Agenda and minutes

RESOLVED:that Councillor Harvey be elected Chairman of the Committee for the 2010/11 Council Year.

RESOLVED:            that Councillor Service be elected Deputy Chairman of the Committee for the 2010/11 Council Year.

Apologies for absence were received from Councillors Service and Tanner.  The Committee was also advised that District Councillor Wood had resigned from the Committee.

Councillors Fooks, Lilly and Harvey 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 19 March 2010 (PF5) and to receive for information any matters arising on them.

The minutes of the meeting of the Committee held on 19 March 2010 were approved and signed.

Dr Dickinson, Jane Binyon and Jon Hislop requested to address the Committee on Item 22.

RESOLVED:  to agree to the request and that the address be taken with Item 22.

10:20

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 31 March 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.

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 8, 9, 10, 11, 12 and 13 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.

10:30 

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. 

The Independent Financial Adviser reviewed the investment activity during the past quarter and presented an overview of the Fund’s position as at 31 March 2010.  He reported that the Fund was holding 4% cash but he did not consider it appropriate to invest the cash at the present time.  Members asked questions and the Independent Financial Adviser and the officers responded to them.

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.

10:40

(1)         The Independent Financial Adviser will report orally on the performance and strategy of UBS drawing on the tables at Agenda Items 7 and 8.

(2)         The representatives (Mr P Harris and Mr T Bell) 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 31 March 2010;

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

In support of the above is their report for the period to 31 March 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 T Bell and Mr P Harris) 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 31 March 2010.  The representatives responded to members’ questions.

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

11:20 

(1)         The Independent Financial Adviser will report orally on the performance and strategy of Alliance Bernstein drawing on the tables at Agenda Items 7 and 8.

(2)         The representatives (Mr N Davidson and Mr D Stewart) 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 31 March 2010;

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

In support of the above is their report for the period to 31 March 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 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 31 March 2010.  The representatives responded to members’ questions.

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

12:00

The Independent Financial Adviser will report orally on the main issues arising from the reports from Baillie Gifford and Legal & General in conjunction with information contained in the tables (Agenda Item 7).

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 the performance of Baillie Gifford over the last quarter had been disappointing.  He also reported that Legal & General had continued to outperform the benchmark.

RESOLVED:            to note the report.

12:05

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 and officers responded to questions about the performance of Alliance Bernstein.

RESOLVED:            to ask the Head of Finance & Procurement to ask Alliance Bernstein to attend the next meeting.

12:10

Report of the Independent Financial Adviser (PF13E)

On the advice of the Independent Financial Adviser, the Fund has invested in a private equity holding, after consultation with the Chairman and Deputy Chairman of the Committee.  The report provides details.

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) on a private equity holding.

RESOLVED:  to note the investment in Harbourvest Senior Loans Europe Ltd.

12:15

Report of the Head of Finance & Procurement and the County Solicitor (PF14)

The report discusses a change to the Fund’s overseas custody services.

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 (PF14) which discussed a change to the Fund’s overseas custody services.

RESOLVED:  to defer consideration of the report, to ask that the custodian be invited to the next meeting and to ask officers to report on how arrangements for the custody of assets were made, including other markets where similar arrangements would be required.

12:30

Report of the Head of Finance & Procurement (PF16)

During the past year a number of guidance documents has been published on different aspects of governance.  The report considers these documents, recognises that an assessment of compliance is being undertaken on some and recommends a process for assessing compliance against others.

The Committee is RECOMMENDED to:

(a)               note the work being undertaken to assess the Fund against best practice;

(b)              agree that the objective is to make improvements for the benefit of the fund rather than simply complying with best practice;

(c)               agree to the prioritisation of the knowledge and skills framework and the development of an improved training plan addressing members’ needs.

The Committee considered a report (PF16) on a number of guidance documents on different aspects of governance.

RESOLVED to:

(a)               note the work being undertaken to assess the Fund against best practice;

(b)               agree that the objective is to make improvements for the benefit of the fund rather than simply complying with best practice;

(c)               agree to the prioritisation of the knowledge and skills framework and the development of an improved training plan addressing members’ needs.

The Committee agreed to consider the report at Agenda Item 15 after Agenda Item 19 to enable the Committee to have first considered the reports reviewing the Statement of Investment Principles and the Governance Compliance Statement.

12:35

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

This report reviews the Fund's Governance Compliance Statement, as required under the Pension Regulations.

The Committee is RECOMMENDED to note the report, and endorse the Governance Compliance Statement as contained in Annex 2 to the report.

The Committee considered a report (PF17) which reviewed the Fund's Governance Compliance Statement, as required under the Pension Regulations.

RESOLVED: to note the report and endorse the Governance Compliance Statement as contained in Annex 2 to the report.

12:45 

Report of the Head of Finance & Procurement (PF18)

Administering Authorities are required by the Department for Communities and Local Government to prepare, publish and maintain a statement of compliance against a set of six principles for pension fund investment.  A review has been undertaken and a number of improvements are proposed for the Committee to consider. 

The Committee is RECOMMENDED:

(a)               to review the assessment of compliance against the six principles for pension fund investment at Annex 1 to the report;

(b)              subject to any changes the Committee wishes to make, to agree the assessment;

(c)               to agree the programme of proposed improvements set out in paragraph 4 of the report.

The Committee considered a report (PF18) on the assessment of compliance against a set of six principles for pension fund investment. 

