Agenda and minutes

Apologies for absence and temporary appointments were received as follows:

The Committee was advised that Brenda Churchill had resigned as beneficiaries’ observer for health reasons and Peter Fryer had replaced her as the beneficiaries’ observer.  The Committee sent her their best wishes.

Councillors Fooks, Harvey, Hayward, Service and Thompson declared personal interests as members of the Pension Fund Scheme under the provisions of Section 18 of the Local Government and Housing Act 1989.

To approve the minutes of the meeting held on 4 September 2009 (PF3) and to receive for information any matters arising on them.

The Minutes of the meeting of the Committee held on 4 September 2009 were approved and signed.

On Minute 21/09 (WM Company Presentation on the Pension Fund’s Investment Performance for the Twelve Months ended 31 March 2009), the Independent Financial Adviser reported, for clarification, that the reference in paragraph 2, line 5 to the underperformance of bonds was in general and did not relate to the bonds held in the Oxfordshire Fund, which had performed well.

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 2009 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 3         -  Baillie Gifford

Graph 4         -  Legal & General

Graphs 5 & 6 - 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 and 9 on the agenda.

EXEMPT ITEMS

The Committee is RECOMMENDED that the public be excluded for the duration of items 6, 7, 8, 9, 10 and 11 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 was advised that Tables 1 to 19 were compiled from the custodian's records. The custodian was the Pension Fund's prime record keeper. He 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 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.

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 2009.  He also updated the Committee on the current market value of the Fund’s investments, which was the same as the value as at 30 September.

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 and 9 on the agenda.

RESOLVED:      that the public be excluded for the duration of Items 6, 7, 8, 9, 10 and 11 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.

10:30

Report of the Independent Financial Adviser (PF6)

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 (PF6) which set out an overview of the current and future investment scene and market developments across various regions and sectors.  The Independent Financial Adviser updated the Committee orally.

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

10:45

(1) The Independent Financial Adviser will report orally on the performance and strategy of UBS Global Asset Management drawing on the tables at Agenda Items 5 and 6.

(2) The representatives (Mr P Harris and Ms Y Thomas) 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 2009;

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

In support of the above is their report for the period to 30 September 2009.

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 P Harris and Ms Y Thomas) 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 30 September 2009.  The representatives reported that a significant portion of the cash being held for investment in property had now either been committed or invested.  The representatives responded to members’ questions.

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

11:25

(1) The Independent Financial Adviser will report orally on the performance and strategy of Alliance Bernstein drawing on the tables at Agenda Items 5 and 6.

(2) The representatives (Mr G Blunden, 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 30 September 2009;

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

In support of the above is their report for the period to 30 September 2009.

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 30 September 2009.  The representatives responded to members’ questions.

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

12:05

The Independent Financial Adviser will report orally on the main issues arising from the reports from Baillie Gifford and Legal & General in conjunction with information contained in the tables (Agenda Item 5).

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

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

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

The Independent Financial Adviser reported that the performance of Baillie Gifford had been disappointing since the end of March and that the performance of Legal & General had exceeded the benchmarks over both the twelve-month and three-year periods.

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

12:10

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.

In relation to private equity, the Independent Financial Adviser reported that the commitment to invest in Adams Street Partners and Partners Group Funds would be drawn down over a number of years.  Since the last meeting, some cash had been drawn down by these Funds but no investments had been made in quoted private equity investment trusts.

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

12:15

Report of the Independent Financial Adviser (PF11)

The Committee requested a fundamental review of hedge fund investment.  The report fulfils that request.  Consideration is given to the objectives of investing in hedge funds and whether those objectives are being achieved.  Consideration is also given to investing in hedge fund replication vehicles as an alternative.

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 considered a report (PF11) which reviewed hedge fund investment including the objectives of investing in hedge funds and whether those objectives are being achieved and of investing in hedge fund replication vehicles as an alternative. 

RESOLVED:  to:

(a)       continue with the current allocation to Hedge Funds;

(b)   agree that Hedge Funds continue to be managed by UBS Wealth Management.

