Pension Sub-committee And Pension Board - 07/06/2006

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE OF THE FINANCE COMMITTEE held at Dundee on 7th June, 2006.

Present:-

BAILIES

Charles D P FARQUHAR

COUNCILLORS

Fraser MACPHERSON

Helen DICK, (substitute for Councillor Joe MORROW)

Nigel DON

Joe FITZPATRICK

Rod WALLACE (substitute for Bailie Neil I C POWRIE)

In attendance:-

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

Councillor Fraser MACPHERSON, Convener, in the Chair.

The minute of meeting of this Sub-Committee of 17th May, 2006 was noted.

Unless marked thus * all items stand delegated.

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 item of business on the grounds that it involved the likely disclosure of exempt information as defined in paragraphs 4, 6 and 11 of Part I of Schedule 7A of the Act.

I REVIEW OF THE FUND

Geoff Singleton of Hymans Robertson gave a presentation regarding a Review of the Structure of the Fund, firstly considering a Review of the Investment Strategy and Structure. Geoff noted the current investment strategy of the fund and its recent history and advised of the current and proposed risk/return trade offs.

Members noted Geoff's recommended actions.

Thereafter, Geoff gave a further presentation on the implementation of a New Structure to the Fund, outlining the existing structure and past performances of the various Fund managers. It was recommended that there be an increase in overseas equity, and an introduction of private equity, and an increase in investment in property.

The Convener thanked Mr Singleton for his presentation. Thereafter members considered Report No 311-2006, Review of Fund by the Depute Chief Executive (Finance), which considered the reports prepared by Hymans Robertson on the Fund - Review of Investment Strategy, and Structure and Implementation of a New Structure.

The Sub-Committee agreed to approve the revised asset allocation structure shown at Appendix 1 to the report. This was in line with the following Hymans Robertson's recommendations:-

(i) Retain the overall level of equities at 70%;

(ii) Move the UK: Overseas balance of equities from 60:40 to 50:50. This would include the consideration of introducing a UK equity manager;

(iii) Investigate the benefits of introducing an active Currency Overlay Manager;

(iv) Increase the allocation of property from 9% to 12%;

(v) Review the performance targets and benchmarks for the Bond Managers (Fidelity and Goldman Sachs);

(vi) Reduce the cash balance in the benchmark from 2% to 0.

After consideration of the private equity option suggested by Hymans Robertson, the members agreed that this should not be introduced into the structure meantime.

It was agreed that officers should discuss options for implementing these changes with existing managers and report back to the Sub-Committee.

Fraser MACPHERSON, Convener.