RESOLVED to:

(a)               agree the assessment of compliance against the six principles for pension fund investment at Annex 1 to the report;

(b)               agree the programme of proposed improvements set out in paragraph 4 of the report.

12:55

Report of the Head of Finance & Procurement (PF19)

The Government has published a revised set of investment regulations which includes the requirement to agree and publish a Statement of Investment Principles (SIP) by 1 July 2010.  The regulations also specify what should be included.  The current SIP has not had a fundamental review for some time.  The opportunity has been taken, in the light of changes in the regulations, to undertake such a review.  Two specific changes have been made: identifying three specific investment objectives and changing the frequency of fundamental reviews of the investment strategy. 

The Committee is RECOMMENDED to approve the revised Statement of Investment Principles set out in Annex 1 to the report. 

The Committee considered a report (PF19) on a revised set of investment regulations which included the requirement to agree and publish a Statement of Investment Principles by 1 July 2010. 

RESOLVED:  to approve the revised Statement of Investment Principles set out in Annex 1 to the report. 

12:20

Report by the County Solicitor and Head of Legal & Democratic Services (PF15)

The report updates members on changes in the law and recent statutory guidance on the duties and responsibilities of members of the Committee.

The Committee is RECOMMENDED to:

(a)               continue to act within its agreed Statement of Investment Principles in the best interests of the Scheme; and

(b)              continue to act within its agreed Governance Compliance Statement in the best interests of the Scheme.

The Committee considered a report (PF15) which updated members on changes in the law and recent statutory guidance on the duties and responsibilities of members of the Committee.  

RESOLVED to:

(a)       continue to act within its agreed Statement of Investment Principles in the best interests of the Scheme; and

(b)               continue to act within its agreed Governance Compliance Statement in the best interests of the Scheme.

13:00

Report of the Assistant Chief Executive and Chief Finance Officer (PF20)

The report is the review and updating of the Pension Scheme’s Communication Policy.

The Committee is RECOMMENDED to note this report.

The Committee considered a report (PF20) which reviewed and updated the Pension Scheme’s Communication Policy.

RESOLVED:  to note the report.

RESOLVED:  that the public be excluded for the duration of Items 21 and 22 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.

14:00

Report of the Head of Finance & Procurement (PF21E)

The Committee requested an update of the position in relation to tax claims.  The report is in response to that request.

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 tax claims.

The Committee considered a report (PF21E) which updated the Committee on the position in relation to tax claims. 

RESOLVED:  to

(a)         note the report;

(b)         ask the Head of Finance & Procurement to check whether it is the custodian’s usual practice to lend overseas’ stocks and whether the Fund is earning more income from lending stock than it is losing on tax.

14:05

Report of the Assistant Chief Executive and Chief Finance Officer (PF22E)

Following the loss of a major contract after a recent re-tendering exercise, one of the Fund's smaller Admitted Bodies is proposing that it should be wound up, so ending its admission to the Oxfordshire Fund.  The Fund Actuary has completed estimated calculations for the closure valuation on two bases.  The Committee is invited to consider the implications of the two bases, determine which should apply in this case, and depending on the decision taken, determine the approach to recovering the sum due.

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 authority's decision on this case.

The Committee considered a report (PF22E) on closure valuations for one of the Fund's smaller Admitted Bodies which was proposing that it should be wound up, so ending its admission to the Oxfordshire Fund and additional information on contributions and a letter of representation from the organisation.  Dr Dickinson, Ms Binyon and Mr Hislop spoke on behalf of the organisation.

RESOLVED:

(a)               to agree the closure valuation for Oxfordshire Mental Health Matters should be produced on an on-going basis, subject to the County Council agreeing to under-write the risk of any future pension deficit and subject to no precedent being set and all future applications being considered on their merits;

(b)       in the event that the Association does not have sufficient resources in its reserves to meet the bill and in light of the benefits to the Fund as a whole, any outstanding sum be written off, subject to officers being happy that the Trustees have acted in a reasonable and responsible manner, and so maximising the sum payable from reserves.

14:15

Report of the Assistant Chief Executive and Chief Finance Officer (PF23)

Internal Audits are undertaken annually of Pension Fund Investment and Pension Fund Administration.  The report summarises the issues raised by the audit for the current year in order that the Committee is made aware of them and to give the Committee an opportunity to question officers about any issue raised.

The Committee is RECOMMENDED to note the report.

The Committee considered a report (PF23) which summarised the issues raised by the internal audit of Pension Fund Investment and Pension Fund Administration for the current year.

RESOLVED:  to note the report.

14:30

Report of the Assistant Chief Executive and Chief Finance Officer (PF24)

The report sets out write offs which have taken place under the Council's Scheme of Financial Delegation.

The Pension Fund Committee is RECOMMENDED to note the report.

The Committee considered a report (PF24) which set out write offs which had taken place under the Council's Scheme of Financial Delegation.

RESOLVED:  to note the report.

(a)       Socially Responsible Investment – Tar Sands

The Committee considered a report (PF25(a)) on voting practices by the fund managers on Tar Sands.

RESOLVED:   to receive the report and to note the votes exercised.

(b)       Corporate Governance and Socially Responsible Investment

The Committee was advised that the Assistant Chief Executive and Chief Finance Officer had no other issues 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 the 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 which will take place on Friday 10 December 2010 at 10 am.

RESOLVED:   to note that the Assistant Chief Executive and Chief Finance Officer had no issues to report either arising from the last Forum or about the Annual Pension Forum which would take place on Friday 10 December 2010 at 10 am.