 Gwennodd, i ni gyd yn gwybod i'r ddefnyddio'r gweithio iawn i ddefnyddio'r syniadau a unigol dyfa am y beth sydd yn spookf yn ei gael. Felly i'n gwybod i'n gwybod i'r ddefnyddio, ikrwm iawn i'n gwybod i'r ddefnyddio syniadau, i gael y ffónghwyl, yn rhoi'r cyfarfod i'r gwybod i mewn effaith o'r ddefnyddio a unigol syniadau, a i gael, i ddefnyddio ysglaw'r d Coconut a unigol i'r ddefnyddio syniadau i llyfiadau'r gweithio. and duty fund. Simon McIntosh, WS Collector for the Writers to the Signate Dependence and Duty Fund, and Christine O'Neill, partner of Brody's LLP. Ms Docherty, I understand you have a short opening statement to make on behalf of the promoters. Thank you very much and thank you for the opportunity to allow us to answer questions at any points which the committee has about the bill. I appreciate that you've received briefing information, but I thought it would be helpful if I was to add some explanation as to who we are, as in the organisations we represent. As you've mentioned, I'm Caroline Docherty. I'm deputy keeper to the Signate. That means that I'm effectively the president of the society known as the Society of Writers to Her Majesty's Signate, known as the WS Society. In that capacity, I chair the board of trustees of the WS Dependence and Duty Fund. As you've mentioned, Simon McIntosh is Collector, in other words, administrator of that fund. First, what is our writer to the signate? Originally, writers to the signate were exactly that. They were those who were able to write and were particularly trusted and undertook work on behalf of the Crown. The first recorded use of the signate, in other words, the seal of the king, was in 1369. In 1532, when James V established the system that we know today and the Court of Session came into being, writers to the signate were included as members of the College of Justice. Eventually, those trusted clerks became what are now solicitors and the WS Society is the professional body for writers to the signate. In fact, we are probably the oldest professional body in the world, which is quite a distinction for a relatively small group of Scottish lawyers. What is the relevance of this history today? With the introduction of the Law Society of Scotland in 1949, the regulatory role that the WS Society had ceased. We had to develop our modern purposes, ensuring that the society has relevance that will allow us to continue into the future by being of interest to young lawyers. I believe that we have been successful in doing that. The WS Society continues to grow. We are now a society of around 1,000 lawyers. Over 100 new writers to the signate have been welcomed in the last three years. They reflect the make-up of the Solicitor profession in Scotland now more generally in terms of gender and ethnic background. The society now includes student members, affiliate members, as well as writers to the signate, and therefore includes all age ranges from law students to our most senior retired member, who is over 100 years old. What does the society do? We provide legal training, support in the form of library services, both electronically and traditional paper format. We also provide research and drafting services for our members and our other lawyers. The Society owns the iconic signate library on Parliament Square, and maintenance of that building and its historic and valuable treasures has become an important part of our purposes. In recent years, we have opened up the building more generally to the public. Colonnades is an award-winning destination for afternoon tea, and we are building a series of cultural events open to the public, lectures, discussions, exhibitions and performances called new enlightenment. All of that, combined with the history that I have referred to, the fact that becoming a WS still requires taking an oath before an officer of state, the keeper of the signate, currently Lord Mackay of Clash Fern. That makes the society attractive to some lawyers, those who are interested in what we represent and the focus on high standards in legal services, which we promote through our purposes. Finally, I have explained what writers to the signate and the WS society are, so that brings me briefly to the separate and distinct body, which is the subject of this bill, the WS dependence and utility fund. Historically, the WS society looked after writers to the signate and their widows, who might have fallen on hard times by ad hoc charitable donations. In 1803, that was formalised when the original WS widows fund was started up. All WS at that time, of course, were men. That was to provide benefits to the widows of deceased writers to the signate. Over the years, the fund was changed so that it was widened to provide support for orphans and other dependents as well, and then later to take account of the fact that women were becoming writers to the signate from 1976, and then more recently to provide benefits for the civil partners of deceased contributors to the fund. Until 1989, membership of the WS society brought with it membership of the dependence and utility fund, and it was seen as one of the benefits of being a writer to the signate that you contributed to this fund. However, in 1989, in large part due to changes in the tax regime, which meant that the fund would become a less attractive proposition for new members contributing to it, the fund was closed to new members at that point. Since that date, membership of the WS society has continued to grow, as I mentioned, but those who have become WS since that date are not contributors to the fund. Equally, not all of the contributors remain writers to the signate, some have resigned their commission, so the two bodies are separate in that respect. Clearly, while the society's membership is growing, the contributors to the fund are inevitably ageing. There are now