Agenda and minutes

An apology for absence was received from Peter Fryer (Beneficiaries’ Observer).

Councillors Fooks, Harvey, Lilly, Patterson (co-opted member), Service and Tanner 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 3 September 2010 (PF3) and to receive for information any matters arising on them.

The minutes of the meeting of the Committee held on 3 September 2010 were approved and signed.

Mr Birkett, Finance Director of CfBT, addressed the meeting on Item 17(b).  He spoke in support of recommendation (b) in the report.

10:10

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 2010 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 and 6         UBS

Graphs 7-12              Performance relative to Benchmark of the fund managers

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 and 10 on the agenda.

The Committee was advised that Tables 1 to 10 had been compiled from the custodian's records. The custodian was the Pension Fund's prime record keeper. He had accrued for dividends and recoverable overseas tax within his valuation figures and might also have used different exchange rates and pricing sources compared with the fund managers. The custodian had also treated dividend scrip issues as purchases which the fund managers might not have done. This might mean that there were minor differences between the tabled figures and those supplied by the managers.

Mr Davies reported that the valuation of the Pension Fund had recovered to the level it had been at March 2010 and that the valuation had increased marginally above this level by the end of November.  He added that UBS had invested part of the £10m it had been allocated recently in this quarter and the remainder of it would be invested in the forthcoming quarter.

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 and 10 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 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.

10:20 

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.  Members asked questions and the Independent Financial Adviser responded to them.

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.

10:35

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

(2)         The representatives (Mr P Harris and Mr A Sadler) 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 2010;

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

In support of the above is their report for the period to 30 September 2010.

At the end of the presentation, members are invited to question and comment and the Fund Managers to respond.

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

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

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

The representatives (Mr P Harris and Mr N Melhuish) 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 2010.  The representatives responded to members’ questions.

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

11:15 

The representatives  (Mr G Waller and Ms V Sloan) of Partners Group will provide a brief outline of Partners Group and the areas they invest in.  They will then detail how the Pension Fund has been invested, how the funds are performing and their future prospects.  Consideration will also be given to other potential opportunities for investment.

At the end of the presentation, members are invited to question and/or make comments and the representatives will be invited 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 Ms V Sloan) of Partners Group provided a brief outline of Partners Group and the areas in which they invested.  They detailed how the Pension Fund had been invested and how the funds had been performing and their future prospects.  The representatives responded to members’ questions.

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

11:55

Report of the Independent Financial Adviser (PF9).

The reports details the current listed and unlisted investments in private equity and reflects on the implications of the recent market volatility on value of those investments. The report goes on to outline the current strategy for investing in Private Equity.

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 (PF9) which detailed the current listed and unlisted investments in private equity, reflected on the implications of the recent market volatility on the value of those investments and outlined the current strategy for investing in Private Equity.

RESOLVED:  to note the report.

12:15

The Independent Financial Adviser will report orally on the main issues arising from the reports from Alliance Bernstein, 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 Alliance Bernstein’s recent performance had been adequate and that Baillie Gifford and Legal & General had performed well.

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

12:20

The Independent Financial Adviser will, if necessary, summarise the foregoing reports of the Fund Managers and answer any questions from members.

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

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

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

12:25

A draft of the Annual Report and Accounts was approved at the meeting of the Committee on 3 September 2010. A copy of the Pension Fund Annual Report and Accounts 2009/10 has been circulated separately to members of the Committee and is also available for public inspection.

The Committee is RECOMMENDED to adopt formally the Pension Fund Annual Report and Accounts 2009/10.

The Committee considered the Pension Fund Annual Report and Accounts for 2009/10.

RESOLVED: to adopt formally the Pension Fund Annual Report and Accounts 2009/10.

The Committee agreed to vary the order of business so that item 13 could be considered after lunch.  It agreed to consider Item 14 and subsequent items, if time permitted, before lunch.

12:45

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

This report is to inform the Committee of the changes introduced by the Local Government Pension Scheme (LGPS) (Miscellaneous) Regulations, which came into force on 30 September 2010.  These regulations introduced some 56 changes, with retrospective effect from April 2008, October 2008, April 2009 and December 2009, although many of these are technical clarifications.  This report details the most significant of these changes.

The Committee is RECOMMENDED to note the report.

The Committee considered a report (PF14) which informed the Committee of the changes introduced by the Local Government Pension Scheme (Miscellaneous) Regulations, which came into force on 30 September 2010.  These regulations introduced some 56 changes, with retrospective effect from April 2008, October 2008, April 2009 and December 2009, although many of these were technical clarifications.  The report detailed the most significant of these changes.

RESOLVED:  to note the report.

12:50

Report of the Head of Finance & Procurement (PF15)

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.  The report proposes a timetable for the next 16 months.

