
|
2014 €000 |
2013 €000 |
|
|
Central Fund |
85 |
5,442 |
|
Creditors |
2,840 |
3,524 |
|
Deferred Income |
1,094 |
1,563 |
|
Accruals |
2,626 |
1,781 |
|
6,645 |
12,310 |
Deferred Income relates to a reverse premium on rental payments that will be credited to the Income and Expenditure Account on an annual basis in the period to April 2017 (Note 10).
9. Capital Account
|
|
|
|
2014 €000 |
2013 €000 |
|
Opening Balance |
3,202 |
3,249 |
||
|
Transfer to Income and Expenditure Account |
||||
|
Asset Funding |
||||
|
– Fixed Assets |
1,194 |
|||
|
Capital Funding |
||||
|
– Amortisation in Line with Depreciation |
(1,384) |
|||
|
– Net amount Released on Asset Disposal |
(34) |
(1,418) |
(224) |
(47) |
|
Closing Balance |
2,978 |
3,202 |
10. Commitments
In 1991, 2007 and 2012, the Agency entered into lease agreements of varying duration until 2017, 2026 and 2027, in respect of office accommodation at Treasury Building, Grand Canal Street, Dublin 2.
The gross annual rental cost under these operating leases is €2.8m, excluding a reverse premium of €0.5m per annum relating to deferred income included in Note 8.
The nominal future minimum lease payments are set out in the following table:
| Operating leases |
Less than |
1-5 years €000 |
More than 5 years €000 |
Total €000 |
|
31 December 2014 |
2,828 |
8,457 |
12,104 |
23,389 |
|
31 December 2013 |
2,828 |
9,527 |
13,861 |
26,216 |
11. Contingent Liabilities
The Agency had no contingent liabilities at 31 December 2014.
12. Related Parties
Minister for Finance
The Minister for Finance appoints six members of the Agency in accordance with section 3A of the National Treasury Management Agency Act, 1990, as amended.
National Asset Management Agency
In accordance with sections 41 and 42 of the National Asset Management Agency Act 2009, the Agency provides business and support services and systems in addition to assigning staff to NAMA.
The recovery of expenses from NAMA is detailed in note 2.
Strategic Banking Corporation of Ireland
In accordance with section 10 of the Strategic Banking Corporation of Ireland Act 2014, the Agency provides business and support services and systems in addition to assigning staff to the SBCI. The recovery of expenses from the SBCI is detailed in note 2.
Ireland Strategic Investment Fund
In accordance with section 41 of the National Treasury Management Agency (Amendment) Act 2014, the ISIF is controlled and managed by the Agency. Under section 48 of the Act, the expenses of the Agency in the performance of its functions relating to the ISIF are defrayed from the ISIF. The recovery of expenses from the ISIF is detailed in note 2.
National Pensions Reserve Fund
In accordance with section 21 of the National Pensions Reserve Fund Act, 2000, the Agency is manager of the NPRF.
National Development Finance Agency
In accordance with section 11 of the National Development Finance Agency Act, 2002, the NDFA performed its functions through the Agency.
13. Events since the Balance Sheet Date
Under the provisions of the National Treasury Management Agency (Amendment) Act 2014, as commenced by S.I. 22 of 2015, the NDFA was dissolved on 27 January 2015. On this date the relevant statutory functions were given to the Agency and all property, rights and liabilities of the NDFA were transferred to the Agency.
14. Approval of Financial Statements
The financial statements were approved by the Agency on 26 May 2015.