Agenda, decisions and minutes

Councillor Les Sibley attended for Councillor Lynda Atkins.  Apology received from Councillor Neil Owen.

Councillors Fooks, Lilly, Sibley, District Councillor Patterson and Paul Gerrish 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 5 September 2014 (PF3) and to receive information arising from them.

The Minutes of the meeting held on 5 September 2014 were approved and signed as a correct record.

Professor Alan Allport addressed the meeting in relation to item 7 on the Agenda. He alerted members of the Committee to his concern that there would be a major financial risk arising from climate change. He commented that investment consequences had not been adequately assessed and that 60% – 80% of existing fossil reserves needed to remain in the ground. If this should not happen than the infrastructure of society would be destroyed. He added that divesting from fossil fuel energy and investing into renewable energy would prove very attractive with huge growth potential and would even yield slightly better returns.

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 30 September  2014 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 - Wellington

Graph 5 - 6 Legal & General

Graphs 7 and 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 and 11 on the agenda.

The Independent Financial Adviser reviewed the investment activity during the past quarter and presented an overview of the Fund’s position as at 30 September 2014.

Mr Davies noted that the overall value of the Fund had risen by approximately £29 million.

RESOLVED: 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.

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

The Committee 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 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 was considered that, in all the circumstances of each case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

10:30

The report of the Independent Financial Adviser (PF7) 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) gave an overview of the current and future investment scene and market developments across various regions and sectors. The report itself did not contain exempt information and was available to the public. The Independent Financial Adviser will also report orally and any information reported orally will be exempt information.

The public was 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 to bear the Independent Financial Adviser’s conclusions in mind when considering the Fund Managers’ reports.

10:40

(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 (Malcolm Gordon, Eric Byrne and Antony 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 30 September 2014;

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

In support of the above is their report for the period to 30 September 2014.

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 Independent Financial Adviser reported orally on the performance and strategy of UBS drawing on the tables at Agenda Items 5 and 7.

The representatives, Malcolm Gordon, Eric Byrne and Antony Sander 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 2014. They also gave their views on the future investment scene.

At the end of the presentation, they responded to questions from members.

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 presentation and to take any necessary action, if required.

11:20

(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 (Sarah Brewer and Sergio 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 2014;

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

In support of the above is their report for the period to 30 September 2014.

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 Independent Financial Adviser reported orally on the performance and strategy of Partners Group drawing on the tables at Agenda Items 5 and 7.

The representatives, Sarah Brewer and Sergio 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 2014. They also gave their views on the future investment scene.

At the end of the presentation, they responded to questions from members.

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 presentation and to take any necessary action, if required.

12:00

The Independent Financial Adviser will report (PF10) on the officer meetings with Wellington and Baillie Gifford, as well as update the Committee on any other issues relating to the Fund Managers not present, including Legal & General and the Private Equity portfolio.

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 (PF10) on the main issues arising from the officer meetings with Wellington and Baillie Gifford in conjunction with information contained in the tables (Agenda Item 5). The Committee also considered a report, again from the Independent Financial Adviser (PF10) which provided a review of the strategy and recent performance of the Fund’s Private Equity portfolio.

The Independent Financial Adviser also reported back on his telephone discussion with Legal & General and responded to Members’ questions.

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.

12:05

The Independent Financial Adviser will summarise any issues arising from the  previous discussions, the appointment of a Diversified Growth Manager and the latest position on 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, 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 noted the summary of the Independent Financial Adviser.

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.  

12:10

The report (PF12) sets out the latest business proposal for the future arrangements of the Oxfordshire Pension Fund.  Annex 1 is the full business proposal which has been discussed with Officers and Members from the three pension funds of Buckinghamshire, Oxfordshire and Berkshire.  The main report highlights the key issues from the report following these discussions, and the key questions for further consideration.

Part of the concern expressed during the meeting on 17 November was in respect of the potential financial savings achieved through collaboration.  In addressing this information further, this report contains information on the fee levels currently charged by Oxfordshire’s Fund Manager, and the potential for further reductions which is commercially sensitive information.

