Agenda and minutes

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

Amended as shown in bold and strikethrough at the meeting on 3 June 2012.

To approve the minutes of the meeting held on 3 December 2010 (PF3) and to receive for information any matters arising on them.

The Minutes of the meeting of the Committee held on 3 December 2010 were approved and signed as a correct record.

9:55

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 31 December using the following tables:

In addition to the above tables, the performance of the Fund Managers over the past 18 months has been produced graphically as follows:

Graph 1  - Value of Assets

Graph 2 -  Alliance Bernstein

Graph 4 - 5  - Baillie Gifford

Graph 6 - 7 - Legal & General

Graph 8 - 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 8, 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 Pension Fund had had a strong quarter, adding that the £64m equities gain had been given back by the fall in the markets. However, equities were slightly above the benchmark. He also reported that UBS had invested the remaining part of the £10m allocated to them in the last quarter into a property mandate. The Fund was currently ahead of the benchmark by 0.6%, and over 3 years, lagged by almost 2%. Overall, 2010 saw a good alignment of performance with the benchmark.

The Committee 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 Agenda Items 8,9 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 items 10 and 11, there are no reports circulated with the Agenda. Any exempt information will be reported orally.

RESOLVED that the public be excluded for the duration of items 7, 8, 9, 10, 11, 12 and 13 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 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 outweighed the public interest in disclosing the information.

10:05

Report of the Independent Financial Adviser (PF7).

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 (PF7) 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 Adviser responded to them.

The Committee 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 Managers.

10:20

(1)               The Independent Financial Adviser will report orally on the performance and strategy of Baillie Gifford drawing on the tables at Agenda Items 7 and 8.

(2)               The representatives (Mr L Robb and Mr A Dickson) 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 December 2010;

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

In support of the above is their report for the period to 31 December 2010.

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 and reviewed 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 December 2010. The representatives responded to members’ questions.

The Committee RESOLVED to note the main issues arising from the reports.

11:00

(1)               The Independent Financial Adviser will report orally on the performance and strategy of Alliance Bernstein drawing on the tables at Agenda Items 7 and 8.

(2)               The representatives (Mr N Davidson and Mr D Stewart) 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 December 2010;

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

In support of the above is their report for the period to 31 December 2010.

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 N. Davidson and Mr D. Stewart) reported and reviewed 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 December 2010. The representative’s responded to members’ questions.

The Committee RESOLVED to note the main issues arising from the reports.

11:40

The Independent Financial Adviser will report orally on the main issues arising from the reports from UBS and Legal & General in conjunction with information contained in the tables (Agenda Item 7).

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 Independent Financial Adviser reported that UBS’s recent performance had been satisfactory and Legal & General had performed well.

The Committee RESOLVED to note the Independent Financial manager’s oral report.

11:45

The Independent Financial Adviser will, if necessary, summarise the foregoing reports of the Fund Managers 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. 

The Independent Financial Adviser reported that he had nothing further to report.

11:50

The Committee agreed to undertake a fundamental review of its Investment Management arrangements once every three years, following the Valuation of the Fund. The Independent Financial Adviser and Independent Consultant have undertaken the review and their report includes a review of the Investment Strategy, Investment Structure and Investment Manager Performance (PF12E).

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 are RECOMMENDED to approve the recommendations as contained within the report PF12E.

The Committee had agreed to undertake a fundamental review of its Investment Management arrangements once every three years, following the Valuation of the Fund. The Independent Financial Adviser and Independent Consultant had undertaken the review and their report included a review of the Investment Strategy, Investment Structure and Investment Manager Performance(PF12E)

The Committee requested that a report looking into the possibilities of investment in social housing be brought to a future meeting of this Committee.

The Committee RESOLVED to agree the recommendations put forward by the Independent Financial Advisor and the Independent Consultant, as set out in report PF12E, subject to a minor amendment.

12:50

The report (PF13) reviews the activity of Mr P. Davies, the Independent Financial Adviser, over the past year.

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 are RECOMMENDED to:

(a)               note the variation to Mr Davies contract, as set out in report PF13; and

(b)              consider whether it wishes to provide Mr Davies with any feedback on his performance.

The Committee considered a report (PF13E) which reviewed the activity of Mr P. Davies, the Independent Financial Adviser, over the past year.

The Committee thanked Mr Davies for all his hard work over the past year and noted the variation to Mr Davies’ contract, as set out in report PF13E.

BUSINESS CONSIDERED FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

14.00

Lord Hutton is due to issue his final report on the future of public services pensions on 10 March. Sean Collins will give an oral report on its main findings.

The Committee is RECOMMENDED to note the report.

