Meeting documents
Pension Fund Committee
Friday, 21 November 2003
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To Members of the Pension Fund Committee Notice of Meeting
MembershipChairman – Councillor C.H. Shouler Councillors:
Co-opted Members:
The agenda follows. Decisions taken at the meeting will become effective at the end of the working day on 2 December 2003 unless called in by that date for review by the appropriate Scrutiny Committee.
AGENDAAddenda
To approve the minutes of the meeting held on 29 August 2003 (PF3) and to receive for information any matters arising therefrom.
10:05 During the early part of the quarter, the transition process was completed and the four new managers commenced management of their portfolios from 11 July 2003. The
Independent Financial Adviser will review the investment activity
during the past quarter and present an overview of the Fund’s position
as at 30 September 2003 using the following tables: 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 7E to 9E on the agenda. EXEMPT ITEMS The Sub-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 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 7E and 8E 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 February 2004.
10:20 The Independent Financial Adviser will report 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 is not exempt, will be supported by relevant tables of economic and market trends, where appropriate, which are attached. Any exempt information will be reported orally. (Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).) The Committee are RECOMMENDED to receive the oral report and tables, to consider any further action arising thereon, and to bear the Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.
10:30 (a) The Independent Financial Adviser will report orally on the performance and strategy of UBS Asset Management drawing on the tables at items 5 and 6E. (b) The representative(s) of the Fund Manager will:
In support of the above is their valuation report for the period to 30 September 2003, 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.
In support of the above is their valuation report for the period to 30 September 2003, 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.
11:20 Officers and Mr Bushell received presentations from Alliance Bernstein and Legal and General for the quarter ended 30 September 2003, at County Hall. Mr Bushell will report orally on the main issues arising from these presentations in conjunction with information contained in Tables 1, 2 and 4 (agenda item 5) 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 are RECOMMENDED to note the main issues arising from the presentations and to take any necessary action, if required.
11:35 The 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).
Report by Head of Finance (PF11E). 11:40 The report reviews the activities of the Independent Financial Adviser over the twelve-month period ending 30 November 2003. This was a period of extensive change for the Pension Fund and the Independent Financial Adviser was heavily involved in those changes. As a consequence of this, the Committee are recommended to upgrade his basic fee in line with the retail price index and to award an appropriate ex-gratia payment in recognition of this. (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:
ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC
11:55 The Head of Finance reports as follows:- Officers and the Independent Financial Adviser met with UBS Wealth Management in London to agree an appropriate strategy for the investment in hedge funds. An oral report will be given on the issues that have arisen from this and which are currently being addressed. The Committee is RECOMMENDED to note the report.
12:05 Report by Head of Finance (PF13). The report summarises a series of presentations made by the Fund’s new custodian ABN AMRO Mellon to Mr Wheeler and to the Independent Financial Adviser. Areas addressed include commission recapture, standardised proxy voting reporting, risk reporting and transaction cost reporting. There was also a detailed presentation on stock lending but this is the subject of a separate report on this agenda (agenda item 14). The report also makes several recommendations arising from the presentations. The Committee is RECOMMENDED to:
Report by Head of Finance and the Independent Financial Adviser (PF14). 12:15 The
report describes the activity of stock lending and explains how the
Pension Fund’s custodian, ABN AMRO Mellon addresses areas of associated
risk, including that of collateral, daylight exposure, the credit worthiness
of counterparties and default. The report advises that the Local Government
Pension Scheme (Management and Investment of Funds) Regulation S 1998
allow local authority pensions funds to lend 25% of their total funds,
which for Oxfordshire would equate to approximately £150 million. On
a sum of £150 million they would estimate total earnings of around £30,000,
of which £18,000 would be paid to the Fund. Accordingly, the Committee
are therefore be recommended to request ABN AMRO Mellon to lend stock
on behalf of the Oxfordshire Pension Fund. The Committee are RECOMMENDED to request the Pension Fund’s global custodian, ABN AMRO Mellon, to lend stock on behalf of the Oxfordshire Pension Fund.