The public should therefore be excluded for the consideration of this report because its discussion in public would be likely to lead to the disclosure to members of the public present of information in the following category prescribed by Part I of Schedule 12A to the Local Government Act 1972 (as amended):

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 the Council’s position would be prejudiced in respect of future negotiations with both Fund Managers and potential partners.

It should be noted that the Annex to this report is a public document.  The Business Proposal does not include any specific fee information on the current mandates and all information included has already been in the public domain.

The Committee is RECOMMENDED to:

(a)            consider whether the business proposal provides sufficient evidence to address the question of whether to proceed with a collaboration exercise, and if not, determine what further information they wish to see before making a decision;

(b)            on the basis that a decision to proceed with a collaboration exercise is agreed either now, or on the receipt of further information, determine whether we should proceed with the partners currently identified, or explore the option of seeking a replacement partner with a more similar risk appetite/asset allocation; and

(c)            determine whether now is the right time to initiate a formal consultation exercise, or whether it is necessary to collate any further information identified under i), explore any alternative partners under ii) and/or await a formal decision from the Government on the mandating of passive investments.

The Committee considered a report (PF12) which set out the latest business proposal for the future arrangements of the Oxfordshire Pension Fund. Annex 1 set out the full business proposal which had been discussed with officers and members from the three pension funds of Buckinghamshire, Oxfordshire and Berkshire. The main report highlighted the key issues following these discussions and the key questions for further consideration.

Part of the concern expressed during the meeting on 17 November was in respect of the potential financial savings achieved through collaboration. In addressing this information further, this report contained information on the fee levels currently charged by Oxfordshire’s Fund Managers and the potential for further reductions which is commercially sensitive information. It was therefore decided that:

the public should be excluded for the consideration of this report 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 the Council’s position would be prejudiced in respect of future negotiations with both Fund Managers and potential partners.

It was noted that the Annex to the report was a public document as the Business Proposal did not include any specific fee information on the current mandates and all information included had already been in the public domain.

RESOLVED (unanimously) to:

(a)  defer any potential future collaboration until such time as the Government make clear its position on the mandating of passive investment for all listed assets;

(b)  ask officers to explore with other LGPS Funds who share a similar risk appetite/asset allocation, the opportunities for informal collaborative working, with the potential for more formal arrangements in the future;

(c)  note the information included in the report and to confirm that this covers the issues on which this Committee needs to be informed before making any decision on collaboration, whilst accepting that the actual information would need to be revised should other LGPS Funds be included in any future proposal; and

(d)  thank the officers for all their hard work to date on this project.

READMISSION OF THE PRESS AND PUBLIC

12:40

The report (PF13) sets out the key elements of the latest consultations from the Department of Communities and Local Government and the LGPS Shadow Scheme Advisory Board on the Governance arrangements for the Local Government Pension Scheme.

The Committee is RECOMMENDED to:

(a)            note the key issues set out in the latest consultation documents; and

(b)            determine the process for preparing the draft constitution and terms of reference for the new Local Pension Board, to be considered and agreed at the March meeting of this Committee.

The Committee considered a report (PF13) which set out the key elements of the latest consultations from the Department of Communities & Local Government and the LGPS Shadow Scheme Advisory Board on the Governance arrangements for the Local Government Pension Scheme.

RESOLVED to:

(a)  note the key issues set out in the latest consultation documents; and

(b)  to request the officers  to draft a constitution and terms of reference in the new year on the lines of the steer given at this meeting,  to be sent to all members of the Committee for comment; and that the outcome be submitted to the 13 March 2015 meeting for approval.                                                                                                                        

12:50

The Annual Report and Accounts for 2013/14 have now been published, and hard copies for members of the Committee are enclosed with this agenda.  There were no changes of substance from the draft version approved by the Committee at their meeting in September 2014.  Following the drafting of the Report and Accounts, and indeed after the conclusion of the majority of the external audit work, we received new statutory guidance on the contents of LGPS Annual Report and Accounts.  For 2013/14, it was agreed that these additional notes could be covered by way of an addendum published by 1 December 2014.  The additional information has been requested to provide further clarifications on current publications, but also to set out information in a consistent way across all LGPS Funds, so that it can be aggregated to produce an Annual Report and Accounts for the LGPS as a whole.  In addition, a number of key performance indicators are included, which can be used by Pension Boards in assessing the overall effectiveness of the governance and administration of their Fund.  Data includes the attendance and training records of Members of this Committee. 

