Agenda and minutes

Apologies for lateness were received from Councillor Beacham.

There were no items of urgent business. Item 6 was admitted as late business, since the report was not received from Hymans Robertson five working days before the meeting and so had to be dispatched at a subsequent date.

No declarations of interest were received.

No deputations or petitions were received.

That the Minutes of the meeting held on 23 January 2006 be confirmed and signed as an accurate record.

Vince McEntegart, a representative from Hymans Robertson, presented their latest report to the Pensions Panel.

Mr. McEntegart informed members that 70% of the Haringey Local Government Pension Fund was invested in equities. Approximately 60% of these investments in equities were in the UK stockmarket and 40% were overseas. Mr. McEntegart advised members that only 10% of worldwide equities were actually in the UK and 90% were overseas. He mentioned that this meant the Fund was disproportionately committed to UK equities.

Mr. Jones, the adviser to Trustees, advised members that investing a large proportion of equity investment in the UK stockmarket was a prudent course as the liabilities of the fund were in pounds sterling. Members were informed that most local authority pension funds in Britain preferred to put the bulk of their funds in assets priced in pound sterling.

The recommendation given by Hymans Robertson was that the percentage of assets invested in the UK stockmarket be decreased. Mr. McEntegart advised that more funds could be invested in China and other emerging markets since these markets tended to provide a high rate of return.

The fund was mainly investing in large companies that were quoted on the stock market. Hymans Robertson suggested that some money could be invested in the private equity market. This involved investing money in companies that were not quoted in the stock exchange. Mr. McEntegart informed members that, at the moment, the pension fund was investing in a relatively small number of companies. Investing in the unquoted firms’ market would help to diversify the fund. Furthermore, Mr. McEntegart informed members that some unquoted companies had done very well recently since their management had greater freedom to make bold, long-term decisions than firms that were quoted on the stockmarket and had to be responsive to short-term pressure from the markets.

Mr. McEntegart advised members that an issue they needed to bear in mind was whether to opt for active or passive management of their fund. At the moment, the Fund Managers the Haringey Pension Fund had were active managers. The Panel was informed that active management cost about 0.4% in fees per year (£2.5m). They were advised that passive management would be cheaper. However, they were informed that, if they opted for passive management, they would not have a chance to make above-average returns due to good stock-picking.

According to information provided to members by fund managers at previous meetings of this Panel, over the past two and a half years, the Council’s Pension Fund had underperformed the market. There thus had not been good results from active management. However, the Director of Finance and Mr. Jones informed members that this was a relatively short timescale to judge the effectiveness of the fund managers’ investment strategy. They advised members that the benefits and failures of active management could be more effectively measured over a longer timescale.

The Director of Finance informed members that it was his recommendation that, as the stock market was not perfect in  ...  view the full minutes text for item 6.

There were no items of new urgent business