Report by Head of Finance (PF15). 12:25 Following a presentation by Hermes to the Pension Fund Committee on 29 August 2003, members asked officers to report back on any issues arising from the presentation, and to advise whether the Oxfordshire Pension Fund should be taking any further action to comply with the Myners Review on shareholder activism/engagement.
The Committee is RECOMMENDED to:
Report by Head of Finance (PF16). 12:45 The report compares he Oxfordshire Pension Fund’s asset distribution with that of other local authority pension funds. It also compares the Fund’s 3, 5 and 10 year investment performance with those of other English county councils. The Committee is RECOMMENDED to receive the report.
BREAK FOR LUNCH
The procedure is attached for consideration at (PF17). 2:00 The current scheme was adopted in 2001 and is due to expire on 31 December 2003. the Teachers Joint Committee, at their meeting on 13 November had the document before them for consultation purposes. An update will be given at the meeting with regard to the outcome. The Committee are RECOMMENDED to renew the Premature Retirement compensation Scheme for Teachers until 31 December 2004.
Report by Head of Finance (PF18). 2:10 The report summarises the annual review of AVC provision by Watson Wyatt pension consultations, including the Council’s existing arrangements with Prudential and their investment performance. The Committee is RECOMMENDED to:
2:15 Report by Head of Finance (PF19). Attached are two Audit Commission reports entitled:
The Committee is RECOMMENDED to:
The Head of Finance reports as follows:- 2:25 A draft of the Annual Report and Accounts was approved at the 29 August meeting. The Committee is now be asked to formally adopt the Pension Fund annual report and accounts. (The Report has been circulated separately to members and relevant officers). The Committee is RECOMMENDED to adopt the Pension Fund annual report and accounts for 2002/03
Report by Head of Finance (PF21). 2:30 In April 2003 Watson Wyatt informed us of their decision to withdraw from providing actuarial services to the local government sector by November 2003. This was reported to Committee in May 2003, seeking approval for the process of selecting a new actuary and to determine the level involvement by Committee. The Committee agreed to approve the process to select a new actuary, subject to consultation with the Chairman and Deputy Chair of the Committee, when appropriate. The report gives details on the appointment process and on the successful applicant. The Committee is RECOMMENDED to approve the appointment of Hewitt, Bacon and Woodrow as new actuaries to Oxfordshire County Council for a period of 5 years with immediate effect.
2:35 The Head of Finance reports as follows: The Head of Finance will report orally on issues arising from officers and Fund Managers on their involvement in matters of Socially Responsible Investment and Corporate Governance. The Committee is RECOMMENDED to note the report.
Report by Head of Finance (PF23). 2:40 To consider a request from a current administration body, London Museums Agency, to enter into a new admission agreement to the Local Government Pension Fund. The Committee is RECOMMENDED to approve the application from ALM London subject to all parties agreeing to the terms of the Admission Agreement, and this Committee being informed when agreements have been signed.
Report by Head of Finance (PF24). 2:45 The office of the Deputy Prime Minister (ODPM) has been undertaking a stocktake of the Local Government Pension Scheme (LGPS) with the intention of simplifying the rules and reducing costs. The ODPM has drafted amending regulations, to be introduced mainly from 1 April 2004, and has asked for comments on these by 1 December 2003. The amending regulations represent the first stage of the changes to be made to the scheme. Annex 1 (download as .rtf file) highlights the major changes to the regulations. The second stage of the process is likely to be much more controversial than the first as it will have more significant and fundamental impact. As a prelude to the second stage, the ODPM has issued a discussion paper drawing on the responses received from earlier stocktake consultation. The discussion paper, which was received only a short time ago, is attached at Annex 2 (download as .rtf file) , for information, together with a covering letter from the ODPM. It covers, among other things, issues such as:
The ODPM has indicated that comments on this paper will be carefully considered by Ministers and will be translated into draft amending regulations for statutory consultation in early 2004 to take effect from 1 April 2005. The ODPM has asked for a response by 12 January 2004. The Committee is RECOMMENDED to:
2:55 The
Director for Resources will report on any relevant issues arising
from the last Annual Forum.
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