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

The Committee considered a report (PF15) which proposed a timetable for the monitoring arrangements for the Investment Managers for the next 16 months.

RESOLVED:  to agree the programme of manager meetings as set out in the report.

12:55

Report of the Head of Finance & Procurement (PF16).

The report proposes a training plan for members of the Pension Fund Committee.  The Committee is asked to review the plan and approve it for the coming year.

The Committee is RECOMMENDED to approve the Training Plan at Annex 1 to the report, subject to any amendments it wishes to make.

The Committee considered a report (PF16) which proposed a training plan for members of the Pension Fund Committee. 

RESOLVED:  to approve the Training Plan at Annex 1 to the report, subject to the amendment in Annex 1, of Annual Training Events, column 3, Committee Training Day “July ’11” to read “June ’11”.

14:20

The Assistant Chief Executive and Chief Finance Officer reports as follows:

Oxfordshire Mental Health Matters (OMHM)

Trustees from OMHM made a submission to this Committee in June to request that the closure valuation was assessed on an on-going basis.  Following the departure of the remaining staff, the closure valuation was updated resulting in a revised closure valuation amount of £21,000.

Oxford Spires Academy

Oxford School is taking academy status from 1 January 2011 and so will become a scheduled scheme employer from that date.

The Committee is RECOMMENDED to note the report.

The Assistant Chief Executive and Chief Finance Officer advised the Committee as follows:

Oxfordshire Mental Health Matters (OMHM)

Trustees from OMHM had made a submission to this Committee in June to request that the closure valuation be assessed on an on-going basis.  Following the departure of the remaining staff, the closure valuation had been updated resulting in a revised closure valuation amount of £21,000.

Oxford Spires Academy

Oxford School was taking academy status from 1 January 2011 and so would become a scheduled scheme employer from that date.

RESOLVED:  to note the report.

14:25

Report by the Assistant Chief Executive and Chief Finance Officer (PF18).

At the Pension Fund Committee meeting on 19 March 2010, the implications of changes to the Local Government Pension Scheme Management and Investment of Funds Regulations were reported. The report referred to the requirement for the administering authority to hold all monies held on behalf of the Pension Fund in a separate bank account from 1 April 2011.   It was noted that the operation of a separate bank account would require changes to financial systems including SAP but the implications were not known at the time of the meeting.  A further report was to be presented to the Pension Fund Committee at a later date. 

This report notes the progress to date in meeting the regulatory requirement for a separate bank account and provides an update of the implications of the change to the Council’s financial systems.

The Pension Fund Committee is RECOMMENDED to note the report and the action taken to meet the requirements of a separate bank account.

The Committee considered a report (PF18) which updated the Committee on progress in meeting the regulatory requirement for a separate bank account and provided an update of the implications of the change to the Council’s financial systems.

RESOLVED:  to note the report and the action taken to meet the requirements of a separate bank account.

12:30

Report of the Assistant Chief Executive and Chief Finance Officer (PF13)

This report updates the Committee on the Interim Report of the Independent Public Service Pensions Commission and seeks the Committee's view on a response to the Commission's subsequent call for further evidence.

The Committee is RECOMMENDED to note the findings of the interim report of the Commission, to consider the issues raised by Lord Hutton’s call for further evidence, and to set out those views it wishes to see included in a final submission to the Commission, to be agreed after the Employers’ Forum on 10 December 2010.

The Committee considered a report (PF13) which updated the Committee on the Interim Report of the Independent Public Service Pensions Commission.

The Committee made the following comments on the report:

·                    Change from final salary to career average

·                    The scheme should be easily understood

·                    Define pay below £21k as low pay: this might require additional pay bands to avoid “cliff edge” changes in contribution rates

·                    To encourage employees to join, the employee contribution rate should not be set too high

·                    3% increase in employee contribution was too high

·                    LGPS was different from other public sector pensions as it was a funded scheme and should be treated differently

·                    The state pension should not be taken into account so that the LGPS pension could be reduced.  It also complicated the scheme.

·                    The LGPS was a defined benefits scheme and should not be changed into a hybrid scheme

·                    There should be no cap on the level of pension an employee could receive

·                    Age at which an employee could receive their LGPS pension scheme could be linked to the age at which they received the state pension with the government setting the age

·                    Membership of LGPS should not be mandatory

·                    Would consider pooling administration with a number of other administering authorities if significant savings could be achieved but wanted to retain control of the investment of the pension fund locally

·                    Revert to 1/80^th accrual

·                    Accrued benefits to be protected

·                    Close the existing arrangements for new accrual, revalue the benefits on the basis on an agreed index (presumably CPI in line with the new arrangements for deferred benefits), with benefits payable in line with the regulations at the time of retirement.

RESOLVED:  to ask Mr Collins to circulate the draft response to all members of the Committee before he despatched the response to the Government.

