Pension Sub-committee And Pension Board - 21/02/2007

At a MEETING of the SUPERANNUATION INVESTMENT SUB-COMMITTEE of the FINANCE COMMITTEE held at Dundee on 21st February, 2007.

Present:-

BAILIES

C D P FARQUHAR

Neil I C POWRIE

COUNCILLORS

Fraser MACPHERSON

Joe MORROW

Nigel DON

In attendance:-

Mr Willie GOWANS

Councillor Fraser MACPHERSON, Convener, in the Chair.

Apologies had been received from Councillors Sawers and FitzPatrick.

The minute of meeting of this Sub-Committee of 15th November, 2006 was noted.

Unless marked thus * all items stand delegated.

I RETIRAL - MR WILLIE GOWANS

The Convener thanked Mr Gowans for his service on the Committee and wished him well in his retiral.

II MINUTE OF MEETING OF 15TH NOVEMBER, 2006

The minute of meeting of the Superannuation Investment Sub-Committee of 15th November, 2006 was submitted and approved.

III PROPOSED TIMETABLE OF MEETINGS FOR 2007/08

There was submitted Report No 60-2007 by the Head of Finance.

This report suggested a programme of meetings of the Superannuation Investment Sub-Committee to cover investment performance and issues arising during the year 2007/2008.

The Sub-Committee approved the undernoted programme of meetings:-

All meetings to commence at 11.00 am.

IV TAYSIDE SUPERANNUATION FUNDS BUSINESS PLAN 2007/08

There was submitted Report No 61-2007 by the Head of Finance introducing the fourth annual business plan for the Tayside Superannuation Funds.

Members noted that the current plan would see the initial results from the revised asset allocations managers were asked to put in place in 2007/08.  Some were also asked to increase their out-performance targets.  It was further noted that it was proposed that the contracts with Hymans Robertson and Barnett Waddingham be extended for an additional three year period.

The Sub-Committee noted the information within the report and approved the 2007/08 Business Plan which would apply to the administration and management of the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

V STATEMENT OF INVESTMENT PRINCIPLES ANNUAL REVIEW

There was submitted Report No 62-2007 by the Head of Finance reviewing Statements of Investment Principles for the Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

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

VI FUNDING STRATEGY STATEMENT ANNUAL REVIEW

There was submitted Report No 63-2007 by the Head of Finance introducing the second Funding Strategy Statements for the Tayside Superannuation Funds.

The Sub-Committee approved the Funding Strategy Statements for Tayside Superannuation Fund and the Tayside Transport Superannuation Fund.

The 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 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 7A of the Act.

VII FOREIGN INCOME DIVIDEND AND TAX CREDIT RECLAIMS

There was submitted Report No 131-2007 by the Head of Finance seeking approval to engage KPMG and McGrigors to enable the Fund to participate in the Group Litigation Order regarding tax reclaims.

The Sub-Committee approved the engagement of KPMG and McGrigors to pursue the reclaim of tax incurred on foreign income dividends.

VIII TAYSIDE SUPERANNUATION FUNDS

(a)                    PERFORMANCE SUMMARIES

There was submitted Report No 64-2007 by the Head of Finance relating to Performance Summaries for the quarter, twelve months and three years to 31st December, 2006 reviewing the investment performance of the Main Fund's four Fund Managers (excluding Property) for the quarter to 31st December, 2006.  It also considered the performance of the Transport Fund which shares two of these managers.

The report compared investment performances of the Funds with the Funds' specific benchmarks which consist of various stock market indices.

The Sub-Committee noted that two Fund Managers had out-performed the benchmark for the quarter to 31st December, 2006.  It was further noted that one Fund Manager was behind the benchmark but that its mandates had now been changed.

The Sub-Committee noted the information contained within 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 65-2007 by the Head of Finance relating to Schroder Property Investment Management Limited performance for the quarter, twelve months and three years to 31st December, 2006 reviewing the investment performance of the Property Portfolio managed by Schroder Property Investment Management Limited for the quarter to 31st December, 2006 and for the twelve month period to the same date.

The report compared investment performances with an appropriate benchmark from 1st April, 2004.  Information prior to this was still compared to the previous benchmark.

The Sub-Committee noted the information contained herein with regard to the performance of the Property Portfolio managed by Schroder Property Investment Management Limited.

(c)                    SUMMARIES OF INVESTMENTS AND TRANSACTIONS

There was submitted Report No 66-2007 by the Head of Finance summarising investments and transactions during the period 1st October to 31st December, 2006 reviewing the investment activities of the Main Fund's five Fund Managers to the quarter to 31st December, 2006.  The Transport Fund shared three of these managers and their transactions were included.

The report summarised the transaction of each Fund Manager and showed the market values of the Main and Transport Fund.

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

(d)                    QUARTERLY FUNDING REPORT

The was submitted Report No 67-2007 by the Head of Finance which considered a report by Barnett Waddingham reviewing the current funding level of the Funds as assessed by Barnett Waddingham, the Fund Actuary.

The Sub-Committee agreed to note the report.

IX PRESENTATION AND TRAINING

John Carson, Tom Wright and Rosie Oldfield of Baillie Gifford gave a presentation.  John outlined the history regarding the original mandate noting that the investment philosophy of Bailie Gifford was that over time superior earnings growth would lead to share price-out performance.  Tom noted that 2006 had been a good year for equities but it had been disappointing in terms of performance.  Tom was confident that future performance would be much improved due to factors such as the positive position of the world economy, the likelihood of an increase in interest rates and cheaper quality growth stock. 

Rosie advised members that companies were becoming more aware of socially responsible issues to climate change for both moral and financial reasons.

The Convener thanked the speakers for their presentation.  Members noted that this was John Carson's last presentation as he was retiring.  John was thanked for his contribution to the Fund and members wished him well in his retirement.

Fraser MACPHERSON, Convener.