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ITEM PF3

PENSION FUND COMMITTEE – 30 AUGUST 2002

PENSION FUND COMMITTEE – 24 MAY 2002

Minutes of the Meeting commencing at 10.00 am and finishing at 1.00 pm

Present:

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.

26/02. APOLOGIES FOR ABSENCE AND TEMPORARY APPOINTMENTS

Apologies for absence and temporary appointments were received as follows:

Apology from	Temporary Appointments
Councillor Dawes	-
District Councillor Mary Neale	-
Councillor Witcher	Councillor Harris

27/02. MINUTES

The Minutes of the meeting of the Committee held on 8 April 2002 were approved and signed.

28/02. OVERVIEW OF PAST AND CURRENT INVESTMENT POSITION

(Agenda Item 5)

The Financial Adviser reviewed the investment activity during the past quarter and gave an overview of the Fund’s position as at 31 March 2002. The report was supported by relevant charts of economic and market trends.

RESOLVED: to receive the charts and tables, and that the information contained in them be borne in mind insofar as they relate to items 7E and 8E in the Agenda.

29/02. EXEMPT ITEMS

RESOLVED: that the public be excluded during the consideration of items 6E-9E in the Agenda since it was 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, i.e. information relating to the financial or business affairs of any particular person (other than the authority).

PROCEEDINGS FOLLOWING THE WITHDRAWAL OF PRESS AND PUBLIC

30/02. OVERVIEW AND OUTLOOK FOR INVESTMENT MARKETS

(Agenda Item 6E)

The Independent Financial Adviser reported orally, giving an overview of the current and future investment scene and market developments across various regions and sectors. His oral report and the report PF6E, which was not exempt, was supported by relevant charts of economic and market trends, where appropriate, and these were attached.

RESOLVED: to receive the oral report and charts, to consider any further action arising thereon, and to bear the Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

31/02. DEUTSCHE ASSET MANAGEMENT LTD

(Agenda Item 7E)

Mark Burgess reported on the performance of the Deutsche Asset Management’s portfolio for the quarter which ended on 31 March 2002, with reference to the separate meeting report as circulated. He pointed out that property continued to do well and was their best performing asset. He added that UK equities had performed better during the quarter and performance was 0.7% above the median. Mr Westlake then reported briefly on the UK equities, confirming Mr Burgess’s view that there had been a much stronger performance in the UK Equity markets during the quarter. He added, however, that there was no clear direction. Mr Westlake also pointed out that UK companies were not making capital investments. Mr Westlake concluded that there was a general nervousness in what was generally a ‘sideways’ market. In the light of the above, they therefore recommended that there be no change in Deutsche’s strategy of asset allocation.

Messrs Burgess and Westlake responded to members’ questions concerning performance in the current quarter.

RESOLVED: to receive the Deutsche Asset Management Ltd written report for the period ended 31 March 2002.

32/02. SCHRODER INVESTMENT MANAGEMENT

(Agenda Item 8E)

Mr Bolton introduced Mr Nick Purves, Fund Manager for the UK Equity portfolio, who would manage the Oxfordshire Fund in the future.

Mr Bolton reported on the performance of Schroder Investment Management’s portfolio for the quarter which ended on 31 March 2002, with reference to the separate meeting report as circulated.

Mr Bolton assured members of the Committee of the continued team effort to restore Schroder’s long term performance record. Mr Purves directed the Committee’s attention to the review of the Investment Process as set out at page 4 of their summary, saying that, in the interests of continuity, he could not at this time see considerable change in their strategy of asset allocation.

Mr Bolton and Mr Purves responded to Members’ questions concerning performance in the current quarter.

RESOLVED: to receive the Schroder Investment Management (UK) Ltd written report for the period ended 31 March 2002.

33/02. SUMMARY BY THE FINANCIAL ADVISER*

(Agenda Item 9E)

The Financial Adviser indicated that he did not wish to make a report.

34/02. ASSET LIABILITY STUDY

(Agenda Item 10E)

The Committee considered a report (PF10E) which set out a recommended timetable for an agreed phasing of the Asset Allocation Policy. It also set out a recommended interim arrangement for changes to the existing CAPS benchmark. Officers had written to several external consultants formally inviting them to submit a quotation to advise on the Pension Fund’s management structure and any consequential changes to existing arrangements. Having considered both the cost and any quality of service the consultants were able to provide, an appointment had been recommended.