14:00

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

The report responds to the concerns from a number of Admitted Bodies to the Oxfordshire Pension Fund about the potential costs associated with the ending or significant scaling down of their Fund membership.  Fund membership may end or significantly reduce as a result of the unaffordability of continued membership of the Local Government Pension Scheme, insolvency of the company itself, or the loss of a contract under a re-tendering exercise.  The report considers alternative options to the current practice in undertaking cessation valuations, or future valuations following closure of the scheme to new members or a significant reduction in membership on loss of a contract.  Members are asked to consider the principles to adopt going forward.

The Committee is RECOMMENDED:

(a)              to consider its approach to future valuations for community admission bodies in the event of closure, cessation or significant membership reduction following TUPE ; and

(b)              to determine whether it wishes to agree a revised approach in line with paragraphs 11-18 in the report and to ask Officers to amend the Funding Strategy Statement accordingly.

The Committee considered a report (PF17(a)) which responded to the concerns from a number of Admitted Bodies to the Oxfordshire Pension Fund about the potential costs associated with the ending or significant scaling down of their Fund membership. 

RESOLVED:  to:

(a)               seek recovery of the deficit from those scheme employers funding the contractual arrangements, who arguably had retained the resources to meet this deficit payment on an on-going basis, noting that there was no statutory basis to enforce this option if the relevant scheme employers did not accept responsibility; and

(b)               agree to adopt a revised approach in line with paragraphs 11-18 in the report and to ask Officers to amend the Funding Strategy Statement accordingly.

RESOLVED:  that the public be excluded for the duration of Item 17(b) in the Agenda since it was likely that if they were present during that item 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 that item in the Agenda and since it was considered that, in all the circumstances of the case, the public interest in maintaining the exemption outweighed the public interest in disclosing the information.

14:10

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

The Committee is asked to consider the two applications set out in 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, in that such disclosure would prejudice the authority's decisions on these applications.

The Committee considered a report (PF17(b)) containing two applications for valuation. 

RESOLVED:

(a)       In respect of the application in Annex 1 to the report, to confirm to the organisation that all future valuations, including a cessation valuation, would be undertaken on an on-going basis, with the Pension Fund as a whole underwriting the risk of any eventual shortfall, and gaining the benefit of any future surplus;

(b)       In respect of the application in Annex 2 to the report, to RECOMMEND Cabinet to accept the transfer of responsibility for the past service deficit in respect of those staff formerly employed by the organisation solely to work on the Connexions service, and the corresponding increase in the Council’s contribution rate.

14:30

Report of the Head of Finance & Procurement (PF19)

The report considers the options for the payment of a death grant. The circumstances of the case have the potential to make the payment of the grant contentious.  A Committee decision is therefore required.

The Committee is RECOMMENDED to approve the payment of the death grant equally between the member’s three surviving children and her partner.

The Committee considered a report (PF19) on the options for the payment of a death grant.

RESOLVED:  to approve the payment of the death grant equally between the member’s three surviving children and her partner.

14:35

Report of the Assistant Chief Executive and Chief Finance Officer (PF20)

This report updates the Committee on the 2010 Valuation process, highlighting some of the interim results and issues.  The final Valuation report is not due to be published until the end of March 2011.

The Committee is RECOMMENDED to note the interim valuation results produced by the Actuary and consider any issues it would wish to raise with the Actuary at the Employers’ Forum.

The Committee considered a report (PF20) which updated the Committee on the 2010 valuation process.

RESOLVED:  to note the interim valuation results produced by the Actuary and to agree it  had no issues to raise as a Committee with the Actuary at the Employers’ Forum.

14:40

Report of the Assistant Chief Executive and Chief Finance Officer (PF21)

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

The Pension Fund Committee is RECOMMENDED to note this report.

The Committee considered a report (PF21) which set out write off’s taken under the Council’s Scheme of Financial Delegation.

RESOLVED:   to note the report.

14:45

Report of the Assistant Chief Executive and Chief Finance Officer (PF22)

Oxfordshire County Council, as Administering Authority, of the Oxfordshire Local Government Pension Scheme is required to formulate and keep under review its Abatement Policy.  The report reviews the policy.

The Committee is ASKED to decide:

(a)              whether it wishes to have an abatement policy, and if yes;

(b)              the value at which the pension should be protected; and

(c)               what level should be used in the formula for calculating abatement.

The Committee considered a report (PF22) reviewing the Administering Authority’s current abatement policy.

RESOLVED:  to agreenot to have an abatement policy.

14:50

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

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

RESOLVED:  to note the report.

14:55

The Committee is reminded that the Annual Pension Forum will take place on Friday 10 December 2010 at 10 am.

The Committee was reminded that the Annual Pension Forum would take place on Friday 10 December 2010 at 9.50 am.  

RESOLVED: to note the position.