Meeting documents

RESOLVED:

That Mr Frank Downes be elected Chairman for the ensuing year.

RESOLVED:

That Mr Peter Hardy be appointed Vice Chairman for the ensuing year.

There were no apologies.

The Chairman welcomed to the meeting Matthew Passey from Mercer Investment Consulting.

To declare any personal and prejudicial interests

There were no declarations of interest.

of the meeting held on 2 April 2009, to be confirmed.

The minutes of the meeting held on 2 April 2009 were confirmed as a true record.

With regard to Item 4 of the minutes a member asked whether merging with other Pension Funds would ever be a possibility.  Members were informed that the Department for Communities and Local Government (DCLG) is currently consulting on delivering affordability, viability and fairness through Local Government Pension Schemes.  The consultation includes reference to the financial stability of Local Government Pension Funds.  However, at a recent regional meeting it was not considered a viable option to merge with other Pension Funds since each Fund makes investments in its own right.

Report of Julie Edwards, Pensions and Investments Manager, which includes the mini-valuation outcome.

Members received the report of the Pensions and Investments Manager, the purpose of which was to present the performance of the Pension Funds’ fund managers for the first quarter of 2009.  Members noted that the current report was intended to be presented to the meeting on 19 June which had been cancelled. However, the PFC newsletter provided an update on the Fund Managers performance as at 30 June 2009.

The market value of the Fund decreased from £1,074m to £1,004m during the three months ending 31 March 2009.  However, it increased to £1,069m during the three months ending 30 June 2009.

Compared to other Funds the BCC Pension Fund ranked 44 for quarter 4 of 2008 and the annual and three years ranking of 52 and 48 respectively had reduced compared to the previous quarter.

The actuarial valuation as at 31 March 2007 showed a funding level of 81% with an average required employer contribution of 19.2%.  As at 31 March 2009 the Actuary has estimated that the funding level is 63% and the average required employer contribution would be 22.5% of payroll.  It was noted that Pension Funds are not permitted to change employer contributions between triennial valuations other than in exceptional circumstances and the current employer contribution will remain until the valuation in 2010.

In answer to a member’s question, it was noted that each of the Directors of Finance for the larger employers in the Scheme receives an employer specific interim valuation report. 

Concern was expressed about the possible increase in employer contributions because of the drop in the funding level of the Pension Fund.  It was noted that there have been discussions with the Actuary regarding possible steps for the future.  However, there did appear to be some recovery in the market and it was hoped that by the time of the next triennial valuation, based on the position as at 31 March 2010, the funding level would be improved. 

The DCLG consultation paper, which will be discussed at the next meeting of the Pension Fund Committee will be looking at setting out different funding targets other than 100%.  The paper talks about a staged value for the Fund as opposed to maximising the value of the Fund.

Members discussed the controls which are in place with regard to underperformance by a fund manager, including an initial discussion between the Assistant Head of Finance and the Pensions & Investment Manager with the Fund Manager, as well as inviting Fund Managers to the Committee meeting to give an account of their actions, in order that the Committee can review the investment.  New managers supply a summary of their rationale which can be monitored over time. All Fund Managers are constantly monitored and assessed.

The Independent Adviser stated that the results were satisfactory for the year and the Pension Fund Managers performed better than average against others in the market.  It was agreed that the Advisers would give a regular verbal report on fund manager performance after each quarterly  ...  view the full minutes text for item 6.

Report of Clive Palfreyman, Assistant Head of Finance

Members received the report of the Pensions and Investments Manager the purpose of which was to present the Pension Fund Accounts for 2008/09.

The net assets of the Fund as 21 March 2009 were £1,007,413 which is a reduction of £200,000 compared to the previous year.  £105m was received in contributions and £71m paid out to fund retirement and death benefits.  There was a reduction on net returns on investments of £233m.  The Audit Commission fee for the year ending 31 March 2010 will be £73,000 compared to £23,000 this year.

Members discussed action being taken with regard to possible losses from Landsbanki.  The action taken in the last few months will mean the BCC Treasury Management Strategy will have no relation to the Pension Fund because changes have been made in the way that process is governed.  It was agreed that a report on possible Landsbanki investments would be presented at the next meeting of the Pension Fund Committee once further guidance had been received.

