Minutes

Pensions Committee (old)
Thursday, 23rd March, 2006 7.00 pm

Contact: Vino Sangarapillai  3682

Items
No. Item

1.

Apologies for absence

Minutes:

Apologies for absence were received from Councillors Milner and Patel.

 

The Chair expressed his concern with regard to the low attendance of Members at the Panel meetings and felt that, when appointed by Full Council to this Panel, members should discharge their duties and attend meetings.

 

The Chair welcomed the attendance of a representative from an admitted body to the Fund meeting – Max Wood, the Managing Director of Haringey Accord.

 

2.

Urgent business

Minutes:

There were no items of urgent business. There was one item of late business – Item 7 (Fund Performance and Administration Update). The reason given to Members for the lateness of the report was that the report authors were awaiting further information from fund managers in order to produce a comprehensive report.

 

3.

Declarations of interest

Minutes:

No declarations of interest were received.

 

4.

Minutes of 2nd Feb

Minutes:

RESOLVED:

 

That the Minutes of the meeting held on 2 February 2006 be confirmed and signed as an accurate record.

 

5.

Deputations/petitions

Minutes:

No deputations or petitions were received.

 

6.

Attendance of 5 fund managers

Minutes:

 

ATTENDANCE BY FIVE FUND MANAGERS:

 

Each Fund Manager gave a presentation of approximately 10 minutes followed by questions from Members and the Advisor to Trustees.

 

i.                    Bernstein

ii.                  Wellington

iii.                ING

iv.                 Capital

v.                   Fidelity

 

 

 

i. Bernstein

 

Patrick Rudden and George Blunden entered the proceedings and addressed the Panel on behalf of Bernstein.

 

They informed members that, over the 4th quarter of 2005, fund performance had been 0.43% above benchmark and 0.07% below target. 

 

Mr. Rudden advised the Panel that the best returns in Q4 had been in the consumer staples, consumer cyclicals and construction sectors. The FTSE as a whole had increased by 22%.

 

The Panel were further informed that more than two-thirds of the sales of large UK companies were made overseas. The UK market was thus reflecting strong sales elsewhere as well as strong sales in the UK.

 

Members were informed by Mr. Rudden that the fund had made a significant investment in Vodafone. Bernstein was of the opinion that Vodafone had good earnings potential as it was the largest or second-largest player in most mobile phone markets with the exception of Japan. Vodafone had sold off its Japanese operations, which had been welcomed by most industry analysts. This would mean that  Vodafone had potential for major share price  growth in the near future.

 

The Advisor to the Trustees, Howard Jones, enquired about the split between execution and research costs in the fees Bernstein paid brokers.

 

Mr. Rudden responded that total commission was 15 basis points (0.15%). Of this, it was estimated 5 to 7 basis points were research costs and 8 to 10 basis points execution costs.

 

The Chair enquired as to whether the fund had cast any proxy votes on controversial issues in the 4th quarter. Mr. Rudden responded that most controversial issues come up for consideration at AGMs around April. As such, the fund had not cast any proxy votes on major issues in the quarter under consideration.

 

Mr. Rudden and Mr. Blunden then withdrew from the proceedings.

 

ii. Wellington

 

Mike Elwood and Cassie Martin entered the proceedings and addressed the Panel on behalf of Wellington.

 

Mr Elwood and Ms Martin reported that fund performance was 0.24% below benchmark and 0.74% below target in the quarter to December 2005. Annualised performance since inception was 1.59% below benchmark and 3.59% below target.

 

Mr. Elwood informed the Panel that the fund was heavy in oil stocks. The recent fall in oil prices had affected the value of oil company shares significantly. This was one of the principal reasons given for underperformance. .The fund was overweight large cap companies whilst the largest growth had occurred amongst small cap companies, this had hurt Fund performance.

 

Mr. Jones asked if the fund managers were able to disaggregate commissions paid to brokers. Mr. Elwood replied that Wellington was unable to do so at this time.

 

In order to improve performance, Mr. Elwood informed the Panel that staff would be added to the sections within Wellington that researched  ...  view the full minutes text for item 6.

7.

Fund performance and administration update

Minutes:

The report of the Director of Finance on Fund Performance and Administration was outlined to the Panel to the Panel by the Pensions Manager, Chief Accountant and the Head of Personnel.

 

Officers reported that the overall performance of the fund had been 0.45% above benchmark.

 

The Panel were informed by the report of the Director of Finance that training was available from the custodian Northern Trust. Members had indicated at previous meetings that they would appreciate training from this provider. The Panel was advised that the event would be being held on 21 June. This would be an event which would include representatives from other local authorities and would, therefore, provide an opportunity to meet trustees of other local authority pension funds and share views, knowledge and experience.

 

The Chair sought the advice of officers regarding the suggestion from ING that the benchmark used for their property fund be altered. Mr. Jones advised that any decision on changing the benchmark should be deferred until the investment strategy review was completed.

 

The Panel stated that they had no appetite for more risk and would seek the advice of the Director of Finance as regards the change of benchmark as suggested by ING

 

The Chair asked for further details under “Pensions Administration” regarding compliance with the Data Protection Act”,  disclosure of information under various rules etc. He suggested that a certificate of existence for pensioners above a certain age should be required. .

 

The Pensions Manager informed the Panel that the Council participated in the Audit Commission’s National Fraud Initiative. This involved data-sharing between the DWP and local authority pension funds. The aim of this would be to prevent situations where, for example, someone was collecting the pension of a dead pensioner fraudulently.

 

It was agreed that a paragraph regarding the position on the above subjects was to be included in future reports.

 

As regards the  CIPFA  Guidance  Notes, circulated earlier, as per the decision of the Pensions Panel, the Chair indicated that there were three fundamental issues:-

 

1)     Delegation of the power, in relation to maintaining a Pension Fund-  either to a Committee, Sub-committee or Officer of the authority;

 

2)     Reporting  to Council, either through a Pensions Committee or through a non-Executive Committee;

 

 

3)     Representation of other employers as admitted bodies and other representatives.

 

The Chair expressed his opinion that Haringey Council could adopt any of the models, as mentioned in points 1 & 2 or as per the 2nd of March draft report of the Monitoring Officer on the subject but the most important point was that the structure for maintaining the Pensions Fund must be effective and compliant with the Myners Principles.

 

In addition, he expressed the view that there must be representation of all stakeholders, either with or without voting powers.

 

However, in order to make the “Pensions Panel” compliant with the 10 points in the Myners principles , as the initial step to be reviewed within a short period the Chair proposed that 4(a)(i) of  ...  view the full minutes text for item 7.

8.

New items of urgent business

Minutes:

There were no items of new urgent business

9.

Any Other Business

Minutes:

As Cllr Floyd would be retiring from the Council, this was his last Pensions Panel meeting. The Chair conveyed his thanks to him for his attendance and contribution to the body. As this was the last meeting of this Municipal year, the Chair thanked officers and members for their kind co-operation in managing the affairs of this panel in a non-partisan way

 

The Chair mentioned that local authority pension funds had discretionary powers to grant admitted bodies seats on their Pensions panels granting them voting powers at meetings. This was a matter which he believed should be considered by the new Council when it reviewed the constitution and terms of reference of bodies, along with the effective structure for maintaining the Pension Fund of the Council, in the light of the CIPFA Guidance.

 

The Union Representative, Roger Melling, suggested that, when a new Pensions Panel is appointed after the local elections, an informal introductory meeting should be held to enable officers and the Advisor to Trustees to explain terminology used in the Panel to new members. He also expressed a wish that Fund Managers present their reports in plain English as there was a tendency among them to drift into jargon.