Agenda and minutes

Councillor David Harvey was elected Chairman for the current Council year.

Councillor Bill Service was elected Deputy Chairman for the current Council year.

An apology was received from Councillor Bill Service.

Councillors Darke, Fooks, Harvey, Lilly and Patterson 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 meetings held on 16 March 2012 (PF5) and to receive information arising from them.

The Minutes of the meeting of the Committee held on 16 March 2012 (PF5) were approved and signed as a correct record.

There were no petitions submitted or any requests to address the meeting by members of the public.

10:20

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 March 2012 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 – 3    Baillie Gifford

Graph 4 – 5  Legal & General

Graph 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, 10, 11, and 12 on the agenda.

Mr Davies reported that the first quarter for 2012 had seen a strong equity and bond appreciation for the Pension Fund amounting to £80m. Since then the equity markets in the United Kingdom and overseas had fallen by 8% in sterling terms, which had resulted in £68m of the above mentioned appreciation being given back. As a result, the Fund was currently worth £1.23b. Over 12 months the Fund was performing 0.1% below its benchmark, over 3 years, 0.9% below, and over 5 years, 1.3% below.

Members enquired about the timescale with regard to the Wellington transfer. Mrs Ross responded that it was close to finalisation.

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 9,10,11 and 12 on the Agenda.

The Committee is RECOMMENDED that the public be excluded for the duration of items 9, 10, 11, 12, 13 and 14 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 13 there is no report circulated with the Agenda. Any exempt information will be reported orally.

It was RESOLVED that the public be excluded for the duration of items 9, 10, 11,12, 13, and 14 in the Agenda since it was likely that if they were present during those items there would be a disclosure of exempt information as defined in Part 1 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 was considered that, in all circumstances of each case, the public interest in disclosing the information.

10:35

Report of the Independent Financial Adviser (PF9).

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 (PF9) 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.

Mr Davies pointed out that since the report had been written, uncertainty in the market had become greater, mainly due to continuing uncertainty of the fiscal climates in Greece, Spain and Italy.

RESOLVED: to receive the report, tables and graphs and to receive the oral report of the Independent Financial Adviser.

10:50

(1)               The Independent Financial Adviser will report orally on the performance and strategy of UBS drawing on the tables at Agenda Items 7 and 9.

(2)               The representatives (Mr S. Lee and Mr A. Sander) 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 2012;

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

In support of the above is their report for the period to 31 March 2012.

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.

Prior to the entry of the UBS representatives, the Independent Financial Adviser reported that Nick Melhuish, Head of Global Equities, had left the Company for a change in lifestyle. Mr Davies and the officers would be meeting with his replacement, Nick Irish, shortly. Officers would report back to a future meeting on any impact of this change in terms of approach and performance. He added that performance during the previous two quarters had improved substantially.

In response to  concerns expressed by the Committee at the last meeting regarding the property portfolio, Mr Davies added also that he and the officers had met with Mr. Sander that week and, as a result, had felt more confident about the approach taken.

The representatives, Mr. S. Lee and Mr. A. Sander, reported on and reviewed the present investments and the property portfolio in relation to their part of the Fund and their strategy against the background of the current investment scene for the period which ended 31 March 2012. The representatives responded to Members’ questions.

Members of the Committee asked questions and received responses in respect of the following areas:

• Local rental incentive schemes on retail property;
• Exposure to market in Poland and the question of stock availability;
• The number of funds which UBS were involved in and difficulty for Committee members to take stock of transactions taking place, due to a lack of clarity in the paperwork submitted. Mr Lee thanked the Committee for its feedback and responded that work was in progress to review the layout of reports, adding that, via natural dilution, UBS were looking to retain a portfolio in the region of 20 funds.

RESOLVED: to note the main issues arising from the presentation and to take any necessary action, if required.

11:30

(1)               The Independent Financial Adviser will report orally on the performance and strategy of Legal & General drawing on the tables at Agenda Items 7 and 9.

(2)               The representatives (Mr J. Cloke and Mr M. White) 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 2012;

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

In support of the above is their report for the period to 31 March 2012.

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.

Prior to the entry of the Legal & General representatives, the Independent Financial Adviser informed the Committee that Legal & General’s performance had been very good and that they had outperformed their target over three years. He added that they had recently made changes to their corporate bond which was now accessed via their new pooled fund named ‘Core Plus’. A better return to UK Corporate Bonds was expected. Mr Davies also pointed out that Legal & General had offered to increase their Fixed Annualised Performance target from 1 April 2012 and this had been agreed by the Officers.

The representatives, Mr J. Cloke and Mr. M. White, 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 31 March 2012. The representatives responded to members’ questions. Mr White gave a more detailed explanation of the ‘Core Plus’ scheme.

Members of the Committee asked questions and received responses in respect of the following areas:

·      The areas which Legal & General considered to be underweight;

·      Implications of slow growth outlook in Europe and the United States;

·      Reasons for adopting the Core Plus scheme at this particular time.

RESOLVED: to note the main issues arising from the presentation and to take any necessary action, if required.

12:10

The Independent Financial Adviser will report on the main issues arising from the reports from Baillie Gifford in conjunction with information contained in the tables (Agenda Item 7) (PF12). He will also update the Committee on progress in relation to the transition of the global equity mandate to Wellington.

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 orally on the main issues arising from the reports from Baillie Gifford in conjunction with information contained in the tables (Agenda Item 7). Mr Davies reported that Baillie Gifford were performing well.

