Meeting documents

Pension Fund Committee
Friday, 21 May 2004

PF210504

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To Members of the Pension Fund Committee

Notice of Meeting

Meeting

PENSION FUND COMMITTEE

Date/Time

Friday 21 May 2004 at 10.00 am

Place

County Hall, Oxford

Contact officer

Marion Holyman
(Tel: 01865 810177; E-mail)


Chris Impey
Assistant Chief Executive

12 May 2004

Membership

Chairman – Councillor C H Shouler

Councillors:

Richard Farrell

Neville F Harris

Brian L Hook

Barbara Gatehouse

Jim Moley

 

Co-opted Members:

Michael Howes

Bob Price

 

 

AGENDA

  1. Apologies for Absence and Temporary Appointments

  2. Election to Chair for the Current Council Year

  3. Election to Deputy Chair for the current Council Year

  4. Declarations of Interest

  5. Minutes

    6. To approve the minutes of the meeting held on 20 February 2004 (PF5) and to receive for information any matters arising therefrom.

  6. Petitions and Public Address

  7. Presentation by the Local Authority Pension Fund Forum

    8. 10.05 In November 2003 the Committee received a report on Corporate Governance and Shareholder Activism. The report referred to Local Government Pension Regulations, which require local authority pension funds to set out how they comply with the ten investment principles contained in the CIPFA document "Principles for Investment Decision Making in the Local Government Pension Scheme in the UK". The Pension Fund’s Statement of Investment Principles (SIP) is periodically updated to report any issues which are not fully complied with and activism is one of these.

    The CIPFA principle on activism says that "Local Authorities may wish to consider seeking alliances with other pension funds in general, or a group of local authority pension funds, to utilize the benefits of collective size where there is a common interest to influence a company to take action on issues relating to corporate governance.".

    The report referred to the existence of the Local Authority Pension Fund Forum (LAPFF). The Committee asked officers to include an item in the 2004/05 Business Plan to explore the option of becoming a member of LAPFF. The LAPFF has been invited to do a presentation to the Committee, which will cover the existing LAPFF membership, fees and examples of the type of issues it deals with. A paper from LAPFF entitled "Benefits of LAPFF membership" is produced as agenda paper (PF7) (download as .doc file).

    Following the presentation, the Committee is RECOMMENDED to consider whether the Oxfordshire Pension Fund should become a member of the Local Authority Pension Fund Forum.

  8. Overview of Past and Current Investment Position

10.25 The Independent Financial Adviser will review the investment activity during the past quarter and present an overview of the Fund’s position as at 31 March 2004 using the following tables:

Table 1 - provides a consolidated valuation of the Pension Fund at 31 March 2004;

Tables 2 to 4 - provide details of the individual managers’ asset allocations and compare these against their benchmark allocations;

Table 5 - shows net investment/disinvestments during the quarter;

Tables 6 to 7 - provide details on the Pension Fund’s Private Equity;

Tables 8 to 10 - provide investment performance for the consolidated Pension Fund and for the four Managers for the quarter ended 31 March 2004.

The Committee is RECOMMENDED to receive the tables, and that the information contained in them be borne in mind, insofar as they relate to items 10E to 12E on the agenda.

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 10E - 12E, there are no reports circulated with the Agenda. Any exempt information will be reported orally.

The Fund Managers’ reports relating to the Exempt Items at 10E, 11E and 12E 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 21 August 2004.

9.E Overview and Outlook for Investment Markets

    1. Report (PF9E) (download as .doc file) of the Independent Financial Adviser. The report sets out an overview of the current and future investment scene and market developments across various regions and sectors. The report itself does not contain exempt information and is available to the public.

The Independent Financial Adviser will also report orally and any information reported orally will be exempt information.

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

UBS Asset Management

10.E (a) Change of Property Benchmark

    1. Report of the Head of Finance (PF10E(a))

During the quarter UBS Global Asset Management wrote to the officers recommending a change in the property benchmark due to technical reasons. The Independent Financial Adviser was consulted on this issue and a new benchmark was agreed. The report explains the background to this decision.

(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 report and endorse the action taken by the officers.

(b) Performance and Strategy

11.00

 (1) The Independent Financial Adviser will report orally on the performance and strategy

of UBS Global Asset Management drawing on the tables at items 8 and 9E.

(2) The representatives (Mr K Barker and Mr P Dennis-Jones) of the Fund Manager will:

(i) 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 31 March 2004;

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

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

In support of the above is their valuation report for the period to 31 March 2004 and a separate report for the period.

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

(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 consider and to adopt or amend any recommendations before them.

11.E Legal and General

11.25

(a) The Independent Financial Adviser will report orally on the performance and strategy of Legal and General drawing on the tables at items 8 and 9E.