no contributors to the fund who are younger than their early 50s, and the oldest is over 100. The trustee's aim is to ensure that the funds held by the dependence and utility fund are administered in such a way that annuities, annual payments, will continue to be made to the widows and widowers of the contributors to the fund until the death of the last of them. That has to be done in a way that represents fairness between the generations, so that the last surviving widows or widowers do not receive a disproportionate payment. That is an explanation that I hope has been helpful in providing some background, and we are happy to answer questions. Thank you. If I could now move on to questions, I would like to just say that, in addition to the 141 annuitants, how many potential annuitants are there? Do you have a rough idea? There are present 538 contributors. Most of those will have a surviving spouse, but not all of them, so there are over 500 potential annuitants. How long is it estimated that the fund will pay annuities? In a way, the life of the fund depends on the life of contributors and when the last contributor dies leaving a surviving spouse. We have some projections from actuaries that suggest that it could be well into the 2040s anyway. Then, when the last annuitant is identified, it is a question of how long he or she survives their spouse. What would happen if any residual moneys in the fund, after all the dependence have died? I think that, due to the purpose or the aim that I mentioned that the fund has, that that will not happen, so that the trustees will have to find a strategy that means that that will not happen. The most likely end game for the fund is that, at some point in the future, a product will be bought from an insurance company using the remaining funds. It is putting it simplistically, but that would then provide annuities for the remaining annuitants to avoid what you have just described. Okay, thank you. Could I now ask Tom to come in, if you have some questions? Thank you, convener, and good morning, panel. I just wonder if you could perhaps expand and unpack some of the reasons for the decision to close the fund to new contributors in 1989. I think that none of us were directly involved at that point, but as Caroline Doherty has said, there were changes to the tax regime in 1988, particularly to the taxation of personal pensions and the introduction of the new personal pensions regime, which made for anybody new joining the scheme it rather less attractive to save in this way. The then contributors decided to close the fund to new contributors at that point, but, as I understand it, it was to do with changes to the tax regime under the 1988 Income and Cooperation Taxes Act. Thank you, and good morning. I wanted to ask for a bit more information about the definition of a naturally, because section 1.1 of the bill would modernise the definition of a naturally. Actuary is a fellow of the Faculty of Actuaries in Scotland, or a fellow of the Institute of Actuaries. I understand that those two organisations merged in 2011, and that is reflected in the proposed definition. I just wonder if you could explain in a bit more detail whether the existing definition has caused any difficulties since those two organisations merged, and if any views have been sought from either the institute or the faculty on your proposals? I think that it is fair to say that there have been no difficulties, and it is more from our tidying up exercise, recognising that that change that you have mentioned has taken place. We wanted to tidy up the wording to reflect that new organisation, rather than it being because of any difficulties. Just to add to that my advice to the promoters would be that, as a matter of law, the change to the definition would not be required, and that if there was ever any difficulty around the existing definition, a court would interpret it to include the new definition post-merger. A court would take a pragmatic and sensible approach to the old definition, but, as Caroline has indicated, it is a tidying up exercise. I should say that I have spoken informally to the Institute and Faculty of Actuaries about the change, and, in due course, if the bill proceeds to the next stage, they have suggested that they might wish to see a further additional concept of something that would be called a fellow of the Institute and Faculty of Actuaries, which will be their new title going forward, and therefore there would be a further degree of future proofing achieved by the bill. So, anything that was changed in this bill would completely match whatever the Faculty of Institute decided to do. In general terms, I would like to ask whether the role and function of the collector, what happens with that and how onerous is it? As Caroline said in her introduction, I am the administrator of the fund. That involves liaising closely with the deputy keeper as chair of the trustees and with the six other trustees. I have to maintain good relationships with the collectors and annuitants through regular communications with them and dealing with their phone calls and emails. More specifically, in dealing with the contributors, I need to collect their annual contributions. I have to keep them informed about developments in the fund, for example, the latest actuarial report, which we had a couple of years ago and meetings to do with that. I have to give them notice of the annual general meeting and any other general meetings that are invited to and any informal consultations that the trustees are carrying out. I have to deal with their general inquiries and get notification from them of deaths and marriages, for example. That is really dealing with the contributors and on the annuitant side, twice a year, I pay out the annuity to them and I get their correspondence or if an