Agenda and minutes

The Chairman welcomed District Councillor Patterson to his first meeting.

Councillors Fooks, Harvey, Lilly, Patterson (co-opted member), Service and Tanner declared personal interests as members of the Pension Fund Scheme under the provisions of Section 18 of the Local Government and Housing Act 1989.

To approve the minutes of the meeting held on 25 June 2010 (PF3) and to receive for information any matters arising on them.

The minutes of the meeting of the Committee held on 25 June 2010 were approved subject to the deletion of Mr S Collins from the list of officers present at the meeting.

10:20

Report of the Head of Finance & Procurement and the County Solicitor (PF5).

The report discusses a change to the Fund’s overseas custody services.  The Committee deferred this item at its last meeting.

The Committee is RECOMMENDED to:

(a)               grant a Power of Attorney to ING Slaski to enable the Fund to make investments in Poland;

(b)              consider delegating decision-making related to custody of assets to the Head of Finance & Procurement and the County Solicitor, after consultation with the Chairman and Deputy Chairman of the Committee.

The Committee considered a report (PF5) about a change to the Fund’s overseas custody services.  Ms B Dowling-Jones (BNY Mellon) and Ms S Geaney (Legal Services) attended for this item.

RESOLVED to:

(a)       grant a Power of Attorney to ING Slaski to enable the Fund to make investments in Poland;

(b)       delegate decision-making related to custody of assets to the Head of Finance & Procurement and the County Solicitor, after consultation with the Chairman and Deputy Chairman of the Committee.

10:25

Tables 1 to 10 are compiled from the custodian's records. The custodian is the Pension Fund's prime record keeper. He accrues for dividends and recoverable overseas tax within his valuation figures and may also use different exchange rates and pricing sources compared with the fund managers. The custodian also treats dividend scrip issues as purchases which the fund managers may not do. This may mean that there are minor differences between the tabled figures and those supplied by the managers.

The Independent Financial Adviser will review the investment activity during the past quarter and present an overview of the Fund’s position as at 30 June 2010 using the following tables:

In addition to the above tables, the performance of the Fund Managers over the past 18 months has been produced graphically as follows:

Graph 1 – Value of Assets

Graph 2 - Alliance Bernstein

Graph 3 - Baillie Gifford

Graph 4 – Legal & General

Graphs 5 and 6 - UBS

The Committee is RECOMMENDED to receive the tables and graphs, and that the information contained in them be borne in mind, insofar as they relate to items 9, 10 and 11 on the agenda.

The Committee was advised that Tables 1 to 10 had been compiled from the custodian's records. The custodian was the Pension Fund's prime record keeper. He had accrued for dividends and recoverable overseas tax within his valuation figures and might also have used different exchange rates and pricing sources compared with the fund managers. The custodian had also treated dividend scrip issues as purchases which the fund managers might not have done. This might mean that there were minor differences between the tabled figures and those supplied by the managers.

The Independent Financial Adviser reported that £20m cash had been allocated to fund managers after consultation with the Chairman and Deputy Chairman at the interim meeting in August (£10m for investment in overseas equities and £10m for investment in property). 

RESOLVED:  to receive the tables and graphs, and that the information contained in them be borne in mind, insofar as they relate to Items 9, 10 and 11 on the agenda.

RESOLVED: that the public be excluded for the duration of Items 7, 8, 9, 10, 11, 12, 13 and 14 in the Agenda since it was likely that if they were present during those items there would be disclosure of exempt information as defined in Part I of Schedule 12A to the Local Government Act 1972 (as amended) and specified in relation to the respective items in the Agenda and since it was considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

10:35

The representative (Karen Thrumble) of the WM Company will review the Oxfordshire Pension Fund’s investment performance for the twelve months ended 31 March 2010.  The presentation will compare Oxfordshire’s performance against its own customised benchmark and against the WM Local Authority Pension Fund Universe. 

