Meeting documents

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To Members of the Pension Fund Committee

Notice of Meeting

Derek Bishop
Head of Democratic Services

16 November 2005

Membership

Chairman – Councillor Rodney Rose

Councillors:

Co-opted Members:

AGENDA

Agenda

1. Apologies for Absence and Temporary Appointments
   
   
2. Declarations of Interest – see guidance note

Councillors Bradshaw, Harvey, Hayward, Moley and Rose are members of the Pension Fund by virtue of Section 18 of the Local Government and Housing Act 1989.

3. Minutes
   
   (See also Addenda)
   

To approve the minutes of the meeting held on 26 August 2005 (PF3) and to receive for information any matters arising from them.

4. Petitions and Public Address
5. Overview of Past and Current Investment Position
   
   (PF5- Tables 1-10 - download as .xls file)
   

EXEMPT ITEMS

The Committee will be invited to resolve to exclude the public for the consideration of the following exempt items (marked E) by passing a resolution in relation to each such item in the following terms:

"that the public be excluded during the consideration of the following items in the Agenda since it is likely that if they were present during those items there would be a disclosure of "exempt" information as described in Part I of Schedule 12A to the Local Government Act, 1972 and specified below each item in the Agenda."

Note: In the case of items 7E, 8E and 9E, there are no reports circulated with the Agenda. Any exempt information will be reported orally.

The quarterly reports from the Fund Managers relating to the Exempt Items at 7E, 8E and 9E and any information to be reported orally have not been made public and should be regarded as strictly private to members and officers entitled to receive them until after 24 February 2006 subject to the provisions of the Freedom of Information Act.

6.E Overview and Outlook for the Investment Markets

10:25 Report of the Independent Financial Adviser (PF6E) (download as .doc file).

7. Report of Main Issues arising from Reports of the Fund Managers not represented at this meeting

10:40 The Independent Financial Adviser will report orally on the main issues arising from the presentations from Alliance Bernstein and Legal & General in conjunction with information contained in the Tables (Agenda item 5).

(Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).)

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

8. UBS Global Asset Management

10:50

(1) The Independent Financial Adviser will report orally on the performance and strategy of UBS Global Asset Management drawing on the tables at items 5 and 6E.

(2) The representatives (Mr K Barker and Mr J Anderson) 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 ended 30 September 2005;

(b) report on whether or not voting rights have been exercised and if so details of the rights exercised;

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

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

(Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).)

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

9. Baillie Gifford

11:20

(1) The Independent Financial Adviser will report orally on the performance and strategy of Baillie Gifford drawing on the tables at items 5 and 6E.

(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 ending on 30 September 2005;

(b) report on whether or not voting rights have been exercised and if so details of the rights exercised;

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

In support of the above is their report for the period to 30 September 2005.

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

(Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).)

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

10. Summary by the Independent Financial Adviser

11:50 The Independent Financial Adviser will, if necessary, summarise the foregoing reports of the Fund Managers and answer any questions from members.

(Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).)

11. Annual Review of the Independent Financial Adviser

11:55 Report of the Head of Finance & Procurement (PF11E).

The report reviews the activities of the Independent Financial Adviser for the twelve-month period ending 30 November 2005. For the second consecutive year he has exceeded his contractual duties but this has been during a period of major changes for the Oxfordshire Pension Fund. Furthermore, his knowledge and skills have been deployed in preference to using other external consultancy services where the Pension Fund has underspent on its budget. The Adviser has indicated that he is willing to continue for at least the next twelve months if the Committee wishes to reappoint him.

The Committee is RECOMMENDED to:

1. reappoint the Independent Financial Adviser for a further twelve months and to upgrade his fee by 2.95%, in line with the Local Authority Green Book Pay Award for 2005/06, to take effect from 1 December 2005;
2. award the Independent Financial Adviser an ex gratia sum as set down in the report in recognition of the extra duties he has carried out over the last two years;
3. request officers to keep the Independent Financial Adviser’s fee within budget going forward.

ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

12. Future Programme and Timetable for Monitoring Investment Managers Arrangements

12:05 Report of the Head of Finance & Procurement (PF12) (download as .doc file).

The report sets out the timetable for Pension Fund Committee meetings and officer meetings with the managers up until February 2007.

The Committee is RECOMMENDED to agree the programme of manager meetings as set out in the report.

13. Progress on Rebalancing to the New Strategic Benchmark and Implementing the Tactical Asset Allocation Fund

12:10 Report by the Head of Finance & Procurement (PF13).

The Report summarises the outcome of meetings held with the UBS Multi-Asset, Property, Private Equity and Hedge Fund management teams on 13 September 2005 and a meeting with Alliance Bernstein on 28 September 2005. The Pension Fund was successfully rebalanced to the new strategic benchmark during October 2005.

The Committee is RECOMMENDED to note the report.