The Committee expressed concern regarding the increased fee from the Audit Commission for their work.  This has happened because the work of the County Council and the Pension Fund has now been segregated and has resulted in the Pension Fund being charged a higher amount.  The Pension Fund has challenged the Audit Commission regarding the fee.

The Committee noted the Statement of Accounts for the financial year ended 31 March 2009.

Report of Clive Palfreyman, Assistant Head of Finance

Members received the report of the Assistant Head of Finance.

The Governance Compliance Statement was last reviewed in February 2008 and it is considered good practice to review it on an annual basis.  The review has shown that although audit quality and task management processes are good, member training needs further work.

Members were reminded that there will be a training session with Aviva on 16 September.  A member asked whether more independent training could be provided.

The Assistant Head of Finance stated that, as in the past, a skills audit would be undertaken shortly in order to set planning for next year.  A member suggested that induction training would be useful prior to the specific training events.  It was stated that at the September training session with Aviva, an induction session will be held, along with an introduction to Asset Classes.  Members were encouraged to ask for explanations on issues they did not understand during meetings, and to use training days to do the same thing.

The Annual Pension Fund Conference was discussed and it was noted that this would be held on an annual basis, even though a web-based version was held last year.  The date this year is 15 October 2009.

The Committee approved the Governance Compliance Statement for publication on the Pensions Website.

The next meeting of the Committee will be held at 10.00am on Thursday 3 September 2009 in Mezzanine Room 2.

Members are reminded that there is a training day at Aviva in London, at 10.00am on Wednesday 16 September 2009.  Please note this date in your diaries.

Dates of future meetings

2009

16 September (Training Day at Aviva)

19 November

The next meeting of the Committee will be held at 10.00am on Thursday 3 September 2009 in Mezzanine Room 2.

Members are reminded that there is a training day at Aviva in London, at 10.00am on Wednesday 16 September 2009.  Please note this date in your diaries.

Dates of future meetings

2009

16 September (Training Day at Aviva)

19 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 2 April 2009, to be confirmed

The confidential minutes of the meeting held on 2 April 2009 were confirmed as a true record.

Report of Clive Palfreyman, Assistant Head of Finance

Members received the report of the Assistant Head of Finance and discussed its contents.

RESOLVED:

The Committee:

• Agreed that the Fund should seek to appoint one or more Transition Managers
• Agreed that the Transition Manager search should be delegated to Officers with the final decision for appointment being delegated to the Chairman and then reported to Committee.

Verbal update from Clive Palfreyman, Assistant Head of Finance

Members received a verbal update from the Assistant Head of Finance.

A member asked whether there could be an up to date valuation of the Fund. It was noted that the next full valuation will be in March 2010, but the figures are monitored on a quarterly basis.  The Committee meeting dates had also been changed in order to be able to provide members with the most up to date figures as early as possible.  The Pension Fund Committee newsletter is published one month after the previous quarter’s end (one week after figures are available) in order to provide a timely further update to members.

Members also have the opportunity to call the Assistant Head of Finance at any time if they wish to discuss any matters. 

It was also noted that monitoring of fund managers is carried out on an ongoing basis and a framework is in place whereby if fund managers consistently under-perform, the Committee is alerted and managers are called in to discuss their performance.

It was agreed that a Forward Plan would be circulated in order to inform members of items that will be presented to the Committee.

At the last meeting it was agreed that managers would be asked to provide a report on what their predictions over the coming six months and then report on the actions they had taken over that six months.  It was suggested that this could be introduced for new managers as well.

Report of Clive Palfreyman, Assistant Head of Finance

Members received the report of the Assistant Head of Finance and noted that in 2007 the Committee looked at governance arrangements as well as the way at the way the Committee received advice, and identified three key advisers – the Investment Consultant, the Committee Adviser and the Actuary.  It was agreed that their roles should be looked at on a regular basis, staggered over three years. In this connection the agreement with the Actuary was extended to include the 31 March 2010 valuation, and the Committee tendered for and appointed a new Committee adviser in 2008 appointing Carolan Dobson.  This year the Committee is asked to look at the role of the Pension Fund Investment Consultant.

The Committee considered and agreed the arrangements for the investment consultant role.