ITEMS FOLLOWING THE RE-ADMISSION OF THE PRESS AND PUBLIC

12:30

  (a)     Pension Fund Annual Reportand Accounts for 2008/09

 A draft of the Annual Report and Accounts was approved at the meeting of the Committee on 4 September 2009. A copy of the Pension Fund Annual Report and Accounts 2008/09 has been circulated separately to members of the Committee and is also available for public inspection. The changes to the draft are:

- the inclusion of a foreword

- the correction of the fund performance information at paragraph 16

- an amendment to the Statement of Investment Principles to reflect recent decisions of the Committee.

The Committee is RECOMMENDED to adopt formally the Pension Fund Annual Report and Accounts 2008/09.

12:35

(b)       Report to Those charged with Governance 2008/09: Oxfordshire County Council Pension Fund

The report (PF12b) meets requirements for the external auditors to communicate to those charged with governance audit matters of governance interest that arose from the audit of the Local Government Pension Fund Accounts.

The Committee is RECOMMENDED to accept the report (PF12b) to those charged with governance and note any comments from KPMG LLP.

(a)               Pension Fund Annual Report and Accounts for 2008/09

The Committee considered the Pension Fund Annual Report and Accounts for 2008/09.

RESOLVED:  to adopt formally the Pension Fund Annual Report and Accounts 2008/09.

(b)              Report to those charged with Governance 2008/09:  Oxfordshire County Council Pension Fund

The Committee considered the Report by the External Auditors of the Pension Fund for 2008/09 (PF12(b)).  Ms J Awty and Mr S Allsop (KPMG) attended for Item 12(b).

RESOLVED:  to accept the report (PF12b) to those charged with governance.

12:40

Report of the Head of Finance & Procurement (PF13)

Each year the Committee considers the monitoring arrangements for the Investment Managers, agreeing the frequency that the managers attend Committee and how often they are seen by officers and the Independent Financial Adviser.  At the meeting in November 2008 a few changes were made and it is proposed that these revised arrangements should continue in 2010/11.

The Committee is RECOMMENDED to agree the programme of manager meetings as set out in the report.

The Committee considered a report (PF13) on the monitoring arrangements for the Investment Managers for 2010/11. 

RESOLVED:  to agree the programme of manager meetings as set out in the report, subject to the Head of Finance & Procurement scheduling attendance by Adam Street Partners/Partners Group at one of the meetings in 2010/11.

12:45

Report of the Assistant Chief Executive and Chief Finance Officer (PF14)

This report updates the Committee in respect of the recent tender exercise to appoint an Actuary for the Pension Fund, following the expiry of our previous contract with Hewitt Associates.  The report also provides an update on the approach to our Funding Strategy Statement following the appointment of the new Actuary, and further discussions held with a number of Admitted Bodies and with the Department for Comunities and Local Government.

The Committee is RECOMMENDED to:

(a)               note the appointment of a new Actuary with effect from 11 December 2011; and

(b)              add the option of a standard approach to future funding for all admitted bodies, with Scheduled Bodies underwriting the risk for the smaller Community Admitted Bodies.

The Committee considered a report (PF14) on the recent tender exercise to appoint an Actuary for the Pension Fund, following the expiry of our previous contract with Hewitt Associates, and also provides an update on the approach to our Funding Strategy Statement following the appointment of the new Actuary, and further discussions held with a number of Admitted Bodies and with the Department for Comunities and Local Government and addenda circulated at the meeting. 

RESOLVED:  to:

(a)       note the appointment of a new Actuary with effect from 11 December 2009; and

(b)       add the option to the consultation on changes to the Funding Strategy Statement of a standard approach to future funding for all admitted bodies, with Scheduled Bodies underwriting the risk for the smaller Community Admitted Bodies.

12:50

Report of the Assistant Chief Executive and Chief Finance Officer (PF15)

This report informs Committee of the Chief Executive’s decision, under delegated powers, in the payment of a death grant and seeks delegation for future decisions where there are no contentious circumstances.

The Pension Fund Committee is RECOMMENDED to:

(a)       note the decision in making payment of the death benefits detailed in the report;

(b)       delegate authority to the Assistant Head of Shared Services (Financial Services), after consultation with the Chairman of the Pension Fund Committee, to determine non-contentious cases, subject to reporting to the next meeting of the Committee on such determinations.