14. Private Equity Review

12:20 Report by the Head of Finance & Procurement (PF14).

The report reviews the existing arrangements for managing private equity. The investments are mainly held in quoted investment trusts and are managed in house by the Independent Financial Adviser, who in turn receives material and recommendations from the UBS Investment Banking Division. The report concludes that there is no reason why this arrangement cannot continue, post Mr Bushell's retirement, with the task being carried out by a newly appointed independent financial adviser. The report also explores the various options for investing the further 2% earmarked for private equity and recommends investing in a private fund of funds. This would help to improve the portfolio's geographical and financing stage distribution and also offer a different management option to supplement the existing arrangement. If the Committee agrees to invest in a private equity fund of funds, this will necessitate going out to tender and it is recommended that bfinance, the company the Committee used for the major Fund review in 2003, be appointed to assist in this exercise.

The Committee is RECOMMENDED to:

1. invest an initial sum of £20 million in a private equity fund of funds with the option to extend this to 6% of the total Oxfordshire Pension Fund over the longer term;
2. appoint bfinance to carry out the tendering arrangements;
3. request officers and the Independent Financial Adviser to short list, interview and appoint an appropriate manager or managers, having regard to achieving a well diversified portfolio in terms of both geographical and financing stage;
4. request officers to report the outcome of this exercise to the Pension Fund Committee in May 2006.

15. CIPFA Local Authority Pension Fund Investment Statistics

12:35 Report by the Head of Finance & Procurement (PF15).

The report compares the Oxfordshire Pension Fund's asset allocation with that of other local authority and private sector pension funds. It also compares the 1-, 3-, 5- and 10-year investment performance returns with those of other English County Councils. Oxfordshire was the top performing local authority pension fund over the one-year period with a return of 13.5%. The report compares this return to the investment return assumptions made by the Actuary in his March 2004 valuation.

The Committee is RECOMMENDED to receive the report.

16. Review of the Global Custodian

12:40 Report by the Head of Finance & Procurement (PF16).

In April 2003 the Oxfordshire Pension Fund appointed ABN AMRO Mellon, as its first independent global custodian, on a three-year fixed contract with the option to extend for a further two years. The report reviews the performance of ABN AMRO drawing on the results of three externally conducted custody surveys and the views of officers and the Independent Financial Adviser. The review concludes that the Pension Fund has received a cost effective and high quality service and sees no reason why this should not continue. The Committee is advised to exercise the option to extend the custody contract for a further two years.

The Committee is RECOMMENDED to exercise the option to extend the custody contract with ABN AMRO Mellon at 31 March 2006 for a further two years until 31 March 2008.

17. Latest Position on the Local Government Pension Scheme

12:45 Report by the Head of Finance & Procurement (PF17).

This report seeks to update the Committee on the latest position on the Local Government Pension Scheme (LGPS), following the revocation of the April 2005 changes.

The Committee is RECOMMENDED to note the current position, and in the absence of Government regulations (or a clear commitment to produce the necessary regulations) which avoid the costs of revocation falling on employers, to instruct the Head of Finance & Procurement to write in the first week of December to all scheme employers, putting them on notice of the additional contributions which will be voluntarily sought with effect from April 2006 (but not called for until later in 2006/07).

18. Pension Fund Audit and Formal Adoption of the Annual Report and Accounts for 2004/05

12:50 A draft of the Annual Report and Accounts was approved at the meeting of the Committee on 26 August and the Committee is now asked formally to adopt the Report. A copy of the Pension Fund Annual Report and Accounts 2004/05 has been circulated separately to members of the Committee and is also available for public inspection.

The Committee is RECOMMENDED to adopt formally the Pension Fund Annual Report and Accounts 2004/05.

19. Corporate Governance and Socially Responsible Investment

12:55 The Head of Finance & Procurement will report orally.

20. Payment of Dependent’s Pension Benefit

13:00 Report by the Head of Finance & Procurement (PF20).

The Committee has previously asked for all decisions concerning discretion relating to payment of dependent's benefits to be referred to it. In this instance, the decision required is whether a child has been in continuous education and is therefore entitled to a child’s pension.

The Committee is ASKED:

1. to decide whether it wishes to treat the education of the elder daughter as continuous;
2. whether it wishes for future cases to be referred to the Committee for decision.

21. Admission Agreements

13:05 Report by the Head of Finance & Procurement (PF21) (download as .doc file).

The report highlights particular issues relating to admission agreements for consideration and seeks the Committee’s views on how to deal with future admission agreements. The report also asks the Committee to consider an application from one body to join the Oxfordshire Pension Fund.

The Committee is ASKED to:

1. decide whether all new admission agreements should require a bond to be put in place in accordance with advice from the Fund Actuary;
2. decide whether bonds values should be reviewed annually or triennially;
3. agree the admission of KGB Cleaning.