Agenda and minutes

Councillor A.M. Lovatt attended in place of Councillor C.H. Shouler.

The Committee asked that their best wishes for a speedy recovery be conveyed to Sally Fox who was recovering from a motor cycle accident.

Councillors Darke, Harvey, Lilly, Patterson (co-opted member) and Service declared personal interests as members of the Pension Fund Scheme under the provisions of Section 18 of the Local Government & Housing Act 1989.

To approve the minutes of the meeting held on  3 June 2011 (PF3) and to receive information arising from them.

The Minutes of the meeting of the Committee held on 3 June 2011 were approved and signed as a correct record,

With regard to Minute 30/11 ‘Re-branding of the Pension Fund’ Mr Collins reported that further investigations had revealed that costs incurred in changes to the Pension Fund brand would not be in relation to the design aspects, but to the software required. He added that a clearer branding would reduce administrative errors. The Committee endorsed their decision to spend £2 – 3k on the re-branding.

There were no requests to address the Committee or to submit a petition.

10:10

Tables 1 to 10 are compiled from the custodian's records. The custodian is the Pension Fund's prime record keeper. He accrues for dividends and recoverable overseas tax within his valuation figures and may also use different exchange rates and pricing sources compared with the fund managers. The custodian also treats dividend scrip issues as purchases which the fund managers may not do. This may mean that there are minor differences between the tabled figures and those supplied by the managers.

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 June 2011using the following tables:

In addition to the above tables, the performance of the Fund Managers over the past 3 years has been produced graphically as follows:

Graph 1          – Value of Assets

Graph 2-3       - Baillie Gifford

Graph 4-5       – Legal & General

Graphs 6-10  – UBS

The Committee is RECOMMENDED to receive the tables and graphs, and that the information contained in them be borne in mind, insofar as they relate to items 9 and 10 on the agenda.

The Committee was advised that Tables 1 to 10 had been compiled from the custodian’s records. The custodian was the Pension Fund’s prime record keeper. He had accrued for dividends and recoverable overseas tax within his valuation figures and might also have used different exchange rates and pricing sources compared with the fund managers. The custodian had also treated dividend scrip issues as purchases which the fund managers might not have done. This might mean that there were minor differences between the tabled figures and those supplied by the managers.

Mr Davies reported that the current valuation of the Pension Fund showed a shortfall of 1.9% per annum over the past 3 years and 1.4% per annum over the last 5 years. The past year had been a positive one when measured against the benchmark. In line with the sharp decline of the UK market in recent months, there had been a depreciation of £93m at the end of August 2011, but Bonds had gained £8m leading to an overall depreciation of £85m.

RESOLVED: to note the comments of the Independent Financial Adviser and to receive the tables and graphs and that the information contained in them be borne in mind insofar as they related to Items 9 and 10 on the Agenda.

The Committee is RECOMMENDED that the public be excluded for the duration of items 7, 8, 9, 10, 11,12 and 13 in the Agenda since it is likely that if they were present during those items there would be disclosure of exempt information as defined in Part I of Schedule 12A to the Local Government Act 1972 (as amended) and specified in relation to the respective items in the Agenda and since it is considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

THE REPORTS RELATING TO THE EXEMPT ITEMS HAVE NOT BEEN MADE PUBLIC AND SHOULD BE REGARDED AS STRICTLY PRIVATE TO MEMBERS AND OFFICERS ENTITLED TO RECEIVE THEM.

NOTE: In the case of item 9, there are no reports circulated with the Agenda. Any exempt information will be reported orally.

It was RESOLVED that the public be excluded for the duration of items 8,9,10,11 and 12 in the agenda since it was likely that if they were present during those items there would be disclosure of exempt information as defined in Part 1 of Schedule 12 A to the Local Government Act 1972 (as amended) and specified in relation to the respective items in the Agenda and since it was considered that, in all circumstances of each case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

10:15

The representative (Karen Thrumble) of the WM Company will review the Oxfordshire Pension Fund’s investment performance for the twelve months ended 31 March 2011. The presentation will compare Oxfordshire’s performance against its own customised benchmark and against the WM Local Authority Pension Fund Universe.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority’s investments in funding the Pension Fund.

Karen Trumble, representing the WM Company, presented her report (PF7) on the Pension Fund’s investment performance for the 12 months ended 31 March 2011. The presentation compared Oxfordshire’s performance against its own customised benchmark and against the WM Local Authority Pension Fund Universe. A copy of her presentation is attached to the signed copy of the Minutes.

RESOLVED: to take note of the points raised in the presentation and to thank Karen Trumble for her attendance.

10:55

Report of the Independent Financial Adviser (PF8).

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.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

The Committee is RECOMMENDED to receive the report, tables and graphs, to receive the oral report, to consider any further action arising on them and to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

The Committee considered a report (PF8) which set out an overview of the current and future investment scene and market developments across various regions and sectors. Members asked questions and the Independent Financial Advisor responded to them.

