Return to AgendaITEM PF3
PENSION FUND committee
MINUTES of the meeting held on 26 November 2008 commencing at 10.15 am and finishing at 3.24 pm
Present:
Voting Members: Councillor David Harvey - in the chair
Councillor Alan BrydenCouncillor Neville Harris Councillor Dermot Roaf Councillor Don Seale Councillor Bill Service
District Council Representatives: Councillor Richard Langridge (co-opted member)
By Invitation: Mr A Bushell (Independent Financial Adviser) Mr G Blunden (Alliance Bernstein) Mr N Davidson (Alliance Bernstein) Mr P Harris (UBS) Mr T Bell (UBS) Mrs B Churchill (Beneficiaries’ Observer)
Officers: Mr P Gerrish (Head of Finance & Procurement); Mr S Collins and Mrs S Fox (Shared Services); Mrs D Ross and Ms M Holyman (Corporate Core); Mr T Wheeler (consultant)
The Committee considered the matters, reports and recommendations contained or referred to in the agenda for the meeting and decided as set out below. Except insofar as otherwise specified, the reasons for the decisions are contained in the agenda and reports, copies of which are attached to the signed Minutes.
71/08 APOLOGIES FOR ABSENCE AND TEMPORARY APPOINTMENTS
An apology for absence was received from Councillor Bob Price (co-opted member). The Chairman reported that Mrs Churchill had replaced Mr Gibson as the Beneficiaries’ Observer and welcomed her to the meeting.
72/08 DECLARATIONS OF INTEREST
Councillors Harvey and Service and Mrs Churchill declared personal interests as members of the Pension Fund Scheme under the provisions of Section 18 of the Local Government and Housing Act 1989.
73/08 MINUTES
The Minutes of the meeting of the Committee held on 27 August 2008 were approved and signed.
74/08 OVERVIEW OF PAST AND CURRENT INVESTMENT POSITION (Agenda Item 5)
The Committee was advised that Tables 1 to 7 were compiled from the custodian's records. The custodian was the Pension Fund's prime record keeper. He 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 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 reviewed the investment activity during the past quarter and presented an overview of the Fund’s position as at 30 September 2008. In response to Councillor Langridge’s question, the Head of Finance & Procurement reported that the value of the fund at 31 October 2008 had been £824m and at 21 November 2008 it was approximately £785m.
RESOLVED:
(a) to receive the tables, and that the information contained in them be borne in mind, insofar as they related to items 7E, 8E and 9E on the agenda;
(b) to ask the Head of Finance & Procurement to report to the next meeting on how members of the Committee could receive more up-to-date valuations at the meetings and between meetings.
75/08 EXEMPT ITEMS
RESOLVED: that the public be excluded for the duration of items 6E, 7E, 8E, 9E, 10E, 11E, 12E and 13E 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.
ITEMS FOLLOWING THE EXCLUSION OF THE PRESS AND PUBLIC
76/08 OVERVIEW AND OUTLOOK FOR INVESTMENT MARKETS (Agenda Item 6E)
The Committee considered a report (PF6E) which set out an overview of the current and future investment scene and market developments across various regions and sectors. The Independent Financial Adviser updated the Committee orally and responded to members’ questions.
RESOLVED: to receive the report and tables, to receive the oral report and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.
77/08 ALLIANCE BERNSTEIN (Agenda Item 7E)
The representatives (Mr G Blunden and Mr N Davidson) of the Fund Manager 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 September 2008. Mr Blunden apologised for their poor performance. He said that it had been a difficult year for their style of management, but the market was moving towards one which would suit their style of management. He was optimistic about future investments and expected to realise the losses which had been made recently. Mr Davidson outlined the reasons for the underperformance. They responded to members’ questions.
RESOLVED: to note the main issues arising from the presentation.
78/08 UBS (Agenda Item 8E)
The representatives (Mr P Harris and Mr T Bell) of the Fund Manager 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 September 2008. They gave their view on the future investment scene. Mr Harris said that performance this last quarter had been above the benchmark for overseas equities but below the benchmark for property. He was confident their current investments were the right stocks. Mr Bell reported on the current underperformance of hedge funds. When asked about the high level of cash, Mr Harris indicated that this was a strategic decision in the light of the current state of the market and that there was an expectation that this would be re-invested in property early in the new financial year.
RESOLVED: to note the main issues arising from the presentation.
