Pension Sub-committee And Pension Board - 01/03/2006

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE OF THE FINANCE COMMITTEE held at Dundee on 1st March, 2006.

Present:-

 

BAILIE

 

Charles D P FARQUHAR

 

COUNCILLORS

 

Fraser MACPHERSON

Nigel DON

 

In attendance:-

 

Mr Willie GOWANS, Tayside Full-Time Trade Union Officers Group

 

 

Councillor MACPHERSON, Convener, in the Chair.

 

The minute of meeting of this Committee of 16th November, 2005 was noted.

 

Unless marked thus * all items stand delegated.

 

I MATTER ARISING: INVESTMENT IN TOBACCO

 

On a reference to Article V of the minute of meeting of the Finance Committee of 12th December 2005, Investment in Tobacco, the Convener updated the Sub-Committee on recent developments. The Depute Chief Executive (Finance) had written to the Minister for Finance and Public Service Reform requesting a meeting. A reply had been received from the Scottish Executive Deputy Minister stating that a meeting was not necessary and outlining the Executive's position. The letter also advised that there were no plans to amend current legislation to enable the Sub-Committee to disinvest in tobacco on ethical grounds.

 

The Sub-Committee expressed disappointment at the response. The strong support received on this issue from Angus and Perth and Kinross Councils was noted.

 

The Sub-Committee agreed to note the response and remit the matter to the next meeting of the Finance Committee.

 

II PROPOSED TIMETABLE OF MEETINGS FOR 2006/07

 

There was submitted Report No 54-2006 by the Depute Chief Executive (Finance) suggesting a programme of meetings for the Superannuation Investment Sub-Committee to cover investment performance and issues arising in the Financial Year 2006/2007.

 

The Sub-Committee agreed to meet on the following dates:-

 

17th May, 2006

16th August, 2006

15th November, 2006

21st February, 2007

30th May, 2007

 

All meetings to commence at 11 am.

 

III TAYSIDE SUPERANNUATION FUNDS BUSINESS PLAN 2006/2007

 

There was submitted Report No 55-2006 by the Depute Chief Executive (Finance) introducing the third annual Business Plan for the Tayside Superannuation Funds. One key consideration in the current plan was the implication of the results of the triennial valuation of the Fund as at 31st March 2005. A final valuation of the Fund at 31st March 2005 had not yet been received. The Head of Finance advised that the Actuary had confirmed that the 2006/07 employee contributions should remain the same as 2005/06.

 

The Sub-Committee noted the information within the report and approved the 2006/07 Business Plan which applied to the administration and management of the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

 

IV STATEMENTS OF INVESTMENT PRINCIPLES ANNUAL REVIEW

 

There was submitted Report No 56-2006 by the Depute Chief Executive (Finance) reviewing Statements of Investment Principles for the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

 

The Sub-Committee noted the information within the report and approved the Statements of Investment Principles for both the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

 

V FUNDING STRATEGY STATEMENTS

 

There was submitted Report No 57-2006 by the Depute Chief Executive (Finance) introducing the first Funding Strategy Statements for the Tayside Superannuation Funds.

 

The Chief Exchequer Officer stated that a full consultation exercise had taken place. There had been an opportunity for all participating bodies to make their views known at the Superannuation Forum which was held on 13th February 2006.

 

Funding Strategy Statements were a new requirement for the Local Government Pension Scheme (the Scheme). The Statements were required to be produced by 31st March 2006.

 

The Sub-Committee approved the Funding Strategy Statements for the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

 

VI CHANGE OF ACTUARY

 

There was submitted Agenda Note AN74-2006 advising that the staff from Punter Southall who provided actuarial services to the Fund had merged with Barnett Waddingham, another actuarial firm. In order to ensure continuity of service, the Depute Chief Executive (Finance) had agreed that this firm should continue to provide actuarial advice for the remainder of the contract.

 

The Sub-Committee noted the position.

 

The Committee resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the public and press be excluded from the meeting for the undernoted items of business on the grounds that they involved the likely disclosure of exempt information as defined in paragraphs 4, 6 and 11 of Part I of Schedule 7A of the Act.

 

VII TAYSIDE SUPERANNUATION FUNDS

 

(a) PERFORMANCE SUMMARIES

 

There was submitted Report No 58-2006 by the Depute Chief Executive (Finance) reviewing the investment performance of the Main Funds' four Fund Managers (excluding Property) for the quarter to 31st December 2005. The report also considered the performance of the Transport Fund which shared two of the Managers. The report compared investment performances of the Funds' specific benchmarks which consisted of various stockmarket indices. It was noted that the report now included the targets set for the individual Fund Managers.

 

The Sub-Committee noted that two Fund Managers had outperformed the benchmark for the quarter to 31st December 2005 with two Fund Managers slightly underperforming the benchmark. The Transport Fund had equalled the benchmark. Three Fund Managers had outperformed the benchmark for the year to 31st December 2005 and the Transport Fund had also outperformed the benchmark for the year to 31st December 2005. The report also incorporated the Fund Managers' performance for the three year period to 31st December 2005.

 

The Head of Finance advised that the performance of the Fund Managers was constantly reviewed. In addition, the Investment Consultant met with the Fund Managers annually. The Chief Exchequer Officer pointed out that the Fund was rated in the top three of the Scottish Local Authorities.

 

The Sub-Committee noted information contained in the report with regard to the performance of the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund and their Fund Managers.

 

(b) PERFORMANCE SUMMARIES (PROPERTY PORTFOLIO)

 

There was submitted Report No 59-2006 by the Depute Chief Executive (Finance) reviewing the Investment Performance of the Property Portfolio managed by Schroder Property Investment Management Limited for the quarter to 31st December 2005 and for the twelve month period to the same date. The report compared investment performances with an appropriate benchmark from April 2004.

 

The total portfolio had outperformed the benchmark for the quarter to 31st December 2005 and also for the twelve month and three year periods to 31st December 2005. The performances had also exceeded the targets set which were included for the first time.

 

The Chief Exchequer Officer advised that the Fund had recently withdrawn from two Funds in its total portfolio.

 

The Sub-Committee noted the information contained in the report with regard to the performance of the Property Portfolio managed by Schroder Property Investment Management Limited.

 

(c) SUMMARIES OF INVESTMENTS AND TRANSACTIONS 1ST OCTOBER TO 31ST DECEMBER 2005

 

There was submitted Report No 60-2006 by the Depute Chief Executive (Finance) summarising investments and transactions for the period 1st October to 31st December 2005.

 

The Sub-Committee noted the information contained in the report.

 

VIII PRESENTATION AND TRAINING

 

Sam Morse, Peter Yarrow and Niamh Whooley of Fidelity Investments gave a presentation. Peter pointed to a strong performance in 2005 with investors positive and several significant mergers and acquisitions taking place. Sam provided an overview on the 2005 UK Equities Strategy. He looked forward to 2006 but cautioned that the market might well be adversely affected by continuing high oil and energy costs and a possible increase in interest rates.

Niamh spoke of the Fidelity approach to corporate social responsibility. She highlighted issues raised with oil and gas companies and the Gambling Commission. Fidelity were sometimes approached by companies themselves in order to identify their weaknesses. She was gathering information on best practice, not just in the UK but worldwide.

 

The speakers answered questions and were thanked by the Convener.

 

 

 

 

FRASER MACPHERSON, Convener.