Agenda and minutes

There were no apologies for absence.

Councillors Darke, Fooks, Harvey, Lilly, Patterson and Service each 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  7 September 2012 (PF3) and to receive information arising from them.

Minutes approved and signed subject to the following amendment to Minute 42/12 (amendment in bold print):

‘He added that towards the end of August the Fund had gained a further £20m, which gave an approximate value of £1.290bn.

With regard to Minute 53/12, Sally Fox reported that the County Council Members’ annual pension statements were  currently being distributed and those for the District Council members would follow and should be sent by the end of December.

There were no petitions submitted or any requests to address the meeting.

10:05

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 September 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 7,8,9,10 and 11 on the agenda.

Mr Davies reported that the third quarter of 2012 had seen a total appreciation of £45m, and an additional £15m since 6 December, giving an approximate total value of £1.33bn. With regard to asset allocation, the overall value of equities was slightly below target, with bonds 1% above benchmark, but within their target range. Alternatives were also below their benchmark allocation. Despite outperformance by global equities and overseas bonds, overall performance for the quarter and year to 30 September 2012 was 0.6% below benchmark. Over 3 years performance was broadly in line with benchmark, but was 1.2% below benchmark over 5 years.

RESOLVED: to receive the tables and graphs; and that the information contained in them be borne in mind insofar as they related to items 7,8, 9, 10 and 11 on the agenda.

The Committee is RECOMMENDED that the public be excluded for the duration of items 7, 8, 9, 10, 11, and 12 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 11, there is no report 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 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 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 circumstances of each case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

10:20

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 of the Independent Financial Adviser (PF7) which set out an overview of the current and future investment scene and market developments across various regions and sectors. Members asked a number of questions, to which the Independent Financial Adviser responded.

Mr Davies commented that since writing his report, the Chancellor had delivered his Autumn statement which had confirmed a poor economic outlook.

The public were 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.

RESOLVED: To receive the report, tables and graphs and the oral report of the Independent Financial Manager and to bear his conclusions in mind when considering the Fund Managers’ reports.

10:35

(1)               The Independent Financial Adviser will report orally on the performance and strategy of UBS drawing on the tables at Agenda Items 5 and 7.

(2)               The representatives (Mr M. Gordon and Mr N. Irish) 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 30 September 2012;

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

In support of the above is their report for the period to 30 September 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.

The representatives, Mr M. Gordon and Mr N. Irish 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 September 2012.

The public were 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.

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

11:15

(1)               The Independent Financial Adviser will report orally on the performance and strategy of Partners Group drawing on the tables at Agenda Items 5 and 7.

(2)               The representatives (Mr G. Waller and Mr. S. Jovele) 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 30 September 2012;

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

In support of the above is their report for the period to 30 September 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.

The representatives, Mr G. Waller and Mr S. Jovele 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 September 2012.

The public were 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.

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

11:55

The Independent Financial Adviser will report (PF10) on the main issues arising from the reports from Baillie Gifford and Wellington in conjunction with information contained in the tables (Agenda Item 5). A report on a meeting conducted with Wellington is attached. A note of the meeting scheduled to take place this week with Baillie Gifford will be circulated separately.

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 on the main issues arising from meetings which took place during the quarter with Baillie Gifford (UK Equities) and Wellington Management (PF10).

Mr Davies reported that Baillie Gifford and Legal & General had slightly underperformed in the quarter, but their longer term figures were still very good. Early figures for Wellington were ok. He did not however consider that any action was required.

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

12:00

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 it was his view that there was potential in the Fund for new investment and he would therefore be recommending to the next Adam Street Global Programme meeting, a commitment of £$25m to the 2013 programme. He added that infrastructure had been earmarked as a potential area for investment. This was referred to at Agenda Item 14.

RESOLVED: to note the Independent Financial Adviser’s summary.

12:05

The report (PF12) updates the Committee on the latest position regarding the Internal Dispute Resolution Procedure complaint which was considered at the December 2011 meeting.

The Committee is RECOMMENDED to note the report.

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 had before them a report (PF12) updating them on the latest position regarding the Internal Dispute Resolution Procedure complaint which had been considered at the December 2011 meeting.

The public were 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.

Sally Fox undertook to circulate to all members of the Committee the initial letter from the Pensions Ombudsman, along with the response from Sean Collins on behalf of the Council.

RESOLVED: to note the report.

RE-ADMISSION OF PRESS AND PUBLIC

12:15

A copy of the final Annual Report and Accounts for 2011/12 has been circulated separately to each member of the Committee. A copy has also been made available for public inspection.

The Committee is RECOMMENDED to adopt formally the Pension Fund Annual Report and Accounts 2011/12.

The Committee were requested to formally adopt the Annual Report and Accounts for 2011/12, a draft of which had been presented to the last meeting for comment (Min. 54/12 refers).

Donna Ross reported that there had been no major revisions to the accounts, only expansions to the notes on pages 25 and 31, as requested by Members at the last meeting.

RESOLVED: to formally adopt the Annual Report and Accounts for 2011/12.

12:20

The report (PF14) updates the Committee on the latest position regarding the redesign of the Local Government Pension Scheme (LGPS), to become effective from 1 April 2014.  

The report includes information on the most recent Government consultation on Investment in Partnerships, which has been published with the aim of reducing barriers to future investment in infrastructure products.

The Committee is RECOMMENDED to:

(a)               note the latest position on the New Look LGPS 2014 as detailed in the report;

(b)               agree the response to the Government Consultation on Investment in Partnerships based on the draft at Annex 3; and

(c)               agree to hold a seminar on infrastructure investments, provisionally to be held on the afternoon of the 8 March 2013 Pension Fund Committee.