A copy of the addendum will be circulated to the Committee Members in advance of the meeting, and will be published on our website.

The Committee is RECOMMENDED to note the publication of the Annual Report and Accounts 2013/14 and accompanying addendum.

The Annual Report and Accounts for 2013/14 had now been published and a copy was included with this agenda. There had been no changes of substance from the draft version approved by the Committee at the meeting in September 2014. 

Following the drafting of the Report and Accounts, and after the conclusion of the majority of the external audit work, new statutory guidance on the contents of LGPS Annual Report and Accounts had been received. These were covered by an Addenda to the report.

RESOLVED: to note the publication of the Annual Report and Accounts 2013/14 and accompanying addendum.

12:55

The Committee is asked to determine the arrangements for monitoring the performance of the Fund Managers, including the new Diversified Growth Manager for the 2015/16 financial year (PF15).

The Committee is RECOMMENDED to approve the Fund Manager monitoring arrangements as set out in the report.

The Committee were asked to determine the arrangements for monitoring the performance of the Fund Managers, including the new Diversified Growth Manager for the 2015/16 financial year (PF15).

RESOLVED: to approve the recommendation, as set out at paragraph 6 in the report, subject to the revision that Adams Street and Partners Group be monitored by the Officers/IFA at least once per annum.

13:00

This report (PF16) seeks Committee approval for any new admissions to the Fund, as well as update members on the status of any current employer which impacts on future Scheme membership.

The Committee is RECOMMENDED to:

(a)            note previous applications still outstanding;

(b)            note applications approved by Service Manager (PIMMS);

(c)            approve other applications received providing these are on either a pass through basis, or a bond is put in place;

(d)            note the completed applications;

(e)            note the closure of scheme employers; and

(f)             note progress of employer covenant project.

Approval was sought from the Committee for some new admissions to the Fund (PF16). The report also updated members on the status of any current employer which impacted on future Scheme membership.

RESOLVED: to

(a)  note the previous applications still outstanding;

(b)  note applications approved by Service Manager (PIMMS);

(c)  approve other applications received providing these are on either a pass - through basis, or via a bond;

(d)  note the completed applications;

(e)  note the closure of scheme employers; and

(f)   note progress of employer covenant project.

13:05

To receive an update (PF17) on current administration issues including consideration of the final version of the Administration Strategy following a period of employer consultation.

A copy of the Administration Strategy Statement is attached.

The Committee is RECOMMENDED to:

(a)            agree the changes to the service level agreement;

(b)            note the current level of MARS Returns; and

(c)            agree the Administration Strategy.

The Committee received an update (PF17) on current administration issues which included consideration of the final version of the Administration Strategy, following a period of employer consultation.

RESOLVED: to

(a)  agree the changes to the service level agreement;

(b)  note the current level of MARS Returns; and

(c)  agree the Administration Strategy.

13:10

The report (PF18) 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 considered a report (PF18) that gave 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.

13:15

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

The Committee noted that an issue had been raised by Professor Allport under the Petitions and Public Address item. The Chairman requested an officer response to the points be produced and sent to Professor Allport and, at the same time, copied to all members of the Committee.

13:15

The Pension Fund Forum planned for Friday 12 December 2014 has been cancelled due to lack of support from scheme employers.

It was noted that the Pension Fund Forum, which had been planned for Friday 12 December 2014, had been cancelled due to a lack of support from scheme employers.

The Committee asked that a note to all scheme employers be sent by the Chairman to all scheme employers asking if an alternative date would be more suitable in the future. If little response was still forthcoming, then the officers be asked to think of an alternative way of dealing with the situation.