RESOLVED: to receive the report, tables and graphs, to receive the oral report of the Independent Financial Adviser and to bear these comments in mind when considering the reports of the Fund Manager.

11:10

(1)               The Independent Financial Adviser will report orally on the performance and strategy of UBS drawing on the tables at Agenda Items 5 and 8.

(2)               The representatives (Mr L. Robb and Mr I. McCombie) 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 which ended on 31 March 2011;

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

In support of the above is their report for the period to 31 March 2011.

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

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

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

The representatives, Mr L. Robb and Mr I. McCombie, reported on and reviewed the present investments in relation to their part of the Fund and their strategy against the background of the current investment scene for the period which ended on 30 June 2011. The representatives responded to members’ questions.

RESOLVED: to note the main issues arising from the reports.

11:50

The Independent Financial Adviser will report orally on the key issues arising from the Officer meetings with the Fund Managers not represented at the Committee in conjunction with information contained in the tables (Agenda Item 5).

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund.

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

The Pension Fund Committee RESOLVED to note the Independent Financial Adviser’s oral report.

11:55

The Independent Financial Adviser will, if necessary, summarise any other issues arising from the monitoring of our Fund Managers, including any update in respect of the change in Fund Manager, as agreed at the March Committee and answer any questions from members.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, in that such disclosure would prejudice the trading activities of the fund managers involved and would prejudice the position of the authority's investments in funding the Pension Fund. 

Mr Davies reported that he had no additional comments to make on the existing Fund Managers performance and strategy. However, he gave an oral report on progress with regard to the interview process for the appointment of the new Global Equities Manager.

RESOLVED: that the shortlist of up to four Fund Managers be drawn up in consultation with the Chairman, Deputy Chairman and the Opposition Spokesperson and that all councillors be informed of this at the appropriate time.

12:00

As requested at a former meeting, the Independent Financial Adviser sets out the main issues associated with introducing infrastructure or social housing products into the Pension Fund portfolio (PF12).

The Pension Fund Committee is RECOMMENDED to take the following action:

(a)              to delegate to the Fund’s Fixed Income managers (currently Legal & General Investment Management) the decision as to whether to invest on behalf of the Pension Fund in bonds issued by Social Housing providers including The Housing Finance Corporation;

(b)              to request the officers to ascertain whether the EU Procurement Regulations require the Pension Fund to use the OJEU tender process for all investments in unlisted infrastructure funds; and

(c)               subject to the outcome of recommendation (b) above, and to the agreement of the Committee, the Independent Advisor and officers formulate a strategy for selecting suitable infrastructure funds for investment by the Pension Fund. An initial recommendation is to restrict the selection to funds managed by Europe-based managers and investing in European infrastructure.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information. 

As requested at a former meeting, the Committee considered a report (PF12) in which the Independent Financial Adviser had set out the main issues associated with introducing infrastructure or social housing products into the Pension Fund portfolio.

The Pension Fund Committee RESOLVED to take the following action:

(a)               to delegate to the Fund’s Fixed Income Managers (currently Legal & General Investment Management) the decision as to whether to invest on behalf of the Pension Fund in bonds issued by Social Housing providers including The Housing Finance Corporation;

(b)               to request the officers to ascertain whether the EU Procurement Regulations require the Pension Fund to use the OJEU tender process for all investments in unlisted infrastructure funds; and

(c)               subject to the outcome of recommendation (b) above, and to the agreement of the Committee, the Independent Financial Advisor and officers formulate a strategy for selecting suitable infrastructure funds for investment by the Pension Fund. An initial recommendation is to restrict the selection to funds managed by Europe-based managers and investing in European infrastructure.

12:10

This report provides the annual review of the Fund’s Additional Voluntary Contribution (AVC) scheme, including issues regarding performance of the individual funds, and the Scheme Provider (Prudential) itself (PF13).

The Committee is RECOMMENDED to note the report and to confirm the continued use of Prudential as the Council’s AVC provider.

The public should be excluded during this item because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following prescribed category:

3.         Information relating to the financial or business affairs of any particular person (including the authority holding that information) and since it is considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information. 

The Committee considered a report (PF13) which set out the annual review of the Fund’s Additional Voluntary Contribution (AVC) scheme, including issues regarding performance of the individual funds, and the Scheme Provider (Prudential) itself.  

RESOLVED: to note the report and to confirm the continued use of Prudential as the Council’s AVC provider.

12:20

The draft Annual Report and Accounts for 2010/11 (PF14) show the final accounts for the Pension Fund for the year ended 31 March 2011 and provides details on how the Fund operates, including sections on membership and investments. The report also includes the Statement of Investment Principles. The final report will be brought to the Committee in December.

Representatives from the Audit Commission will be present to respond to any questions from Members on their findings.

The Pension Fund Committee is RECOMMENDED to receive the draft report and accounts for 2010/11.