The Committee considered a report (PF14) which gave an update on the latest position regarding the redesign of the Local Government Pension Scheme which was due to become affective from 1 April 2014. The report also included information on the most recent Government consultation on investment in partnerships, which had been published with the aim of reducing barriers to future investment in infrastructure products.

The Committee RESOLVED to:

(a)               note the latest position on the New Look LGPS 2014 as detailed in the report;

(b)               agree the response to the Government Consultation on Investment in Partnerships based on the draft at Annex 3; and

(c)               agree to hold a seminar on infrastructure investments, provisionally to be held on the afternoon of the 8 March 2013 Pension Fund Committee.

12:30

The report (PF15) asks the Committee to approve a new Administering Authority policy giving employer discretion to bring employee benefits into payment where the scheme member’s previous employer no longer exists.

The introduction of such a policy is a requirement of the 2012 Miscellaneous Regulations.

The Committee is RECOMMENDED to:

a)     agree the policy for assessing requests for early payment of pensions;

b)    agree to delegate the decision making under this policy to a panel of officers, following consultation with the Chairman;

c)     note the change of bond requirement; and

d)     note the change of power to request closure valuations and revised rates and adjustment certificates.

The Committee were requested to give their approval to a new Administering Authority policy (PF15) which gave employer discretion to bring employee benefits into payment where the scheme member’s previous employer no longer exists. The introduction of such a policy is a requirement of the 2012 Miscellaneous Regulations.

RESOLVED:

a)     agree the policy for assessing requests for early payment of pensions;

b)     agree to delegate the decision making under this policy to a panel of officers, following consultation with the Chairman;

c)      note the change of bond requirement; and

d)     note the change of power to request closure valuations and revised rates and adjustment certificates.

12:40

The report (PF16) updates the Committee on any new employers within the Fund, including new scheduled bodies (academy schools) and Transferee Admission Bodies (following outsourcing exercises). It informs Members of the intention to start a consultation on the future pooling arrangements for Academy schools, which will then instruct the 2013 valuation process.

The Committee is RECOMMENDED to:

(a)  note the progress of previously approved applications for admitted body status;

(b)  retrospectively approve the application for admitted body status by Hayward Services;  and

(c)   agree the consultation process with academies in relation to pooling options.

The Committee had before them a report (PF16) which gave an update on new employers within the Fund, including new scheduled bodies (academy schools) and Transferee Admission Bodies (following outsourcing exercises). The report also informed Members of the intention to start a consultation on the future pooling arrangements for academy schools, which would then instruct the 2013 valuation process.

RESOLVED: to

(a)   note the progress of previously approved applications for admitted body status;

(b)   retrospectively approve the application for admitted body status by Hayward Services;  and

(c)   agree the consultation process with academies in relation to pooling options.

12:45

The report (PF17) responds to the Committee’s concerns regarding the time taken to appoint a new Fund Manager. The report sets out the key elements in the timetable and looks to identify any key learning points for future selection exercises.

The Committee is RECOMMENDED to consider the report and determine any changes they would wish to see to the process for the appointment of future fund managers.

The Committee had before them a report (PF16) which gave an update on new employers within the Fund, including new scheduled bodies (academy schools) and Transferee Admission Bodies (following outsourcing exercises). It also informed Members of the intention to start a consultation on the future pooling arrangements for academy schools, which would then instruct the 2013 valuation process.

RESOLVED: that

(a)               an informal Member/Officer working group be set up comprising Councillors Harvey, Lilly, Fooks, the Independent Financial Adviser and the officers, to look at the various options, and their cost implications, which could be employed to condense the appointment process in the future and to submit their report to the 8 March 2013 meeting; and

(b)               the above report  to include issues of officer capacity.

12:50

The report (PF18) seeks Committee approval to two minor changes to the Fund’s  Scheme of Delegation relating to write off’s and the investigation of IDRP complaints.

(a)  approve the proposed changes to the Pension Fund’s Scheme of Delegation, as set down at paragraph 3 of the report; and

(b)  accept the change to the write off procedure to allow the Pension Services Manager to approve write off amounts of up to £500; subject to reports being made to this Committee.

The report (PF18) sought committee approval to two minor changes to the Fund’s Scheme of Delegation relating to write off’s and the investigation of Internal Dispute Resolution Procedure (IDRP) complaints.

RESOLVED: to

(a)               approve the proposed changes to the Pension Fund’s Scheme of Delegation, as set down at paragraph 3 of the report; and

(b)               accept the change to the write off procedure to allow the Pension Services Manager to approve write off amounts of up to £500, subject to reports being made to this Committee.

12:55

The report (PF19) provides the Committee with summary details of the amounts written off in the last quarter, in accordance with the Financial Regulations of the Fund.

The Pension Fund Committee is RECOMMENDED to note the report.

The Committee had before them a report (PF19) which provided summary details of the amounts written off in the last quarter, in accordance with the Financial Regulations of the Fund.

RESOLVED: to note the report.

13:00

This item covers any issues concerning Corporate Governance and Socially Responsible Investment which  need to be brought to the attention of the Committee.

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.

SEAN – COULD YOU ADD IN WHAT YOU REPORTED HERE PLEASE – I DIDN’T GET IT DOWN - THANKS

(a)               to note the report; and

(b)               to accept the offer of Baillie Gifford to brief the Committee on Corporate Governance prior to start of the next meeting on 8 March 2013.

13:05

The Committee is reminded that the annual Pension Fund Forum is to be held on Friday 14 December 2012. Members are encouraged to attend as part of their training programme.

The Committee were reminded that the annual Pension Fund Forum would take place on Friday 14 December 2012. Members were encouraged to attend as part of their training programme.