Meeting documents

Apologies were received from David Meacock, Don Phillips and Quintin Ings-Chambers.

To declare any personal and prejudicial interests

There were no declarations of interest.

of the meeting held on 20 September 2007, to be confirmed.

The minutes of the meeting held on 20 September 2007 were confirmed.

Presentation of the three year Actuarial Valuation by Graeme Muir, Barnett Waddingham LLP.

Members received a presentation on the three year Actuarial Valuation from Graeme Muir, Barnett Waddingham LLP.  A copy of the presentation was attached to the agenda for the meeting.

Key points were:

·         The need to set the level of contribution for employers in order to provide sufficient funds for all pension fund members to receive their pensions.

·         Stable contribution rates are important.

·         The actuarial valuation is used to agree a funding plan, but the FRS 17 valuation relates to the actual cost of pensions.

·         The value of assets rose higher than anticipated over the last three years and the funding level has increased from 60% to 84%.  However, ongoing costs increased to 13.4% of payroll and deficit contributions are still required.

·         Once mortality has been considered, the funding level drops to 81%

·         Under the new Scheme which will come into place in 2008, employee contribution rates will vary according to salary.

·         The mortality rate has improved during the 20^th Century and the rate of improvement is accelerating.

·         It was suggested that the current employer’s contribution rate should at least remain the same in order to help pay off the deficit.

Members noted it was unlikely that pension fund levels would reach those in the 80’s when companies were able to take ‘pension holidays’. 

The Committee noted that the actuarial report will remain in draft until March 2008 should members wish to make any further amendments.

The Chairman thanked Mr Muir for his presentation.

The unconfirmed minutes of the Pension Fund Consultative Group meeting, held on 26 October 2007, are attached for information.

Members received the unconfirmed minutes of the Pension Fund Consultative Group, which had its first meeting on 26 October 2007.

The Pension Fund Consultative Group had come into being as a result of the change in the governance arrangements.

The Chairman informed members that the first meeting had been very positive.  An overview of the Pensions Administration Team had been presented and the AVC Options report had led to a recommendation from the Group to the Pensions Fund Committee.  This is covered under item 6 of the Agenda.

The next meeting of the Consultative Group will be held on Tuesday 11 March 2008.

Presentation by Julie Vrondis, Pensions Manager.

Members received the Report and presentation of Julie Vrondis, Pensions Manager.

This report had been presented to members of the Pensions Fund Consultative Group, who had agreed to recommend to the Committee that the Prudential AVC Scheme be opened to members of the Pension Fund.

The Prudential was appointed as a provider in 1989.  However, a review of providers was undertaken in 2000 and Clerical Medical was appointed in place of Prudential.  Those Pension Fund members who were already paying into Prudential were able to continue doing so.

Currently, Prudential is the leading AVC provider in the market.  Members noted that existing Clerical Medical members would be able to transfer if they wished.

RESOLVED

The Committee APPROVED the opening of the AVC Scheme with Prudential.

Report by Julie Edwards, Treasury Manager

Members received the report of Julie Edwards, Treasury Manager, the purpose of which was to present the performance of the Pension Fund’s managers for the third quarter of 2007.

The following was noted:

·         During the three month period to 30 September 2007, the Fund had increased in value from £1,242m to £1,268m.

·         Alliance Bernstein, Blackrock, Mirabaud and Morley had outperformed their benchmark for the third quarter, and Morley, Mirabaud, Blackstone and Blackrock had outperformed throughout the year.

·         The Fund has a gross return of 0.9% compared to the 0.8% benchmark.

·         During this quarter the Pension Fund was ranked in the 28th percentile in the WM local authority universe.  In the year to 30 September 2007 it was ranked 40^th, and over an average of three years to the end of September 2007 it was ranked 38^th.  The five year average is 30^th percentile. 

Report of Julie Edwards, Treasury Manager.

Members received the report of Julie Edwards, Treasury Manager.

The Statement of Accounts was approved by Regulatory and Audit Committee at its meeting on 28 September 2007.

In the year to 31 March 2007 the value of the Pension Fund had increased by £118m to £1.205bn.  Contributions were £103m; Expenses £59m and returns on investments amounted to £74m.

The Committee NOTED the Report.

Report of Julie Edwards, Treasury Manager.

Members received the report of Julie Edwards, Treasury Manager, the purpose of which was to update the Committee on the Pension Fund risk register.

In discussion the following was noted:

·         P6 – If local Government restructures then an increase in early retirements, increase in administration costs and impact on revenue. 

It was agreed that the untreated score should remain the same until the Joint Improvement Board had made decisions regarding shared back office services in February.  A further report would be presented in six months time.

·         P11 – If there is an underestimation of pensioner longevity then there will be a failure to have high enough pension contributions and increased pressure on future contributions.

It was agreed that the Assistant Head of Finance would review this item in order to reflect the actions put in place as a result of the recent actuarial valuation.

Report of Clive Palfreyman, Assistant Head of Finance, Corporate Financial Services

Members received the Report of the Assistant Head of Finance, Corporate Financial Services, which informed members that the Pension Fund’s Governance Policy Statement has been updated in order to take account of revised governance arrangements implemented in May 2007.  This reflected the good practice and reporting arrangements in place.

Officers were currently in the process of developing an Administration Strategy which would be presented to the Committee for approval, at a future meeting.  The Strategy will form the umbrella for administrative framework.

The Chairman requested that this item be presented to the Pension Fund Consultative Group at its next meeting.

Discussion took place regarding the amount of training which members were undertaking.  Apart from regular training sessions at least twice a year, presentations from Fund Mangers and attendance at conferences were also part of the training programme.  Members agreed that consistency of training and attendance at courses was vital to the work of the Committee.  Even though officers were able to provide advice on the Pension Fund, the Committee itself was responsible for the decisions made and should have an understanding of how things work in general terms.

The Committee agreed it was important to establish a training programme for next year on the basis of the training needs analysis carried out earlier in the year.  

With regard to the flowchart showing responsibilities, members noted that the County Council is the Authority with statutory responsibility for the Pension Fund, and reports annually to the other employers involved.  The Chairman also commented that a report on the work of the Pension Fund Committee should also be made annually. 

The next meeting of the Pension Fund Committee will be held on 21 February 2008 in Mezzanine Room 3.  Dates of future meetings are as follows:

The next meeting of the Committee will be held on 21 February 2008 in Mezzanine Room 3. (Addendum: subsequent to this meeting the date of the next meeting was changed to 28 February 2008.)  Dates of future meetings are as follows:

2008                                       2009

17 April                                  5 March

29 May                                   2 April

11 September

23 October

20 November

To resolve to exclude the press and public as the following item is exempt by virtue of Paragraph 3 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating to the financial or business affairs of any particular person (including the authority holding that information)

RESOLVED

That the press and public be excluded for the following item which is exempt by virtue of Paragraph 3 of Part 1 of Schedule 12a of the Local Government Act 1972 because it contains information relating to the financial or business affairs of any particular person (including the authority holding that information)

Of the meeting held on 20 September 2007, to be confirmed.

The confidential minutes of the meeting held on 20 September 2007 were confirmed.

The confidential unconfirmed minutes of the Pension Fund Consultative Group meeting, held on 26 October 2007, are attached for information.

Members received, for information, the confidential minutes of the Pension Fund Consultative Committee meeting held on 26 October 2007 and noted their contents.

Presentation by Mercer Investment Consulting.

Members received a summary and presentation from Anwen Owens and Harriet Anthony of Mercer Consulting.

It was agreed that Mercer Consulting would produce model structures for the Committee to discuss.