Meeting documents
Pension Fund Committee
Friday, 29 August 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 8 September 2003 unless called in by that date for review by the appropriate Scrutiny Committee AGENDA
To approve the minutes of the meeting held on 23 May 2003 (PF3) and to receive for information any matters arising therefrom. 10:05 During the quarter ended 30 June, the transition exercise took place. Deutsche Asset Management Ltd and Schroder Investment Management ceased to manage the assets at the close of business 12 June 2003 and Legal & General, the transition manager took over the management arrangements on 13 June, and continue to manage them until the end of the quarter. The new managers took over from 11 July 2003. Due to the transition over the quarter there will be less information supplied in chart form than was normal. We will be reporting on the total composition of the Fund as at 30 June. The transactions carried out by Deutsche Asset Management Ltd and Schroder Investment Management until 12 June and the performance return at the total fund level and for the individual assets will also be reported The Committee is RECOMMENDED to receive the report. 10:15 As requested by the Pension Fund Manager (Appointments) Sub-Committee, Hermes will give a presentation explaining their proactive approach on Corporate Governance. The Pension Fund’s Statement of Investment Principles highlights activism as one of the CiPFA ‘Principles for Investment Decision – Making in the Local Government Pension Scheme in the UK’ that the Oxfordshire Pension Fund does not currently carry out.
10:55 Report by Combined Actuarial Performance Services Ltd (CAPS) which will be represented by Mr P. Brackett.
The general reports (Pension Fund Statistics and Review documents will give details of the main investment markets and performance statistics for all fund measures by CAPS).
To report, comparing the investment performance of the Council’s Pension Fund as a whole against its customised benchmark. (Copies of the above reports have been circulated to all members of the Committee and copies have also been placed on public deposit).
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 8E - 10E there are no reports circulated with the Agenda. Any exempt information will be reported orally. The Fund Managers’ reports relating to the Exempt Item at 10E 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 30 November 2003.
Mr Brackett will report, analysing in detail the year 2002 investment performance of the Schroder portfolio of the Pension Fund.
Mr Brackett will report, analysing in detail the year 2002 investment performance of the Deutsche Asset Management portfolio of the Pension Fund. (A copy of each of the above reports is enclosed). (Information Exempt in that it relates to the financial or business affairs of any particular person (other than the authority).)
11:55 The Independent Financial Adviser will report orally, giving an overview of the current and future investment scene and market development across various regions and sectors. His oral report and the report PF9E, which is not exempt, is supported by relevant charts of economic and market trends, where appropriate, and these are attached. (Any exempt information will be reported orally). (Chart 4 on investment performance will be circulated at the meeting). (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 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’ report.
12:05 The Independent Financial Adviser will report orally on the investment activity of Schroder Investment Management and Deutsche Asset Management Ltd up until the termination date of 12 June 2003. The Committee is RECOMMENDED to receive the reports.
ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC
12:20 Report by Independent Financial Adviser (PF11) (download as .doc file). Following the Pension Fund’s asset liability study which was carried out in early 2002, the Actuary recommended a 2% investment in Hedge Funds. However, a decision on this was deferred pending further research and information. The report explains Hedge funds and recommends whether or not the Pension Fund should have a small exposure to this asset class. It is recommended that this report, should be considered in conjunction with the paper ‘Hedge Funds Made Simple’, published in 2001 by the National Association of Pension Funds, a copy of which is attached at Annex 1. The Committee is RECOMMENDED that:
12:40 Joint Report by Head of Finance and Independent Financial Adviser (PF12). The report describes futures, options and swaps and how these can be used by our Fund Managers. The Committee is RECOMMENDED to
12:50 Report by Head of Finance (PF13). At the May 2003 Pension Fund Committee Meeting it was reported that Legal and General had been appointed as the Fund’s Transition Manager. Legal and General’s role was to take the existing Schroder and Deutsche Asset Management portfolios and complete the restructuring in order to deliver the new portfolios to the four newly appointed managers in the most timely, cost effective and efficient manner. The report describes the successful conclusion of the investment management restructuring process with all four management agreements having been signed and sealed. It highlights a number of issues of principal that have arisen from the management agreements and which have been dealt with by officers, in consultation with the Independent Financial Adviser. The Committee is RECOMMENDED to
2:00 The draft Annual Report (attached at PF14) gives the full Pension Fund account for the year ended 31 March 2003 and provides details on how the Pension Fund operates, including sections on membership and investments. It also incorporates the Statement of Investment Principles, which has been updated in the light of the major management restructuring exercise that has now been undertaken. The Committee is RECOMMENDED to receive the draft report and accounts and to agree the revised Statement of Investment Principles.