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.       Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The representative (Karen Thrumble) of the WM Company made a  presentation to the Committee (copy of her presentation is attached to the signed copy of the minutes).  She reported on and reviewed the Oxfordshire Pension Fund’s investment performance for the twelve months ended 31 March 2010.  The presentation compared Oxfordshire’s performance against its own customised benchmark and against the WM Local Authority Pension Fund Universe.  The presentation highlighted the improvement in performance in 2009/10 of local authority pension investment compared with the two previous years where in 2008/09 two-thirds of funds had underperformed the benchmark and in 2007/08 three-quarters of funds had underperformed the benchmark.

RESOLVED:  to note the report and presentation.

11:15 

Report of the Independent Financial Adviser (PF8)

The report sets out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself does not contain exempt information and is available to the public. The Independent Financial Adviser will also report orally and any information reported orally will be exempt information.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee is RECOMMENDED to receive the report, tables and graphs, to receive the oral report, to consider any further action arising on them and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

The Committee considered a report (PF8) which set out an overview of the current and future investment scene and market developments across various regions and sectors.

RESOLVED:  to receive the report, tables and graphs, to receive the oral report and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

Agreed

11:30

(1)       The Independent Financial Adviser will report orally on the performance and strategy of Alliance Bernstein, drawing on the tables at Agenda Items 6 and 8 and the letter and performance analysis received from Alliance Bernstein attached (PF9).

(2)       The representatives (Mr N Davidson and Mr D Stewart) of the Fund Manager will:

(a)       report and review the present investment of their part of the Fund and their performance and strategy for the period up to 30 June 2010 against the background of the current investment scene;

(b)       give their views on the future investment scene and the prospects for the Fund's investments.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee is RECOMMENDED to note the main issues arising from the presentation and to take any necessary action, if required.  

The Committee considered the letter and performance analysis from Alliance Bernstein. The representatives (Mr N Davidson and Mr D Stewart) reported and reviewed the present investments of their part of the Fund and their strategy against the background of the current investment scene for the period which ended on 30 June 2010.  They also reported on performance and how they expected improvements in performance would be delivered.  They responded to members’ questions. 

RESOLVED:  to note the main issues arising from the reports.

12:10 

(1)         The Independent Financial Adviser will report orally on the performance and strategy of Baillie Gifford drawing on the tables at Agenda Items 6 and 8.

(2)         The representatives (Mr I McCombie and Mr L Robb) of the Fund Manager will:

(a) report and review the present investments of their part of the Fund and their strategy against the background of the current investment scene for the period which ended on 30 June 2010;

(b) give their views on the future investment scene.

In support of the above is their report for the period to 30 June 2010.

At the end of the presentation, members are invited to question and comment and the Fund Managers to respond.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee is RECOMMENDED to note the main issues arising from the presentation and to take any necessary action, if required.  

The representatives (Mr McCombie and Mr Robb) reported and reviewed the present investments of their part of the fund and their strategy against the background of the current investment scene for the period which ended on 30 June 2010.  The representatives responded to members’ questions.

RESOLVED:  to note the main issues arising from the reports.

12:50

The Independent Financial Adviser will report orally on the main issues arising from the reports from UBS and Legal & General in conjunction with information contained in the tables (Agenda Item 6).

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee is RECOMMENDED to note the main issues arising from the reports and to take any necessary action, if required. 

The Independent Financial Adviser reported that Legal & General had outperformed the benchmark and target.  He added that the figures for Oxfordshire gilts and index-linked were incorrect and should therefore be deleted:  the Total Assets lines were correct.  UBS’ performance had been under the benchmark for this quarter but its performance had been above the benchmark, but not the target, for the last 12 months.  The performance of the hedge funds had also improved this quarter.

RESOLVED:  to note the report.

12:55

The Independent Financial Adviser will, if necessary, summarise the foregoing reports of the Fund Managers and answer any questions from members.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund. 

The Independent Financial Adviser reported that some private equity holdings were being wound down and would be sold.

RESOLVED:  to note the Independent Financial Adviser’s report.

