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ITEM PF3

PENSION FUND COMMITTEE – 26 MAY 2006

Minutes of the Meeting commencing at 10.15 am and finishing at 1.13 pm

Present:

The Committee considered the matters, reports and recommendations contained or referred to in the agenda for the meeting, together with a schedule of addenda and a graph showing updated FTSE share indices (Agenda Item 8E) tabled at the meeting, and decided as set out below. Except insofar as otherwise specified, the reasons for the decisions are contained in the agenda, reports, schedule and graph, copies of which are attached to the signed Minute

RESOLVED: that Councillor Rose be elected as Chairman of the Committee for the current Council Year.

18/06. ELECTION TO DEPUTY CHAIRMAN FOR THE 2006/07 COUNCIL YEAR

RESOLVED: that Councillor Harvey be elected as Deputy Chairman for the current Council Year.

19/06. APOLOGIES FOR ABSENCE AND TEMPORARY APPOINTMENTS

Apologies for absence and temporary appointments were received as follows:

Apology from	Temporary Appointment
Councillor Wilmshurst	Councillor Crabbe


20/06. DECLARATIONS OF INTEREST

Councillors Bradshaw, Harvey, Moley, Price (Co-opted Member), Rose and Service declared personal interests as members of the Pension Fund Scheme under the provisions of Section 18 of the Local Government and Housing Act 1989. Councillors Moley and Service declared prejudicial interests in Agenda Item 16 (Local Government Pension Scheme Regulations – Application for Admission as a Transferee Admission Body) as members of the Vale of White Horse and South Oxfordshire District Councils respectively.

21/06. MINUTES

The Minutes of the meeting of the Committee held on 24 February 2006 were approved and signed.

In response to Councillor Harris’s question, Councillor Rose reported that he had raised with the Chief Executive the issue mentioned in Minute 3/06 (Minutes) and it had been agreed that, if a committee requested a press release on a particular issue, the chairman of the relevant committee would be consulted, should the Media & Communications Section consider that it would be inappropriate for a press release to be issued.

22/06. OVERVIEW OF PAST AND CURRENT INVESTMENT POSITION

(Agenda item 7)

The Committee was advised that Tables 1 to 7 had been compiled from the custodian's records (the Pension Fund's prime record keeper). In his records, 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. In addition, the Committee was advised that the custodian had 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 31 March 2006. He highlighted that UK equities were over the benchmark. Bonds, in particular corporate bonds, were below the benchmark. On UBS’s multi-asset portfolio, he said that UK and overseas equities were in line with the benchmark, European equities were above the benchmark and Asia Pacific (including Japan) equities were below the benchmark. Bonds were generally in line with the benchmark. Alliance Bernstein was moving towards its new benchmarks (a lower benchmark for UK equities and a higher benchmark for overseas equities) but it was currently overweight in UK equities and underweight in overseas equities, particularly US equities. Legal & General was underweight in corporate bonds and overweight in overseas bonds. Baillie Gifford was fully invested. There had been net sales of £21m of UK equities and net purchases of £30m of US equities. There had been net sales of £4m of bonds and net purchases of property, private equity and hedge funds. He said that the performance over the last quarter had overall exceeded the benchmark. He reported that UBS had underperformed this quarter, both in UK and overseas equities. Alliance Bernstein’s and Baillie Gifford’s performances had both been strong over the last quarter and both houses’ performances were over their benchmarks for the year. On Legal & General, he reported that its performance had been over the benchmark for the year. He added that the WM Company had omitted £200,000 income on interest from the figures for Legal & General and the figures for "Total bonds" (Table 10) should read as follows:

	Quarter ended 31 March 2006		Year ended 31 March 2006
	Benchmark Return %	Oxfordshire Total Fund	Benchmark Return %	Oxfordshire Total Fund
Total bonds	-0.6	-0.8	7.6	7.8

He said that this issue had been taken up with the WM Company.

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

23/06. EXEMPT ITEMS

RESOLVED: that the public be excluded for the duration of the items 8E-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 WITHDRAWAL OF THE PRESS AND PUBLIC

24/06. OVERVIEW AND OUTLOOK FOR THE INVESTMENT MARKETS*

(Agenda Item 8E)

The Committee considered a report (PF8E) which set out an overview of the current and future investment scene and market developments across various regions and sectors. The Independent Financial Adviser circulated a graph showing updated FTSE share indices. He also reported orally and responded to members’ questions.

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

25/06. REPORT OF MAIN ISSUES ARISING FROM REPORTS OF THE FUND MANAGERS NOT REPRESENTED AT THIS MEETING*

(Agenda item 9E)

The Independent Financial Adviser reported that he and officers had met with Alliance Bernstein and Baillie Gifford. Alliance Bernstein had offered a higher outperformance target against benchmark for its performance on its new global platform. Its performance since inception had been 22.8% compared with the Oxfordshire benchmark of 20%. He reported that Baillie Gifford’s performance over the last two quarters had been good compared with its performance over the quarters ending June and September 2005. He said that UBS’s performance would be discussed at a meeting with the Company to be held in July.