2:15 Report by Head of Finance (PF15) (download as .doc file). A report on future monitoring arrangements was considered at the Committee’s last meeting on 23 May 2003. It was agreed that all members should be involved in the monitoring process. It was also decided that managers would be invited to Committee meetings on a rotational basis subject to the proviso that managers may be asked to attend additional meetings where there is a cause for concern or if there is a change of personnel. Officers were asked to prepare a further report for this meeting setting out the new arrangements. The Committee is RECOMMENDED to agree the programme of manager meetings as set out in the report.
2:35 Report by Head of Finance (PF16). The report considers the following issues arising from officers’ involvement in matters of Socially Responsible Investment and Corporate Governance.
The Committee is asked to note the report.
2:45 Report by Head of Finance (PF17). In May 2002 the Office of the Deputy Prime Minister published the initial findings of the Stocktake exercise of the Local Government Pension Scheme. To progress this exercise into a second phase the ODPM reported that it would issue a series of discussion papers on key areas, which would demand further analysis and consultation. To date two discussion papers have been circulated. The first sought responses on how a more flexible benefit package, particularly for new employees, might be developed. The second examined the scope for further simplification of the Scheme’s legal framework. Both these papers have previously been presented to this Committee. Comments on both these papers are in the process of being analysed and reported to Ministers. This report considers a third discussion paper, which proposes to introduce a LGPS regulation requiring administering authorities to prepare a funding strategy statement, which will identify the approach to be taken to meet their scheme’s pension liabilities going forward. The Committee is RECOMMENDED to endorse the officers’ comments as set out in paragraphs 8 to 12, add any of their own, and to instruct the officers to send these comments to the Office of the Deputy Prime Minister before the consultation deadline.
3:00 The Committee will be asked to determine arrangements for the next Annual Forum.
3:15 The Head of Finance reports as follows:- On 17 August 2001 the Pensions and Investment Sub-Committee approved in principle the application of the Order of St John Care Trust to become an admitted body with this fund. The approval was subject to the agreement of the terms of the admission agreement. The agreement was signed and in place for the main transfer of staff from the County Council to St Johns on 21 December 2001. The agreement is a ‘closed scheme’ and does not cover new employees joining the Order of St John Care Trust. St Johns is now expected to take over the running of the Wallingford Day Centre from the County Council, and employees are concerned for the continuity of the pension provision. Under the current admission agreement the staff new to St Johns would not be eligible to continue in the Local Government Pension Scheme (LGPS). There are currently 4 part time employees working at the Day Centre who are members of the Local Government Pension Scheme. A solution to provide the continuity of pension provision for the Wallingford Day Centre staff would be to amend the current admission agreement. The Head of the Legal Services & Solicitor to the Council advises that formal approval for such an amendment is necessary. There are no financial implications for the County in considering this amendment to the admission agreement. The fund’s actuary has already provided the employer contribution rate for the original transfer of staff. The inclusion of 4 additional people would be unlikely to cause a change to the employer profile and hence their employer rate before the next full valuation of the pension fund on 31 March 2004.
The
Committee is RECOMMENDED to authorise an amendment to the admission
agreement to enable the staff of the Wallingford Day Centre to continue
as members of the Local Government Pension Scheme subject to all parties
agreeing to the additional and amending terms.
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