RESOLVED: (on a motion by Councillor Law, seconded by Councillor Gatehouse and carried nem con) to:

1. agree the proposed timetable for the phasing-in of the new asset allocation policy as set out in table 2 of Annex 1;
2. instruct Officers and the Independent Financial Advisor to meet with the managers to agree appropriate benchmark indices for all the major asset classes; and
3. appoint the Consultant named in the report to review the existing Oxfordshire Pension Fund structure and, where appropriate, to recommend any changes.

 

ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

35/02. SOCIALLY RESPONSIBLE INVESTMENT AND CORPORATE GOVERNANCE ISSUES

(Agenda Item 11)

The Committee considered what will be a quarterly report (PF11) on issues arising from the subscription to the National Association of Pension Funds (NAPF) and from the fund managers on their involvement in Social Responsible Investment (STI).

Mr Burgess undertook, at the request of the Committee, to write to Members giving the background on why oil company BP was a big constitute of the UK FTSE4 Good Index despite its practice of drilling in environmentally sensitive areas.

RESOLVED: to note the report.

36/02. THE MYNER’S REVIEW ON INSTITUTIONAL INVESTMENT IN THE UNITED KINGDOM

(Agenda Item 12)

The Review on Institutional Investment in the UK, better known as the Myners Review, had concluded with a set of Principles that pension scheme trustees had been recommended to use when looking at their investment policy. The review had suggested that the application of these ten Principles would enhance the quality of trustees’ decision making.

The Government’s response to this review had been that the principles would be applied to the Local Government Pension Scheme by means of a combination of amendments to the Local Government Scheme Regulations and authoritative guidance developed by CIPFA.

The detailed guidance notes from CIPFA had previously been circulated to members of the Committee. The Committee now had before them a report (PF12) that considered the ten Principles and which assessed how closely the Oxfordshire Pension Fund complied with these.

RESOLVED: to ask the officers to:

1. draw up an annual business plan, which should contain financial estimates for the investment and administration of the Pension Fund and appropriate provision for member training; and
2. carry out a formal tender process for the Fund’s actuarial services in the summer of 2003.
   
   

37/02. REPRESENTATION ON PENSION FUND COMMITTEE

(Agenda Item 13)

The Oxford City Branch of UNISON were seeking UNISON representation on the Pension Fund Committee in order to oversee the Fund, on the basis that councillors representing local authorities were not accountable to employee contributors, nor beneficiaries of the scheme.

The Committee considered a report (PN13) which set out the arrangements made by other County Council Pension Fund committees in their appointment processes for a UNISON representative and also gave a background to the current practice in operation in Oxfordshire. The report concluded that UNISON City Branch were asking for a form of scheme member representation that already existed though Mr Leeding in his role did not represent UNISON.

RESOLVED: to:

1. confirm the present policy of inviting an observer to attend Committee meetings in order to represent the beneficiaries and pensioners, and
2. ask the officers to formalise the terms and conditions of this appointment, in consultation with Unison, and report on these arrangements to a future meeting of this Committee.
   
   

38/02. PROPOSED ARRANGEMENTS FOR THE APPROVAL OF EARLY RETIREMENTS

(Agenda Item 14)

At the request of the Pension Benefits Sub-Committee, the Committee had before them a report (PF14) which set out the revised arrangements for the approval of early retirements in the light of the change in the Council’s political management arrangements,

RESOLVED: to approve the proposed revised arrangements for the approval of early retirements.

39/02. APPLICATION FOR ADMITTED BODY STATUS

(Agenda Item 15)

The Committee considered a report (PF15) that introduced an application from the Hamilton Oxford Schools Partnership for admission to the Local Government Pension Fund.

RESOLVED: to approve the application for The Hamilton Oxford Schools Partnership subject to all parties agreeing to the terms of the Admission Agreement, and this Committee being informed when agreements had been signed.

40/02. ANNUAL FORUM

in the Chair

Date of signing 2002

* 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. In the case of the Investment Managers’ reports 7E and 8E, these will remain private until after 24 August 2002.

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