annuitant dies, I hear from their family and the annuity comes to an end and broadly keep them informed of any developments to do with the fund as well. That is the external side of it. Internally, I keep the fund records, I deal with the banking arrangements, we collect income from the fund managers to fund the annuity payments, we prepare the accounts within my office, we prepare the accounts for the fund each year, have them audited, have them approved by the trustees and sent to the contributors, we also deal with the tax compliance, UK tax compliance, and we also seek tax repayments from other countries under double tax treaty arrangements. That is the compliance side. We are also dealing with the fund managers and receiving reports from them of their transactions that go into our records for the accounts. We deal with the actuary and get their advice and distribute that to the trustees. We are dealing with the auditor of the fund as well so that we deal in the normal way with any audit queries they have and have the accounts finalised. We deal with data protection act registration for the fund and deal with the trustees' meetings. We arrange them, prepare the papers for them, prepare the minutes and deal with follow-up and so on. It is a very broad administration function for the fund. Tom Arthur, would you like to come in at this stage? I think that this brings us nicely to the substantive element of the bill, which is the role of the collector, essentially, or who collector can be. Let me begin by asking. I made reference to all of the changes that occurred in 1989 regarding some of the consequences that would fall with the diminishing pool of contributors. I appreciate one perhaps not at the time, but were there any effects and potentialities anticipated at that time as regards to who could possibly be a collector in the future as a consequence of a diminishing pool? No. I think that it is clear that consideration was not given to it at that time. It was just something that, I suppose, in 1989, it seemed, if it was thought about at all, that it seemed so far in the future. It is simply a reactive element of the changes that occurred in 1988 in addressing an immediate concern as opposed to future proofing, as this bill seeks to do. Absolutely. I think that is clear. I think that in terms of the journey towards introducing this bill, was consideration given to any other courses of action such as reopening the fund or such like? No. I think that— Or even changing the eligibility criteria. I think that it is very much a case that we are where we are. Leaving aside reasons as to why it would remain not tax-efficient to open it up, we have always taken the view that the fund is as it is. There is no push for any other strategy for it. There is no other alternative, given that the current act says that the collector has to be a writer to the circuit, then the only alternative, given what I have explained about the ages, is that we remove the requirement. Finally, I am just very conscious of the rich and long-standing traditions and heritage. I noticed at the end that the collector still has to be an individual and not a company of an organisation. What was the reasoning behind that decision? I think that, again, because—By the way, this came out of feedback that we sought from the current contributors—they felt that the fund is unique and that, as such, because of its origins, they would like to feel that there was always a person responsible, rather than an organisation being appointed. They felt that it was important that that aspect be continued, that there was an element of personal responsibility. They like the feeling that they have always had, which is that there is one person, they know who it is, that they can phone if they feel they need to. I find that interesting because, although the decision to close in 1993 was very much based on efficiencies around tax and so on, that decision has made it perhaps more subjective, if I could say in the motive reasons, but no. If I could just add one point about 1989 and the change that was made and providing for the change that is now being anticipated, I think that one distinction, just to be aware of, is that the closing of the fund was something that was open to the trustees at that time to do in terms of the regulations that they are allowed to make under the current act. It was something that was wholly within the control of the trustees, had they wanted at that stage to make the change that is now being sought, legislation would have been required, so there would have been an extra step, so it would not have been something that they could have done in quite the same way as the closing of the fund was done. Was one just a reflection and a question to Simon Mackintosh. Given the range of obligations that you have within the role, would you, of your opinion, be a professional organisation, would that provide greater flexibility and greater support when one individual could within the role of collector, or do you think that the role of collector is one that can be carried out to require to a level by an individual? I personally do not do all of those things myself. For example, the preparation of the accounts, for example, I rely on professional colleagues within my firm to do that, but the contributors were quite clear that they did want to have an individual there, although they recognise that a number of the functions required the support of a professional firm or professional organisation, and they wish to continue with an individual overall responsible to them as contributors and to the inheritance for the the running of the fund, but they recognise and expect that there will be professional backup, and indeed my predecessor and in fact all my predecessors have been solicitors in private practice with the backup of a