(b) The representatives (Ms J Cawley and Mr R Barnard-Smith) of the Fund Manager will:

(1) 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 31 March 2004;

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

In support of the above is their valuation report for the period to 31 March 2004 and a separate report for the period.

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

(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 consider and to adopt or amend any recommendations before them.

12.E Report of main issues arising from presentations given by Fund Managers not represented at this meeting

11.50 The Independent Financial Adviser and officers received presentations from Baillie Gifford and Alliance Bernstein for the quarter ended 31 March 2004 at County Hall. The Independent Financial Adviser will report orally on the main issues arising from the presentations in conjunction with information contained in the Tables (Agenda item 8) and the managers’ quarterly valuation reports.

(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.

13.E Socially Responsible Investment and Corporate Governance Issues

    1. Report of the Head of Finance (PF13E)

The Pension Fund’s managers are instructed to vote in accordance with the NAPF voting guidelines unless there are exceptional circumstances, which in the managers’ judgement would not be in the Fund’s best interests. Where managers take a contrary view to the NAPF they must obtain permission from the officers to vote differently. During the quarter, Baillie Gifford obtained permission from the officers to vote differently from the NAPF guidelines and oppose a resolution at an Extraordinary General Meeting of one of the companies in which the Pension Fund had investment. The report provides the background to this decision.

(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 report.

14.E Summary by the Independent Financial Adviser

12.10 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).)

ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

15. Strategic Asset Allocation and the Transfer of £10 million of surplus cash to UBS Global Asset Management

12.15 Report of the Head of Finance (PF15)

The report describes the Pension Fund’s current asset allocation arrangements i.e. the percentage weightings it has in bonds, equities, property etc. Under the Fund’s previous management arrangements, decisions on asset allocation rested primarily with Schroders and Deutsche Asset Management but, under the new structure, it is the responsibility of the Pension Fund Committee. On 1 April 2004, £10 million of surplus cash was transferred to UBS Global Asset Management and the report explains why this was the favoured option.

The Committee is recommended to note this report and endorse the action taken by officers in transferring £10 million of surplus cash to UBS Global Asset Management.
  1. Funding Strategy Statement

12.25 Report of the Head of Finance (PF16)

The Office of the Deputy Prime Minister published regulations that require local authority pension schemes to have a Funding Strategy Statement (FSS) in place by 31 March 2005. The report lists the main items that should be included in the FSS, explains the issues associated in drawing it up, highlights the need to consult the other employing bodies within the Oxfordshire Pension Fund and sets out a proposed timetable.

The Committee is recommended to note the report, endorse the timetable set out in paragraph 18 of the report, and determine what other involvement, if any, it wishes to have in the process.

17. Local Government Pension Scheme Regulations

12.35 Report of the Head of Finance (PF17)

The report updates the Committee about the changes arising from the new Regulations: in particular, it reviews policy statements covering employer and administering authority's use of discretionary powers, notes the changes and determines the process to be adopted for the new Internal Dispute Resolution Procedure (IDRP) effective from 1 June 2004. The report also informs the Committee about the proposals under consultation within the Draft regulations. These consultations, following the second stage to the stocktake exercise, include increasing the early retirement age from 50 to 55. A response to the Office of the Deputy Prime Minister (ODPM) is required by 30 June 2004.

The Committee is RECOMMENDED to:

          1. note the report;

          2. approve delegation to officers for applying extension of time limits for aggregating membership;

          3. adopt the resolution for use of discretionary powers under Regulation 52;

          4. adopt the recommendations for the new IDRP processes and for specified persons employing and administering authority roles; and

          5. note the draft Regulations and instruct officers of any response to be made to ODPM.

18. Staffing

12.45 Report of the Head of Finance (PF18)

The Committee is RECOMMENDED to:

          1. approve the replacement of the Pensions Administration Manager on a full-time basis;

          2. approve the recruitment of an additional team member to strengthen the Technical Team; and

          3. approve the increased budget for overtime working in order to clear backlogs of work.

19. Admitted Bodies

12.50 The Head of Finance reports on recent admissions to the Pension Fund as follows:



Charter Community Housing - The admission agreement was effective from 26 March 2004.

ALM London - A new agreement was signed on 6 April 2004 following the change of name from London Museums Agency.

Norcap - Following Committee approval last year, the agreement has been signed.

The Committee is RECOMMENDED to note this report.

20. Annual Forum

12.55 The Head of Finance will report on any relevant issues arising from the last Annual Forum. Suggested date for the Forum is 30 November 2004 at 10.00 am.

The Committee is asked to agree the date of the next Forum.

Pre-Meeting Briefing

There will be a pre-meeting briefing at County Hall on Tuesday 18 May 2004 at 2.00 pm for the Chairman, Deputy Chair and Group Spokesperson for the third political group.


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