REPORT OF THE PENSION FUND PANEL

PART II

PENSION FUND INVESTMENT MANAGEMENT

1. The Pension Fund Panel has considered tenders invited for the investment management of one of the Fund's portfolios, received presentations from each of the firms shortlisted and appointed SG Asset Management for the three year period from 1 January 2002 with the option to extend the contract for up to four more years, subject to satisfactory performance.

2. In making the appointment, the Panel took into account whether the investment style adopted by the shortlisted firms would be complementary to the Fund's existing managers, the size of the firms, the experience and seniority of their nominated staff, the importance to them of the Hampshire Fund as a client, and their performance record. The Panel also considered whether to appoint one or two managers and the amount to be allocated to them.

THE PENSION FUND

1. Panel has monitored the policies and performance of the Investment Managers over the previous six month period including the property portfolio. The value of the Fund reflected the falls suffered during the period by the stock markets. Managers' targets have been reviewed and progress made towards developing a specific benchmark for the fund to replace the current performance targets set for each Fund Manager against the Combined Actuarial Performance Services Ltd median.

2. In response to a Government Consultation Paper on Pensions for Elected Members of Local Authorities, the Panel was strongly of the view that the option to take part in a pension scheme should be open to all elected members, not just to executive members and Chairmen of Policy Review Committees. The Panel also felt that such pension provisions should extend to the age of 75, that the Local Government Pension Scheme might not be the most appropriate for Members, and that stakeholder pensions would meet their requirements more aptly. The Standards Committee was of the same opinion and the Department for Transport Local Government and the Regions, together with the Local Government Association have been advised accordingly.

T.K THORNBER, C.B.E

CHAIRMAN

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