14:00

Report of the Independent Financial Adviser (PF13E)

Every year the Committee considers a report reviewing the strategic asset allocation of the Fund.  This report from the Independent Financial Adviser reviews the current allocation, taking into account that there will be a fundamental review undertaken shortly for reporting to the March 2011 Committee.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.            Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee considered a report (PF13E). 

RESOLVED:  to reduce the minimum cash balance retained at any one time to £10m.

14:15

Report of the Assistant Chief Executive and Chief Finance Officer (PF14E)

The Additional Voluntary Contributions (AVC) scheme provides members with a money purchase option to increase their retirement saving, which can be invested in a range of funds.  Oxfordshire's AVC scheme is provided by Prudential.  This report reviews the scheme and its performance over the past year.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3. Information relating to the financial or business affairs of any particular person (including the authority holding that information)

and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would lead to the disclosure of the amount proposed to be incurred.

The Committee considered a report (PF14E). 

RESOLVED:  to note the report and to confirm the continued use of Prudential as the Council’s Additional Voluntary Contribution provider subject to the following amendments to the report:

Paragraph 8, line 2 “Index” should read “Unit” and line 3 “10” should read “5”;

Paragraph 34, line 4 “22/09/10” should read “22/09/09”;

Paragraph 38, line 2 “£450 million” should read “£370 million”.

14:25

The draft Annual Report and Accounts for 2009/10 (PF15) show the final accounts for the Pension Fund for the year ended 31 March 2010 and provide details on how the Fund operates, including sections on membership and investments. The Report also includes the Statement of Investment Principles.  The final report will be brought to the Committee in December.

The Committee is RECOMMENDED to receive the draft report and accounts for 2009/10.

The Committee considered the draft Report and Accounts for 2009/10 (PF15).

RESOLVED:  to receive the draft Report and Accounts for 2009/10 and to ask the Assistant Chief Executive and Chief Finance Officer to consider whether to include a summary of the fund managers’ performance if this information had not already been included in the report.

14:30

Report of the Assistant Chief Executive and Chief Finance Officer (PF16)

The report compares the 2009/10 budget with the outturn for the year. 

The Committee is RECOMMENDED to receive the report and note the out-turn position.

The Committee considered a report (PF16) and additional information (exempt)  circulated at the meeting.

RESOLVED:  to receive the report and the exempt information circulated at the meeting and to note the out-turn position.

14:35

Report of the Assistant Chief Executive and Chief Finance Officer (PF17)

This report presents an application from RM Education for admitted body status in the Oxfordshire Pension Fund following the transfer of one member of staff from The Oxford Academy.

The Committee is RECOMMENDED to approve the application subject to RM Education agreeing to the terms of the Admission Agreements and this Committee being informed when the agreement is signed.

The Committee considered a report (PF17 revised).

RESOLVED: 

(a)         to agree the application from RM Education subject to their agreeing to the terms of the Admission Agreements and this Committee being informed when the agreements are signed;

(b)         to agree to delegate authority to the Assistant Chief Executive and Chief Finance Officer to determine, after consultation with the Chairman of the Committee, the additional applications arising from the retendering of the Supporting People contract (circulated at the meeting).

14:40

The Assistant Chief Executive and Chief Finance Officer has nothing specific to report for this quarter but it should be noted that all the managers have included pages within their valuation reports which provide details on their voting at company AGMs, engagement with companies and their involvement with other socially responsible initiatives. 

The Committee was advised that the Assistant Chief Executive and Chief Finance Officer had nothing specific to report for this quarter but it should be noted that all the managers had included pages within their valuation reports which provided details on their voting at company AGMs, engagement with companies and their involvement with other socially responsible initiatives. 

RESOLVED:  to note report.

14:45

The Assistant Chief Executive and Chief Finance Officer will report orally on any issues arising from the last Forum or about the Annual Pension Forum scheduled for Friday 10 December 2010 at 10 am.

RESOLVED:  to note that the next Annual Pension Forum was scheduled for Friday 10 December 2010 at 10 am but the venue had not yet been confirmed.