Pension Sub-committee And Pension Board - 20/02/2002

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE OF THE FINANCE COMMITTEE held at Dundee on Wednesday,20th February, 2002.

Present:-

COUNCILLORS

In Attendance:-

Mr W Gowans, Tayside Full-Time Trade Union Officers' Group.

Councillor REGAN, Convener, in the Chair.

The minute of meeting of this Sub-Committee of 17th December, 2001 was noted.

Unless marked thus * all items stand delegated.

I APOLOGY

An apology for absence had been received from Councillor Bruce Mackie.

II PROPOSED TIMETABLE OF MEETINGS FOR 2002/2003

There was submitted Report No 77-2002 by the Director of Finance suggesting a programme of meetings of the Superannuation Investment Sub-Committee to cover investment performance and issues arising in the financial year 2002/2003.

The Sub-Committee agreed to the following programme of meetings:-

All meetings to commence at 11.00 am unless otherwise advised.

In addition to the above, members were reminded that the next meeting will take place on 22nd May, 2002.

The Sub-Committee resolved under Section 50(a)(4) of the Local Government (Scotland) Act 1973 that the public and press be excluded from the meeting in order that the undernoted items of business be considered in private 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 7(a) of the Act.

III STATEMENT OF INVESTMENT PRINCIPLES ANNUAL REVIEW

There was submitted Report No 78-2002 by the Director of Finance revising Statements of Investment Principles for the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

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

It was noted that this information would also be available to members of the public.

IV TAYSIDE SUPERANNUATION FUND

(a) WM PERFORMANCE SUMMARIES (BALANCE PORTFOLIOS)

There was submitted Report No 79-2002 by the Director of Finance relating to WM Performance Summaries for both the quarter and the year to 31st December, 2001.

The Sub-Committee noted that all three Fund Managers had out performed the WM Index for the quarter to 31st December, 2001. Two Fund Managers had out-performed the Index for the year to 31st December, 2001 whilst the third Fund Manager had under-performed the Index for the same period.

(b) PERFORMANCE SUMMARY (PROPERTY PORTFOLIO)

There was submitted Report No 80-2002 by the Director of Finance relating to Schroder Property Investment Management Ltd performance for both the quarter and the year to 31st December, 2001.

The Sub-Committee noted the information contained in the above report which included the Investment Performance of the Property Portfolio managed by Schroder Property Investment Management Ltd for the quarter and year to 31st December, 2001.

(c) SUMMARY OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 148-2002 by the Director of Finance summarising investments and transactions during the period 1st October to 31st December, 2001.

The Sub-Committee noted the report.

V TAYSIDE TRANSPORT SUPERANNUATION FUND

(a) WM PERFORMANCE SUMMARIES

There was submitted Report No 81-2002 by the Director of Finance relating to WM Performance Summaries for both the quarter and year to 31st December, 2001.

The Sub-Committee noted the report.

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 147-2002 by the Director of Finance summarising Investments and Transactions during the period 1st October to 31st December, 2001.

The Sub-Committee noted the information contained therein with regard to the performance of the Transport Fund managed by Schroder Investment Management Limited.

VI MEMBERS' TRAINING

There was submitted Report No 82-2002 by the Director of Finance advising the Sub-Committee of the need identified by the Myners Report "Institutional Investment in the UK: A Review" that pension fund decision-makers be given sufficient training and support to ensure an appropriate level of understanding of issues raised and decisions made.

The Sub-Committee approved the following recommendations:-

(a) that an additional item of training be placed on each Sub-Committee agenda to allow for a half-hour presentation on an item of interest;

(b) that the Fund should participate in the Training for Members' scheme to be implemented by CIPFA Scottish Branch Treasury Management Forum Pension Funds Sub-Group following the next local authority elections;

(c) that a Reference Guide be prepared by the Director of Finance outlining the key areas for members' responsibilities and explaining some of the language of the industry.

It was reported that the Convener had agreed that the undernoted item be considered under Standing Order 52(3)(b) in view of the timescales involved.

VII REVIEW OF PORTFOLIO ALLOCATION

The Director of Finance reported that the re-distribution of assets amongst existing managers as agreed by the Sub-Committee on 21st November, 2001 had been successfully completed in accordance with the timetable. (Article V refers). The cost of the exercise was 0.47% of the value of funds transferred against an estimated cost of 0.5%.

The Sub-Committee noted that the re-distribution of assets had been completed.

VIII PRESENTATION - BAILLIE GIFFORD

Mr Tom Wright reviewed the performance for the last 12 months when Baillie Gifford had outperformed the benchmark by 2.3% over a difficult period which produced negative returns. Rates of return for three year and five year periods were both ahead of the benchmark.

Mr John Carson stated that the key issue was now how quickly world economies would recover from the effects of recession and the events of 11th September. Indications were that cuts in interest rates were beginning to work in the United States. Recovery could be slow and patchy.

Mr Colin Melvin spoke on corporate governance and socially responsible investment (SRI). He had regular meetings on these topics and was currently the chair of the SEE Value Group whose aim was to facilitate engagement with companies in order to influence socially responsible investment. The Convener commented that the Sub-Committee members had a duty to maximise pension funds whilst also encouraging active engagement through SRI.

The Convener thanked the speakers on behalf of the members.

GEORGE REGAN, Convener.