Pension Sub-committee And Pension Board - 19/05/2004

At a MEETING of the SUPERANNUATION INVESTMENT SUB COMMITTEE OF THE FINANCE COMMITTEE held at Dundee on 19th May 2004.

Present:-

Bailies

C D P Farquhar

Neil I C Powrie

Councillors

Jill Shimi (substitute for Councillor George Regan)

Joe FitzPatrick

Willie Sawers

Nigel Don

Mr Willie Gowans, Full Time Trade Union Officers' Group

Councillor Shimi took the Chair.

The minute of meeting of this Committee of 25th February 2004 was noted.

Unless marked thus * all items stand delegated.

I LGPS TRUSTEES CONFERENCE

There was submitted Agenda Note AN220-2004 advising that the Local Government Pensions Committee had arranged a conference specifically aimed at Elected Members with responsibility for the Local Government Pension Scheme.

It was agreed that the Convener and any other member interested could attend the conference which would be held in York on 13th and 14th October 2004.

Members wishing to attend were asked to notify Committee Services by 30th June 2004. The cost of the conference was 325 per delegate excluding travel and subsistence.

II SOCIALLY RESPONSIBLE INVESTMENT - SIX MONTHLY REPORT

There was submitted Report No 393-2004 by the Depute Chief Executive (Finance) reviewing the progress by the Fund Managers regarding the positive engagement strategy approved by the Sub-Committee on 23rd February 2000. The four action areas originally identified were Employee Care, Human Rights, Sustainability and the Environment.

The Sub-Committee noted that this was the first summary of engagement activity submitted by Alliance Bernstein. The report also covered the activities of the other Fund Managers, Baillie Gifford and Fidelity Investments.

Following queries raised by members, the Depute Chief Executive (Finance) suggested that Fund Managers should be asked about what independent checks were made on the information supplied to them by companies.

The Sub-Committee noted the information contained within the report with regard to the activities of the Fund Managers during the six month period ended 31st March 2004 and approved the suggestion that Fund Managers be asked about what independent checks were made on the information supplied to them by companies.

The Depute Chief Executive (Finance) undertook to report back on the responses.

The Sub-Committee resolved under Section 50(A)(4) of the Local Government (Scotland) Act 1973 that the press and public be excluded from the meeting for 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 7A of the Act.

III APPOINTMENT OF INVESTMENT CONSULTANT AND ACTUARY

There was submitted Report No 397-2004 by the Depute Chief Executive (Finance) seeking approval to appoint an Investment Consultant and an Actuary for the Superannuation Funds for the period commencing 1st July 2004. The Corporate Finance Manager explained that the report was the result of a recent tendering exercise.

The Sub-Committee approved the following recommendations: -

(a)that Hymans Robertson be appointed as Investment Consultant for the Funds and to attend one officer meeting with each manager each year along with preparing an annual report and attending one Sub-Committee meeting.

(b)that Punter Southall be appointed as Actuary for the Funds.

IV TAYSIDE SUPERANNUATION FUND

(a) PERFORMANCE SUMMARIES

There was submitted Report No 394-2004 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 March 2004. The report also considered the performance of the Transport Fund which shared two of the 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 all four Fund Managers had outperformed the benchmark for the quarter to 31st March 2004. The report also incorporated the Fund Managers' performance for the year to 31st March 2004 and also the three year period to 31st March 2004.

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

(b) PERFORMANCE SUMMARY (PROPERTY PORTFOLIO)

There was submitted Report No 395-2004 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 March 2004 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 outperformed the benchmark for the quarter and the year to 31st March 2004. The annualised three year performance to 31st March 2004 was also detailed. It was noted that exposure to Schroder Exempt would continue to be reduced.

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.

There was submitted Report No 396-2004 by the Depute Chief Executive (Finance) summarising investments and transactions during the period 1st January to 31st March 2004.

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

Councillor Shimi left the meeting and Deputy Lord Provost Farquhar took the Chair

V PRESENTATION

Sally Marshall and Iain Lindsay of Goldman Sachs were welcomed to their first Sub-Committee meeting since their appointment as Bond Managers last year.

Sally briefly reviewed the extent of Goldman Sachs' business which included a growing number of Local Government clients. Iain pointed out that corporate bond returns had levelled off over the last quarter following positive returns over the past year. The performance for the year to date was slightly ahead of the benchmark. Iain reviewed the economic prospects in the U.S., Japan, U.K. and European markets, noting that U.K. interest rates were beginning to rise.

Both speakers answered questions and were thanked for their informative presentation.

JILL SHIMI, Convener.

APPENDIX II

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