The Committee considered the draft Annual Report and Accounts for 2010/11 (PF14) which showed the final accounts for the Pension Fund for the year ended 31 March 2011 and provided details on how the Fund operated, including sections on membership and investments. The report also included the Statement of Investment Principles. The final report would be submitted to the Committee in December.

Mary Fetigan and Nicola Batchelor, representatives from the Audit Commission, attended the meeting in order to respond to any questions from Members.

RESOLVED: to receive the draft report and accounts for 2010/11 and to thank Mary Fetigan and Nicola Batchelor from the Audit Commission for their attendance.

12:30

This report (PF15) covers the outturn figures for both the Pension Investment and Administration Teams, and explains any key differences from the approved budgets.

The Committee is RECOMMENDED to receive the report and note the out-turn position.

The Committee had before them a report (PF15) which covered the outturn figures for both the Pension Investment and Administration Teams, and which explained any key differences from the approved budgets.

RESOLVED: to receive the report and to note the outturn position.

12:35

This report (PF16) informs the Committee of the latest service performance figures for the Pensions Administration Service, highlighting the significant improvements achieved in the last year.

The Committee is RECOMMENDED to note the report on performance in the Pensions Administration Team, and to consider whether they wish to receive an annual report on performance at future Committee meetings scheduled for the autumn.

The Committee had before them a report (PF16) which gave information on the latest service performance figures for the Pensions Administration Service, and highlighted the significant improvements achieved in the last year.

RESOLVED: to

(a)               note the report; and

(b)               receive an annual report at future, autumn scheduled, Committee meetings.

12:45

This report (PF17) sets out current issues around membership of the Oxfordshire LGPS Fund.  These include the issues associated with the establishment of new Academy Schools, and around the new service delivery models developing as a result of the constraints on public sector expenditure and the Big Society model.

The report highlights potential issues arising from the current process for seeking Committee agreement to each application for Admitted Body status, and considers an alternative approach for Committee consideration. A particular case is highlighted.

The report also reports a technical change to a current Admission Agreement, and recommends the approval of a revised agreement.

The Committee is RECOMMENDED to:

(a)              note the position on Academy Schools as set out in this paper;

(b)              consider what changes, if any, they would wish to make to the process for the approval of future admission agreements where approval before the next scheduled Committee is sought to avoid delaying the implementation of new service arrangements; and

(c)               agree the novation of the current admission agreement for Vale Housing Association to the Sovereign Housing Association.

The Committee considered a report (PF17) that set out current issues around membership of the Oxfordshire LGPS Fund. These included the issues associated with the establishment of new Academy Schools, and around the new service delivery models developing as a result of the constraints on public sector expenditure and the Big Society model.

The report also highlighted potential issues arising from the current process for seeking Committee agreement to each application for Admitted Body status, and considered an alternative approach for Committee consideration. A particular case is highlighted.

The report also documented a technical change to a current Admission Agreement and recommended the approval of a revised agreement.

RESOLVED: to:

(a)               note the position with regard to Academy Schools as set out in the report;

(b)               delegate to the Chairman, Deputy Chairman and the Opposition Spokesperson the approval of future admission agreements where this is sought before the next scheduled Committee, in order to avoid delaying the implementation of new service arrangements; however, should any one of the above named members require it, the admission agreement be brought to a special meeting of the full Pension Fund Committee; and

(c)               agree the novation of the current admission agreement for Vale Housing Association to the Sovereign Housing Association.

12:50

This report (PF18) informs the Committee of any write offs agreed by the Officers in line with the approved arrangements set out in the Scheme of Financial Delegation for the Fund.

The Pension Fund Committee is RECOMMENDED to note the report.

The Committee had before them a report (PF18) which informed them of any write offs that had been agreed by the officers in line with the approved arrangements set out in the Scheme of Financial Delegation for the Fund.

RESOLVED: to note the report.

12:55

There will be an oral update on the latest position regarding the changes to the LGPS under the Government’s wider agenda of public sector pension reform (subject to there being any further information in the public domain).

Mr Collins gave an oral update on the latest position regarding the changes to the LGPS under the Government’s wider agenda of public sector pension reform.

It was RESOLVED to note that advice from the Government had yet to be received but that  the consultation process was due to begin at the end of September 2011. Thus the Committee would have the opportunity to consider its response at the next meeting scheduled for 2 December 2011.

13:00

The Assistant Chief Executive & Chief Finance Officer has no other issues to report for this quarter but it should be noted that all the managers have included pages within their valuation reports which provide details on their voting at company AGMs, engagement with companies and their involvement with other socially responsible initiatives.

The Committee noted that there was nothing further to report on this item.

13:05

The Assistant Chief Executive & Chief Finance Officer will report orally on any issues arising from the last Forum or about the Annual Pension Forum which will take place on  9 December 2011 at 10 am.

The Committee noted that the Annual Pension Forum would take place on 9 December 2011 commencing at 10.00 am.