On 10 March 2011, Lord Hutton, the Chairman of the Independent Public Service Pensions Commission, had issued his final report on public services pensions. Sean Collins gave an oral report on its key aspects whilst referring to a published handout, which he circulated around the meeting, that set out the major recommendations.

The Committee noted the oral report.

14:10

The Business Plan summarises the functions undertaken in managing the Fund, identifying and prioritising key tasks for the coming year and outlines the significant risks associated with the Fund.  The budget for 2011/12 is also presented for approval (PF15).

The Committee is RECOMMENDED to approve the Pension Fund Business Plan and Budget for 2011/2012.

The Committee had before them for approval the Business Plan which summarised the functions undertaken in managing the Fund; identified and prioritised key tasks for the coming year; and outlined the significant risks associated with the Fund.  The budget for 2011/12 was also presented for approval (PF15).

The Committee RESOLVED to approve the Pension Fund Business Plan and Budget for 2011/2012, subject to any proposal for the rebranding of the Oxfordshire Pension Fund documentation to be the subject of a report to a future Committee.

14:20

From April 2011, the Fund’s resources will be kept totally separate from County Council resources, including cash balances. Previously these cash balances were managed with the County Council’s cash balances in accordance with the Council’s Treasury Management Strategy. Separating resources means it is necessary for the Pension Fund to agree its own Cash Management Strategy.

The Pension Fund Committee is RECOMMENDED to:

(a)              approve the Pension Fund Cash Management Strategy for 2011/12;

(b)              delegate authority to the Assistant Chief Executive and Chief Finance Officer to make changes necessary to the Pension Fund Cash Management Strategy during the year, in line with changes to the County Council’s Treasury Management Strategy;

(c)               delegate authority to the Assistant Chief Executive and Chief Finance Officer to open separate pension fund bank, deposit and investment accounts as appropriate; and

(d)              delegate authority to the Assistant Chief Executive and Chief Finance Officer to borrow money for the pension fund in accordance with the regulations.

The Committee were advised that from April 2011, the Fund’s resources would be kept totally separate from County Council resources, including cash balances. Previously these cash balances had been managed with the County Council’s cash balances in accordance with the Council’s Treasury Management Strategy. Separating resources meant it was necessary for the Pension Fund to agree its own Cash Management Strategy.

The Committee RESOLVED to:

a)                 approve the Pension Fund Cash Management Strategy for 2011/12;

b)                 delegate authority to the Assistant Chief Executive and Chief Finance Officer to make changes necessary to the Pension Fund Cash Management Strategy during the year, in line with changes to the County Council’s Treasury Management Strategy;

c)                  delegate authority to the Assistant Chief Executive and Chief Finance Officer to open separate pension fund bank, deposit and investment accounts as appropriate; and

d)                 delegate authority to the Assistant Chief Executive and Chief Finance Officer to borrow money for the pension fund in accordance with the regulations.

14:30

At the meeting on 3 September 2010, the Committee delegated decision making related to custody of assets to the Head of Finance & Procurement and the County Solicitor, after consultation with the Chairman and Deputy Chairman of the Committee. As a consequence of the Council’s Business Strategy, the post of Head of Finance & Procurement no longer exists. To avoid authorisation problems with banks and legal representatives of third parties, the Committee is asked to formally change the delegation to the Chief Finance Officer and Monitoring Officer. These roles are defined in the Council’s Constitution.

The Pension Fund is RECOMMENDED to delegate decision making related to custody of assets to the Chief Finance Officer and Monitoring Officer, after consultation with the Chairman of the Committee.

At the meeting on 3 September 2010, the Committee had delegated decision making related to custody of assets to the Head of Finance & Procurement and the County Solicitor, after consultation with the Chairman and Deputy Chairman of the Committee. As a consequence of the Council’s Business Strategy, the post of Head of Finance & Procurement no longer exists. To avoid authorisation problems with banks and legal representatives of third parties, the Committee was asked to formally change the delegation to the Chief Finance Officer and Monitoring Officer. These roles are defined in the Council’s Constitution.

The Committee RESOLVED to delegate decision making related to custody of assets to the Chief Finance Officer and Monitoring Officer, following consultation with the Chairman of the Committee.

14:35

Report of the Assistant Chief Executive and Chief Finance Officer (PF18)

The report sets out write off’s which have taken place under the Council’s Scheme of Financial Delegation.

The Pension Fund Committee is RECOMMENDED to note this report.

The Committee considered a report (PF18) which gave an update on the 2010 valuation process.

The Committee RESOLVED to note the report.

14:40

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

The Committee RESOLVED to note the report.