With regard to progress made in the transition of the Global Equity mandate to Wellington, Mr Collins and Mrs Ross explained the reasons for the time taken to complete the transition, including the complex legal negotiations as well as the need to set up a number of overseas custody arrangements. They reported that it was hoped that all custodial agreements would be opened by the end of June 2012, and the legal negotiations completed to allow the transfer of resources soon after.

RESOLVED: to note the Independent Financial Adviser’s oral report, together with the progress report on the transition of the global equity mandate to Wellington.

12:15

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. 

Mr Davies reported that all issues had been covered in previous discussion throughout the morning and that he therefore had no additional comments to make on the existing Financial Managers’ performance and strategy.

RESOLVED: To note the Independent Financial Adviser’s report.

12:20

The report (PF14) will update the Committee on a recent request from the Fund’s Custodian for a revision of charges, and seek approval to initiate the retendering of the contract.

The Pension Fund Committee is RECOMMENDED to:

a)       note the report;

b)       approve the appointment of a consultant to assist in the custody service selection process;

c)        delegate responsibility for the interview and appointment process of a Global Custodian to Officers; and

d)       request officers to report back to the Committee on their reasons for appointing the successful Global Custodian.

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 had before them a report (PF14) which gave an update on a recent request from the Fund’s custodian for a revision of charges and which sought approval to initiate the re-tendering of the contract.

It was AGREED to: (amendment in bold italics)

(a)   note the report;

(b)   approve the appointment of a consultant to assist in the custody service selection process;

(c)   (on an amendment by Councillor Harvey, duly seconded and agreed nem con) delegate responsibility for the interview and appointment process of a Global Custodian to the officers, following consultation with the Chairman, Deputy Chairman and Opposition Group Spokesperson; and

(d)   request the officers to report back to the Committee on their reasons for appointing the successful Global Custodian.

READMISSION OF PRESS AND PUBLIC

12:25

The report (PF15) will cover the proposed changes to the Local Government Pension Scheme following the detailed negotiations between the Government, Employers and the Unions. The Committee will be invited to respond to the Consultation.

NB: This report is subject to the Consultation Paper being published in time to enable proper consideration at this meeting.

Mr Collins circulated a joint statement by the Local Government Association and the Trade Unions setting out the outcome of their negotiations on the new Local Government Pension Scheme proposals for England and Wales, released on 31 May 2012.

It was noted that the proposals would now be communicated to scheme members, employers, funds and other scheme interests; and unions and employers would both be consulting their members.

Following a discussion the Pension Fund Committee AGREED that the Officers would draft a response to the statutory consultation, when released, and would circulate it around the Committee for comment prior to submission.

12:40

The report (PF16) invites the Committee to complete the annual review of their policies as required under the Pension Fund Regulations. Separate Annexes cover the Governance Compliance Statement, Statement of Investment Principles, Funding Strategy Statement, Scheme of Delegation and the Communication Policy.

The Committee are RECOMMENDED to approve the revised policy documents as set out in Annexes 1-5 to this report, noting the main changes in the documents.

Members considered a report (PF16) which invited the Committee to complete the annual review of their policies, as required under the Pension Fund Regulations. Separate Annexes covered the Governance Compliance Statement, Statement of Investment Principles, Funding Strategy Statement, Scheme of Delegation and the Communication Policy

RESOLVED: that

(a)   subject to some minor amendments agreed at the meeting, to approve the revised policy documents, as set out in Annexes 1 – 5 to the report PF16, noting the main changes in the documents; and

(b)   in accordance with the CIPFA Knowledge & Skills Framework, as presented by Mr Lee of UBS prior to the start of the meeting, to request the officers to put together a further Training Plan to meet the Pension Fund’s requirements, to which, besides members of the Committee, one councillor be invited from each of the Oxfordshire District Councils.

12:55

This report  (PF17) presents applications from Carillion and Capita for admission to the Local Government Pension Fund due to the outsourcing of Property Services; QUEST and Food with Thought.

The Independent Living Service is also being outsourced and there are two applications for admission arising from this.

Also to update members on change of name for an exisiting admitted body.

The Committee is RECOMMENDED to

a)     Approve the above applications subject to their agreeing to the terms of the Admission Agreements and this Committee being informed when the agreement is signed;

b)     Note the change of name for Oxfordshire and Berkshire Mental Health Trust to The Oxford Health NHS Foundation Trust

The Committee considered applications from Carillion and Capita for admission to the Local Government Pension Fund due to the outsourcing of Property Services; Quest and Food with Thought. The Independent Living Service was also in the process of being outsourced and there were two applications for admission arising from this.

It was noted that Carillion had changed their name to Carillion (AMBS) Ltd.

It was AGREED to:

(a)   approve the applications listed in the report PF17, subject to their agreeing to the terms of the Admission Agreements and this Committee being informed when the agreement is signed; and

(b)   note the change of name for the ‘Oxfordshire & Buckinghamshire Mental Healthcare Trust’ to the ‘Oxford Health NHS Foundation Trust’.

13:00

The report (PF18) provides the Committee with summary details of the amounts written off in the last quarter in accordance with Financial Regulations of the Fund.

The Pension Fund Committee is RECOMMENDED to note the report

The Committee had before them a report (PF18) which provided the Committee with summary details of the amounts written off in the last quarter in accordance with Financial Regulations of the Fund.

The Pension Fund Committee noted the report.