Agenda item

The Board is invited to consider whether it wishes to make any changes to its Constitution (attached at LPB13) in accordance with paragraph 68.

In accordance with paragraph 68 of the Constitution (attached at LPB13), the Board was invited to consider whether it wished to make any changes, with particular attention to an issue which had arose in recent meetings regarding the inclusion of items of any other business.

During the ensuing discussion, the Chairman stated his view that items of any other business should be allowed where possible, as this was a meeting held in the public domain (where appropriate). However, he did feel that officers should be given as much time as possible to produce their reports to ensure that proper consideration could be given to them by the Board. To that end, he proposed that a new standard item be added to each Agenda under the title ‘Any other Business for Consideration at the next Meeting’.

He proposed also that appropriate items that were considered urgent and which required consideration by the Board at a meeting, would be added to the Agenda with the agreement of the Chairman, as long as no less than one month’s notice had been given, in order to allow for a written report to be produced.

Moreover, if any very urgent items arose from Pension Fund Committee which required consideration at the next meeting of the Board, and did not allow for one month’s notice to be given, then these would be allowed by the Chairman in special circumstances if the Chairman deemed it appropriate.

The Board AGREED the above and requested Julie Dean to bring a revised Constitution to the next meeting for consideration.

Item of Any Other Business Allowed by the Chairman – Cost Transparency – Investment Costs

The Chairman had allowed this item of any other business to be placed on the Agenda.

Employee representative, Alistair Bastin, who had brought this item, stated his concern that the returns submitted to the Pension Fund Committee were silent in respect of costs incurred by the fund managers and fees charged to the Committee. To that end he requested the Board to consider receiving the cost transparency spreadsheets submitted by the Fund Managers at its next meeting so that a thorough monitoring could occur, to enable comparison with Brunel’s costs and fees following the transition. He was backed also by Stephen Davis who stated his preference to be aware of the costs and the level of fees incurred now, prior to the complete transition to Brunel.

Suggestions from Members of the Board included a proposal that a summary report from the officers to the Board be prepared which highlighted the key points, rather than receipt of the transparency templates themselves; and the possibility of looking at all spreadsheets to ascertain what each individual fund manager was charging.

It was another Board member’s view that the Committee already employed a strategy whereby it looked at the spread of risk profiles employed by the different fund managers in order that a balanced view could be gained. Moreover, net fee levels depended upon the strategic allocations. To look at it in a more detailed manner at that level would, in his view, be unadvisable.

Sean Collins advised the Board that Legal & General submitted four templates for four separate funds and Baillie Gifford, one. The other Fund Managers had not yet submitted any annual returns, having signed up to the transparency code after the end of the financial year. Furthermore, Brunel was not charged with reducing costs, but improving net investment performance. As an example of the dangers of focusing just on investment costs, he cited that Baillie Gifford’s transaction costs were always very low because their process focussed on holding growth stocks for the long term. Brunel could appoint a second manager who transacted on a more regular basis as stocks hit the manager’s assessment of fair value, so increasing the level of investment costs. No judgement could be made on this without also looking at the impact on investment performance. Therefore, for the reasons above, looking solely at a template would not indicate any key implications/issues. Mr Collins also pointed out that actual fees paid were provided each year and made public within the annual accounts.

Following the Board’s discussion it was AGREED that Mr Collins be requested to submit a report covering the points made in the discussion to the next meeting.