Pension Sub-committee And Pension Board - 25/02/2004

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE of the FINANCE COMMITTEE held at Dundee on Wednesday, 25th February, 2004.

 

Present:-

 

Bailies

 

C D P Farquhar

Neil I C Powrie

 

Councillors

 

Joe Morrow

Joe FitzPatrick

Nigel Don

 

Councillor Morrow, Convener, in the Chair.

 

The minute of meeting of this Sub-Committee of 19th November, 2003 was noted.

 

Unless marked thus * all items stand delegated.

 

I PROPOSED TIMETABLE OF MEETINGS FOR 2004/05

 

There was submitted Report No 62-2004 by the Depute Chief Executive (Finance) suggesting a programme of meetings of the Superannuation Investment Sub-Committee to cover investment performance and issues arising during the financial year 2004/2005.

 

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

 

Meeting Date

Manager to Attend

 

Wednesday, 19th May, 2004

Goldman Sachs

 

 

Wednesday, 18th August, 2004

Baillie Gifford & Co

 

 

Wednesday, 17th November, 2004

Schroder Property Investment Management

 

 

Wednesday, 23rd February, 2005

Fidelity Pensions Management

 

 

Wednesday, 18th May, 2005

Alliance Bernstein

 

All meetings to commence at 11 am.

 

II TAYSIDE SUPERANNUATION FUNDS BUSINESS PLAN 2004/05

 

There was submitted Report No 63-2004 by the Depute Chief Executive (Finance) introducing the first annual Business Plan for the Tayside Superannuation Funds. The Business Plan had been prepared in response to the "CIPFA Pension Panel Principles for Investment Decision Making in the Local Government Pension Scheme in the United Kingdom April 2002" which had suggested that as one of the means of achieving effective decision making, an annual Business Plan for the Pension Fund should be prepared and submitted.

 

The Sub-Committee noted the information contained in the report and approved the 2004/2005 Business Plan which applied to the administration and management of the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

 

It was further noted that the Business Plan would be reviewed and updated annually.

III STATEMENT OF INVESTMENT PRINCIPLES ANNUAL REVIEW

 

There was submitted Report No 64-2004 by the Depute Chief Executive (Finance) revising the Statements of Investment Principles for the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund. The Local Government Pension Scheme (Management and Investment of Funds) (Scotland) Regulations 1998 require administering authorities to prepare, maintain and publish a written Statement of Investment Principles (SIP). The Statement of Investment Principles (SIP) had been reviewed annually since 1999. The Regulations were amended on 31st March, 2003 to require authorities to state the extent to which they comply with the ten principles of investment practice contained in "CIPFA Pension Panel Principles for Investment Decision Making in the Local Government Pension Scheme in the United Kingdom April 2002" and the Sub-Committee noted that the two areas which were not being fully complied with last year had now been addressed.

 

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

 

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 1 of Schedule 7(A) of the Act.

 

IV SEPARATE CONTRACTS FOR ACTUARIAL SERVICES AND INVESTMENT CONSULTANCY ADVICE

 

There was submitted Agenda Note AN86-2004 advising that the Fund currently had arrangements in place with Hymans Robertson to provide both actuarial services and investment consultancy advice. The "CIPFA Pension Panel Principles for Investment Decision Making in the Local Government Pension Scheme in the United Kingdom April 2002" codifies best practice identified in the Myners Report "Institutional Investment in the UK: A Review". One of its recommendations was that whilst it was acceptable for one firm to provide both services, these should not be pooled together and should be offered as separate individual contracts.

 

To ensure compliance with best practice, the Sub-Committee noted that separate contracts for each of the above would be put in place from 1st July, 2004. The Depute Chief Executive (Finance) would begin the tendering exercise and would identify short lists which would be reported to the Sub-Committee which would make the final selection.

 

V TAYSIDE SUPERANNUATION FUNDS

 

(a) PERFORMANCE SUMMARIES

 

There was submitted Report No 65-2004 by the Depute Chief Executive (Finance) reviewing the investment performance of the Main Fund's four Fund Managers (excluding property) for the quarter to 31st December, 2003. It also considered the performance of the Transport Fund which shared two of these managers. The report compared investment performances of the Funds with the Funds' specific benchmarks which consisted of various stock market indices.

 

The Sub-Committee noted that two of the Fund Managers had out-performed the index for the quarter to 31st December, 2003, one Fund Manager had equalled the index and one manager had slightly underperformed the index. The Transport Fund return had equalled the benchmark. The report also incorporated the Fund Managers' performance for the year to 31st December, 2003 and also the three year period to 31st December, 2003. It was noted that the three year performance had been included for the first time.

 

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

(b)TAYSIDE SUPERANNUATION FUND PERFORMANCE SUMMARY (PROPERTY PORTFOLIO)

 

There was submitted Report No 66-2004 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, 2003 and for the twelve month period to the same date. The report compared investment performances with an appropriate benchmark which was introduced in July 2003.

 

The total portfolio matched the index for the quarter and outperformed the index for the year. Over a three year period, the performance was marginally below the benchmark. The exposure to the largest holding was continuing to be reduced in line with the Sub-Committee's previous instructions.

 

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 2003

 

There was submitted Report No 67-2004 by the Depute Chief Executive (Finance) summarising investments and transactions during the period 1st October to 31st December, 2003.

 

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

 

VI SCHRODER PROPERTY STRATEGY

 

There was submitted Report No 177-2004 by the Depute Chief Executive (Finance) reviewing the Property Manager's exposure to Schroder's own funds and in particular to Schroder Exempt Property Unit Trust (SEPUT).

 

The Sub-Committee noted the information contained in the report and the document prepared by Schroder Property. It was also agreed to review the position again at a later date.

 

VII PRESENTATION

 

George Blunden and James Ross of Alliance Bernstein gave their first presentation to the Sub-Committee. They explained the Bernstein approach to people, philosophy and portfolio (stock selection) and referred to the detailed research carried out by analysts. Mr Ross also stated that engagement was important to Bernstein.

 

The speakers answered questions and were thanked by the Convener.

 

 

 

JOE MORROW, Convener.