79/08 REPORT OF MAIN ISSUES ARISING FROM REPORTS OF THE FUND MANAGERS NOT REPRESENTED AT THIS MEETING (Agenda Item 9E)
The Independent Financial Adviser reported 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 5). He reported that Baillie Gifford’s performance had been below the benchmark this quarter and that Legal & General had performed well this year. He also raised the timing of when the UK equities passive mandate should be moved to the FTSE All Share Index.
RESOLVED:
(1) to note the main issues arising from the reports;
(2) to authorise the Assistant Chief Executive and Chief Finance Officer to switch from the FTSE 100 Index to the FTSE All Share Index when it was considered appropriate, after consultation with the Independent Financial Adviser and the Chairman of the Committee, and to advise all members of the Committee when the change has taken place.
80/08 SUMMARY BY THE INDEPENDENT FINANCIAL ADVISER (Agenda Item 10E)
The Independent Financial Adviser reported that the officers, in consultation with him, had deliberately retained funds as cash rather than distribute the funds by rebalancing the portfolio. This had served the Fund well during the recent fall in markets. There was clearly a risk that markets would rise, but notwithstanding this, the Independent Financial Adviser was hesitant about rebalancing just yet and recommended that the position be reviewed early in the new year. He added that UBS also held significant sums in cash and were well below the benchmark holding on property.
RESOLVED:
(1) to authorise the Assistant Chief Executive and Chief Finance Officer to discuss with UBS their fees for managing cash and, if no reduction in fees is agreed, to reduce the benchmark for property from 8 to 6%;
(2) to ask the Assistant Chief Executive and Chief Finance Officer to report on rebalancing the whole portfolio to the next meeting.
81/08 PRIVATE EQUITY (Agenda Item 11E)
The Committee considered a report (PF11E) which discussed the strategy for investing in private equity.
RESOLVED: to agree the recommendation in the report.
82/08 HEDGE FUNDS (Agenda Item 12E)
The Independent Financial Adviser reported orally on the current position.
RESOLVED: to review the position at its next meeting.
83/08 INDEPENDENT FINANCIAL ADVISER - ANNUAL REVIEW AND OUTCOME OF APPOINTMENT PROCESS OF NEW ADVISER (Agenda Item 13E)
The Committee considered a report (PF13E) which reviewed the activities of the Independent Financial Adviser for the twelve-month period ending 30 November 2008 and reported on the outcome of the appointment process.
RESOLVED:
(1) to agree the recommendations in the report, subject to an increase of £3260 in the payment in recommendation (b) in recognition of additional duties undertaken;
(2) to ask the County Solicitor to advise on the processes which need to be followed on obtaining independent financial advice.
(Mr Bushell left the room for this item.)
ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC
84/08 RECENT STOCK MARKET CHANGES: IMPACT ON THE PENSION FUND (Agenda Item 14)
The Committee considered a report (PF14) which discussed the impact on the Pension Fund and potential impact on employer contributions of the recent financial turbulence in the markets.
RESOLVED: to note the report, the seriousness of the potential implications, and the factors which would influence the outcome over the next 18 months.
85/08 FORMAL ADOPTION OF THE PENSION FUND ANNUAL REPORT AND ACCOUNTS FOR 2007/08 (Agenda Item 15)
The Committee considered the Annual Report and Accounts 2007/08.
RESOLVED: to adopt formally the Pension Fund Annual Report and Accounts 2007/08.
86/08 FUTURE PROGRAMME AND TIMETABLE FOR INVESTMENT MANAGER MONITORING ARRANGEMENTS (Agenda Item 16)
The Committee considered a report (PF16) on proposals on which Managers would attend Committee and which Managers would meet with officers each quarter between February 2009 and March 2010 and a proposal that the Independent Financial adviser should report periodically on Private Equity.
RESOLVED: to agree the programme of investment manager meetings as set out in the report.
87/08 ADMISSION BODIES (Agenda Item 17)
The Committee was advised that Emmaus had now decided to withdraw its application to become a transferee admission body.
RESOLVED: to note Emmaus’s decision to withdraw its application.
88/08 BENEFICIARIES’ OBSERVER (Agenda Item 18)
The Committee was advised that Mrs Brenda Churchill had replaced Mr Sean Gibson as the Beneficiaries’ Observer.
RESOLVED: to note the position and to welcome Mrs Churchill as the Beneficiaries’ Observer.
................................................................................... in the Chair
Date of signing.................................................................. 2009
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