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

26/06. UBS GLOBAL ASSET MANAGEMENT*

(Agenda Item 10E)

RESOLVED: to receive UBS’s quarterly and presentation reports for the quarter ending 31 March 2006.

27/06. LEGAL & GENERAL*

(Agenda Item 11E)

The representatives (Mr J Cloke, Mr R Barnard-Smith and Ms H Gaukrodger) 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 31 March 2006. They responded to questions.

RESOLVED: to receive Legal & General’s quarterly and presentation reports for the quarter ending 31 March 2006.

28/06. SUMMARY BY THE INDEPENDENT FINANCIAL ADVISER*

(Agenda Item 12E)

The Independent Financial Adviser said that he had nothing further to add to the comments he had made earlier in the meeting.

29/06. APPOINTMENT OF PRIVATE EQUITY MANAGERS*

(Agenda Item 13E)

The Committee considered a report (PF13E). It was reminded that, in November 2005, it had given the officers and the Independent Financial Adviser delegated authority to short list, interview and appoint appropriate private equity managers, having regard to achieving a well diversified portfolio in terms of both geographical and financing stage. The report explained how the tender, evaluation and short listing of the managers had been undertaken and provided the reasons why three managers had been short listed and why two of these had eventually been appointed.

RESOLVED: to note that officers and the Independent Financial Adviser had, in accordance with the authority which the Committee had delegated to them in November 2005, appointed Adam Street Partners to manage £13.2 million in private equity fund of funds and Partners Group to manage £6.8 million in private equity fund of secondaries funds, subject to the satisfactory completion of contracts.

ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

30/06. GROUP ACTION CLAIM FOR RECOVERY OF OVERSEAS TAX

31/06. CHANGES TO THE LOCAL GOVERNMENT PENSION SCHEME (LGPS)

(Agenda Item 15)

The Committee considered a report (PF15) which provided a briefing on the recent changes to the LGPS in the context of the wider ('A Day') changes to the UK pension regime and updated the Committee on a number of administrative issues.

RESOLVED to:

1. note the contents of the report;
   
   
2. delegate authority to the Head of Finance & Procurement to respond to the consultation drafts to be issued by ODPM, as detailed in paragraph 4 of the report, after consultation with the Chairman, Deputy Chairman and Opposition Group Spokesman, in cases where the government timescales preclude consideration by the full Committee; and
   
   
3. agree that the exercise of any such delegated authority in (b) will be reported to the next meeting of the Committee.


32/06. LOCAL GOVERNMENT PENSION SCHEME REGULATIONS APPLICATION FOR ADMISSION AS A TRANSFEREE ADMISSION BODY

(Agenda Item 16)

The Committee considered a report (PF16) which set out one application for admission as a transferee admission body to the Pension Fund.

RESOLVED: to approve the application of Capita as set out in the report subject to it agreeing to the terms of the Admission Agreement, to it putting a bond in place in accordance with actuarial advice and to it being aware of the employer responsibilities of membership to the fund and to this Committee being informed when the agreement is signed.

(Councillors Moley and Service left the room for this item.)

33/06. INTERNAL DISPUTE RESOLUTION PROCEDURES

(Agenda Item 17)

The Committee was informed at its meeting in February 2006 that steps were being taken to recruit a second stage nominated person, following the death of Mr Langridge. The Committee was informed that Mr John Briscoe had been appointed to this post from 1 April 2006. Mr Briscoe had been Pensions Manager at Norfolk County Council until 1997, after which time he had become an independent consultant. The Committee was further advised that he had comprehensive knowledge of the Local Government Pension Scheme Regulations and undertook the second stage nominated person role for 15 other local authorities.

RESOLVED: to note the report.

34/06. PAYMENT OF DEPENDENT'S PENSION BENEFIT

(Agenda Item 18)

The Committee considered a report (PF18) which informed it that the Head of Finance & Procurement had made a decision under the powers delegated her by the Committee at its meeting in November 2005 of whether a child’s pension could continue when a gap year had been taken.

RESOLVED: to note the report.

35/06. ANNUAL PENSION FORUM

(Agenda Item 19)

The Head of Finance & Procurement reported that there were no issues arising from the last Annual Forum.

RESOLVED: to note the report and to agree that the next Forum be held on 24 November 2006 at 2.30 pm.

36/06. CORPORATE GOVERNANCE AND SOCIALLY RESPONSIBLE INVESTMENT

in the Chair

Date of signing 2006

The reports relating to the exempt items have not been made public and should be regarded as strictly private to those members and officers entitled to receive them.

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