Pension Sub-committee And Pension Board - 20/11/2002

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE of the FINANCE COMMITTEE held at Dundee onWednesday, 20th November, 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 23rd October, 2002 was noted.

Unless marked thus * all items stand delegated.

The Director of Support Services reported that, to enable the undernoted item to be considered in private, the Sub-Committee should resolve under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the public and press be excluded from the meeting.

The Sub-Committee agreed that the public and press be not excluded from the meeting.

I SOCIALLY RESPONSIBLE INVESTMENT SIX MONTHLY REPORT

There was submitted Report No 807-2002 by the Director of Finance reviewing the implementation by the Fund Managers of the positive engagement strategy approved by the Sub-Committee on 23rd February, 2000. The four action areas were identified as Employee Care, Human Rights, Sustainability and the Environment. A summary of recent engagement activity was provided by each Fund Manager.

The Director of Finance stated that officers regularly engaged with the Fund Managers and PIRC was employed to provide advice. The annual SRI report would provide more details.

The Sub-Committee noted the information contained in the report with regard to the activities of the Fund Managers during the six month period to 30th September, 2002. It was also agreed to ask the Fund Managers to provide at least one example where they had interacted with a company with a positive outcome.

The Convener had agreed under Standing Order No 51(3)(b) that the following item be considered as a matter of urgency in view of the timescales involved.

II NATIONAL ASSOCIATION OF PENSION FUNDS

There was submitted Agenda Note AN300-2002 asking the Sub-Committee to approve the Fund rejoining the above organisation. This was a national organisation which was at the forefront of the pensions' industry and attempted to give members a voice on all areas of concern. Membership was originally stopped as it was felt that the body was concentrated on the private sector and did not give sufficient weight to local authority concerns. However, the number of local authority members had increased and a specific Local Authority Forum had been set up. The cost of membership was 1,380 per annum.

The Sub-Committee approved rejoining the National Association of Pension Funds.

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 TAYSIDE SUPERANNUATION FUND

(a) W M PERFORMANCE SUMMARIES (BALANCED PORTFOLIOS)

There was submitted Report No 808-2002 by the Director of Finance reviewing the Investment Performance of the Main Funds, three Fund Managers for the quarter to 30th September, 2002 and for the twelve-month period to the same date. The report compared investment performances with various stock market indexes.

The Sub-Committee noted that one of the three Fund Managers had slightly out-performed the WM Index for the quarter to 30th September, 2002 whilst the other two Fund Managers had slightly under-performed the Index. Two Fund Managers had out-performed the Index for the year to 30th September, 2002 whilst one Fund Manager had slightly under-performed the Index. Negative returns had applied for both the quarter and the year to 30th September, 2002.

(b) PERFORMANCE SUMMARY - (PROPERTY PORTFOLIO)

There was submitted Report No 809-2002 by the Director of Finance relating to the Schroder Property Investment Management Limited performance for both the quarter and the year to 30th September, 2002.

The Sub-Committee noted the information contained in the report which included the Investment Performance of the Property Portfolio managed by Schroder Property Investment Management Limited for the quarter and year to 30th September, 2002.

(c) SUMMARY OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 810-2002 by the Director of Finance summarising investments and transactions during the period 1st July to 30th September, 2002.

Members commented on the sharp fall in the value of the Fund which broadly followed the fall in equities. The Director of Finance advised that the actuarial valuation currently taking place would ascertain the Fund's assets against liabilities. Any increased employers' pension contribution rates would apply from 1st April, 2003.

The Corporate Finance Manager stated that speakers from the Actuaries would address the Pensions Forum next year to explain the evaluation process.

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

IV TAYSIDE TRANSPORT SUPERANNUATION FUND

(a) WM PERFORMANCE SUMMARIES

There was submitted Report No 811-2002 by the Director of Finance relating to WM Performance Summaries for both the quarter and year to 30th September, 2002.

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

(b) SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 812-2002 by the Director of Finance summarising Investments and Transactions during the period 1st July to 30th September, 2002.

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

V REVIEW OF STRUCTURE OF FUND: UPDATE

The Principal Treasury and Investment Officer updated members on the progress made since the Sub-Committee meeting on 23rd October, 2002.

VI PRESENTATION

Mr Peter Yarrow and Mr Graham Clapp from Fidelity Investments gave a presentation reviewing concerns over slowing economic growth, lower corporate earnings and investor confidence. Whilst equity markets had continued to decline, some equities were beginning to look attractively valued. It was reported that Fidelity had recently appointed a Corporate Director whose responsibilities included corporate governance and SRI.

The speakers answered questions and were thanked for their presentation by the Convener.

VII MEMBERS' TRAINING

The Principal Treasury and Investment Officer gave a short presentation on the impact of the Myners' Report "Institutional Investment in the UK - A Review" and introducing a glossary of investment terms.

George REGAN, Convener.