A charity’s moral compass and its commitment to transparency, effective governance and ethical work practices is often referred to in the voluntary sector. From my experience one such charity failing spectacularly is Royal Voluntary Service (formerly WRVS) which claims to be ‘together for older people.’ It uses a large resource of about 40,000 volunteers to help run its hospital, food and community services. In 2011 the charity caused an angry backlash in Scotland after ordering volunteers to stop selling the Poppy Appeal in hospital shops, only backing down when the Daily Record made enquiries. In 2009 security guards escorted a hospital café volunteer off the premises over a showdown on snacks, bosses threatening her with suspension. Four volunteers resigned in 2011 after discovering the Chief Executive received £150,000 salary. Year end accounts showed 11 paid staff earned between £60 – £70,000, 1 between £70 – £80,000, 3 between £90-£100,000. Contributions into a money purchase pension scheme were paid in respect of higher paid employees.
Its total expenditure year ending March 2013 of £77,183,000 was considerable as was its income of £73,217,000, which included £3,261,000 (£3,168,000 – 2012) from the Ministry of Defence to manage WRVS Services Welfare, my former employer and the charity’s subsidiary company providing recreational and welfare support to about 20 army bases in the UK, Germany, Cyprus, Northern Ireland and (1) Canada, including its management fee and funding defined pension benefit contributions. The pension scheme closed in 2000. It was running a deficit and in 2002 the company entered into a deficit reduction plan with the Ministry of Defence for additional contributions payable until 2012 to a Buy Out basis. Nominated as member trustee in 2007, I found the scheme poorly managed, benefit payments in disarray, governance knowledge lacking, trustee training sparse and resentment of the member trustee clearly evident http://www.pensions-ombudsman.org.uk – (Decisions/WRVS)
(1) The charity’s Reports & Accounts 2011/12 claim to use the 2008 Actuarial Valuation to show the value of scheme assets as £3,997,000 – 92% of liabilities on a *Minimum Funding Requirement after allowing for assured future benefit increases and reports that its agreement with the Ministry of Defence is to provide Services Welfare Ltd with sufficient resources to ensure the scheme is 100% funded on a Minimum Funding basis by 31st July 2015. *MFR was abolished by the Pensions Act 2004 and replaced in 2005 with the Statutory Funding Requirement as the Reports & Accounts should have made clear. The asset figure shown is also incorrect and relates to the previous valuation carried out in March 2005 – 80% of liabilities on a Continuing Valuation basis.
(2) The 2008 Actuarial Valuation in fact shows the value of assets to be £5,151,000 on a Continuing Valuation. The figures are confirmed by the members’ annual Summary Funding Statement following the 2011 Actuarial Valuation showing assets values over the two valuations as £6,179,000 (£5,151,000 – 2008), liabilities £4,878,000 (£5,176,000 – 2008), surplus/(deficit) £1,841,000 ((£25,000)) – 2008), funding level 138% (100% – 2008). It additionally told members the ‘new (additional) contributions were not essential but had been beneficial during a period of volatile market conditions.’ As a legal requirement it also informed members that if the scheme had wound up as at 31st March 2011, the estimated cost to secure all benefits by means of insurance policies would have been £780,000 less than the assets available. Membership stood at just 28 deferred pensioners and 53 pensioners, a very small scheme indeed.
(3) The Report quotes the valuation using various assumptions, in particular 5% in relation to pre-retirement and post retirement rates of interest and increases for pension in payment, seeming to boost its liabilities. In fact these were revalued at retail price index up to 5%, and only those pensions earned before April 1997 earned annual increases at 5%, others thereafter at RPI.
In 2010 a scheme lawyer was appointed. Subsequent concern at the over legalization of trustees meetings, threats, minutes being altered, discussion of the use of an escrow arrangement for reducing employer tax implications on surpluses, failures of consultation, and discussion of the deficit reduction agreement being extended to 2015, meant referral to the Pensions Regulator. I then discovered the lawyer had corresponded with it under legal professional privilege resulting in being asked whether I could work with the board. It further advised ‘it was reassured the winding up process was being addressed properly.’ The Information Commissioner’s subsequent data protection findings concluded it had failed to fully comply with an access request, and provided insufficient evidence for application of LPP though accepted certain regulatory exemptions. The redacted copy letter showed evidence of attempts to smear and undermine. Contacting the Ministry of Defence over the question of fairness in members’ benefits led to removal from the trustee board in July 2012.
(4) The scheme moved to buy in with Legal & General in June 2012, meaning it remained an investment asset of the company and showing healthy asset and solvency values with the expectation of proceeding towards full buy out within an appropriate period. The actuarial update March 31st 2013 fair valued assets at £5,482,000 (£6,830,000 – 2012), liabilities at £5,384,000 (£5,078,000 – 2012), surplus £98,000 (£1,752,000 – 2012), actuarial losses £1,692,000 (£84,000 – 2012), Ministry of Defence funding £1,692,000 (£84,000 – 2012), therefore showing asset levels returning to around those of 2008.
How the group explains away the fragmented performance of the scheme is a good question. It continues to employ buy out consultants, legal advisers, investment advisers, actuaries and bankers. The last communication with members was in October 2012 meaning no updated information for them. It shows itself not so much together for older people as incompetent and creative at their expense. Only a large and powerful charity with its sight on self preservation at all cost could make such a spectacle of managing a publicly funded asset on behalf of its small contingent of member clients whilst continuing to exude the aura, and the straight face of an ethical charity.
A personal guest article by Gillian Burrows, April 2014.