profession of their firm behind them. It might be worth just making a supplementary point about late 1980s, early 1990s. In 1994, the actuarial report shows that there were over 800 contributors, and at that point 20 plus years ago they would not have been thinking about running out of potential collectors on that sort of number of contributors, and in the mid 1990s the trustees did commission a report from their then actuaries about various possibilities, including potentially reopening of the fund to new entrants, and they were advised very firmly against that, and they were also advised against merging with another fund or winding up in the near future, and the decision taken then, based on the advice, was to continue, and they thought for 20 plus years, and we are now roughly at the 20 plus year point, and the eventual wind-up date, excuse me, is rather further out than they thought in the mid 1990s, but those possibilities were canvassed at that point. Okay, thank you. Can I bring in Mary Fee at this point? Can I just ask a brief follow-up question from the answer that you gave my colleague Tom Arthur? When you said that they were advised against opening up or merging, was there a specific or particular reason or set of reasons why that advice was given? I can read from the report that the trustees received from Watson Wyatt in July 1996, and on the first possibility of reopening the fund to new entrants, they advised against, for the following principal reasons, first of all, that new entrants would have to go into part 2 of the fund, which would be a tax inefficient way of saving, and it's difficult to see what could be provided through the fund that could not as easily and probably more cheaply be provided through the mechanism of personal pensions, and secondly that contributions would need to rise substantially if the existing fund wasn't to subsidise such new contributors. On merger, they said that it would be difficult to see why the trustees or managers of another fund would be prepared to merge with this fund, i.e. the WS fund, without extracting a significant price in the form of a share of surplus. Very helpful, thank you. Thank you. Out of interest in relation to the election and oversight of the collector, has any thought been given to the updating the regulations following the passage of the bill? Yes, we considered updating the regulations. It is something we have done relatively recently, and I think inevitably there is a possibility that we will need to update the regulations that something obviously we can do within the regular programme of meetings and the annual general meeting of the contributors and so on. If there is need to do that, we would. I am going to go back now to Mary Fee. Can I just continue on the point of the diminishing pool of contributors? It is my understanding that the collector and the elected trustees must be contributors, and they must be elected by the fund's contributors. Is that pool diminishes? How will that be done? I suppose that eventually you will get to a point that there will be a handful of people, or potentially no one. How will that be managed? It is not the case that the trustees have to be contributors. Until recently, as a matter of policy, all of the trustees were contributors, but we now have one trustee who is not. He has a particular area of expertise that we wanted to rely on. He is a solicitor and he is a writer to the signet. The trustees will be able to continue because there is not that requirement that they be contributors. The issue arises only in relation to the collector. That has been helpful. The contributors elect a collector or a trustee. What will happen if you get to the point where there are no contributors? When there are no contributors, we are into the territory then of what I had mentioned before. At that point, there is some strategy. At the moment, we assume—who knows what might happen in intervening years in terms of products that are available—that annuities will have been bought for future annuities. The products will be there in place to pay out, but there will be no need necessarily for the body of trustees. The trustees are responsible for ensuring that the purpose of paying annuities to all potential annuities is continued. As I said, they will ensure that there is a strategy and that it will probably be buying a product to ensure that that happens. To ensure that that happens. You spoke earlier on about future proofing and making sure that the bill future-proofed everything. I presume that at some point you would be looking for, say, five years ahead, ten years ahead, you would plan so that you would know as the pool diminished that you would have to make alternative arrangements? Exactly. That is something within the control of the trustees themselves. The body of trustees is always very conscious that, at any point, it is looking five years, as you say, ten years and longer ahead and looking at the various possible options for the fund. I appreciate that that is already stated in the promoter's memorandum, but just so that we have it on record, could you please give me your reasons why the legislation is required to achieve the bills to objectives? Yes. The legislation is required to achieve the objectives because there is no other means by which the requirement that the collector be a contributor can be altered. It requires an amendment to effectively primary legislation. I would just like to ask you, were there any opposing views voiced by the contributors at the AGM? But the proposal to remove that to comments? No, there were no opposing views. That is lovely. Thank you. I do not know any further questions. I would just like to thank you for coming along today and answering the questions so efficiently. If we would just like to now move the session into private, thank you.