The Committee considered a report (PF15) on the Chief Executive’s decision, under delegated powers, in the payment of a death grant and sought delegation for future decisions where there were no contentious circumstances.

RESOLVED:  to:

(a)       note the decision in making payment of the death benefits detailed in the report;

(b)       delegate authority to the Assistant Head of Shared Services (Financial Services), after consultation with the Chairman of the Pension Fund Committee, to determine non-contentious cases, subject to reporting to the next meeting of the Committee on such determinations.

14:00

Report of the Assistant Chief Executive and Chief Finance Officer (PF16)

This report updates the Committee on the recent consultation paper from the Government, and seeks the Committee's view on any draft response it wishes to make to the Government.

The Committee is RECOMMENDED to note the report and to consider what response, if any, it wishes to send to the Government in respect of this consultation.

The Committee considered a report (PF16) on the recent consultation paper from the Government, and sought the Committee's view on any draft response it wished to make to the Government and addenda circulated at the meeting. 

RESOLVED:  to note the report and to respond to the Government expressing its concerns in respect of the proposed changes to the LGPS for such a small number of staff and to suggest the Government explores other options and, in particular, admission for the transferred staff to the Teachers’ Pension Scheme.

14:10

Report of the Assistant Chief Executive and Chief Finance Officer (PF17)

This report informs the Committee about a recent complaint submitted under the Internal Disputes Resolution Procedure.  The complaint investigation has found fault within Pension Services, which has financially disadvantaged a Scheme Member.  As the issue cannot be resolved under the relevant Regulations, the Committee is recommended to agree a compensation payment which will hopefully avoid the need for the matter to be determined by the Pensions Ombudsman under a maladministration finding.

The Committee is also asked to consider whether such decisions in future cases can be determined by Officers, subject to an appropriate limit on the payment.

The Committee is RECOMMENDED:

(a)              based on the evidence of the report, and to compromise any future claim against the Council to the Pensions Ombudsman, to award compensation to Mr P of £2,629 to offset the requirement to repay compensatory pension to the same sum; and

(b)              to determine its policy for future cases, based on the options covered in paragraphs 23-26 of the report.

The Committee considered a report (PF17) about a recent complaint submitted under the Internal Disputes Resolution Procedure.  The complaint investigation had found fault within Pension Services, which had financially disadvantaged a Scheme Member.  As the issue could not be resolved under the relevant Regulations, the Committee was recommended to agree a compensation payment which would hopefully avoid the need for the matter to be determined by the Pensions Ombudsman under a maladministration finding.

The Committee was also asked to consider whether such decisions in future cases could be determined by Officers, subject to an appropriate limit on the payment.

The Committee also considered the addenda circulated at the meeting.

RESOLVED: 

(a)       based on the evidence of the report, and to compromise any future claim against the Council to the Pensions Ombudsman, to award compensation to Mr P of £2,629 to offset the requirement to repay compensatory pension to the same sum; and

(b)               to delegate authority to the Assistant Head of Shared Services (Financial Services), following consultation with the Chairman of the Pension Fund Committee and the County Solicitor, to determine payment of compensation up to £5,000 in settlement of any complaint relating to a possible claim of maladministration of the Pension Fund.  All such cases should be reported to the next full meeting of the Committee for its information.  Cases above £5,000 would need to be brought to the Committee for approval.

14:20

The Assistant Chief Executive and Chief Finance Officer has nothing specific to report 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 Assistant Chief Executive and Chief Finance Officer reported that she had nothing specific to report 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.

RESOLVED:  to note the report.

14:25

The Assistant Chief Executive and Chief Finance Officer will report orally on any issues arising from the last Forum or about the Forum which will take place on 9 December 2009.

The Assistant Chief Executive and Chief Finance Officer reported that Mr Davies, the Independent Financial Adviser, the Pension Fund’s Actuary and Mr Collins would give presentations at the meeting of the Forum which would take place on 9 December 2009.

RESOLVED:  to note the report.