How we invest

NILGOSC aims to invest the assets of the Scheme prudently to ensure that the benefits promised to members are provided, and to provide reasonable stability in contribution rates for the employers.

The Regulations require NILGOSC to maintain a fund to provide for the payment of current and prospective benefits to members of the Scheme.

In order to ensure that this objective is achieved, NILGOSC must determine a suitable investment strategy, which provides both a high return on investments and an acceptable level of risk.

All income received by NILGOSC, including employees’ and employers’ contributions, rents, interest and dividends are paid into the Fund. Expenditure, such as monthly pensions, retirement allowances, death grants, refunds and the administration costs of NILGOSC are met from the Fund.

The assets and liabilities of the Fund are valued every three years by the Scheme actuary. Following each valuation, the actuary certifies the employers’ contribution rates to maintain the viability of the Fund.

To meet this aim NILGOSC’s overall investment objective is to exceed price inflation and general salary growth over long term periods.

The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services. The annual percentage change in CPI is used as a measure of inflation and to index (i.e. adjust for the effect of inflation) the real value of wages, salaries and pensions to show changes in real values. NILGOSC’s actuarial valuation as at 31 March 2019 assumes a prudent investment return of 4.1% for the main group of employers, which is equivalent to CPI +2.1%. NILGOSC’s overall investment target changed on 1 April 2018 in line with the new investment strategy adopted. From that date the overall investment target is to exceed CPI by 3.5% per annum, to be measured over three and five year periods.

Each fund manager has been set an individual performance target using indices applicable to the asset type and geographic market. The Committee monitors the performance of its investment managers by availing of Northern Trust’s performance measurement and reporting facility.