Archived decisions

AT A MEETING of the PENSION FUND PANEL held at The Castle, Winchester on 10 July 2002.

PRESENT:

Councillors: T.K. Thornber, CBE (Chairman); D.A. Kirk; A.R. Ludlow;

W.H. Wheeler.

Pensioners' representative: Mr E.W. Hughes.

Employees' representative: Mr D Offord.

Independent Adviser: Mr. H. Cole

19 MINUTES

    The Minutes of the meeting held on 10 July 2002 were confirmed as a correct record and signed by the Chairman.

20 THE MYNERS REPORT: PRINCIPLES FOR THE MANAGEMENT OF DEFINED BENEFIT SCHEMES

    The Panel considered a report of the County Treasurer (Item 2 in the Minute Book) summarising the Government's ten principles for the management of defined benefit schemes following the publication of the Myners Report on institutional investment. The report set out the extent to which the Fund already complied with the ten principles. It included an updated Statement of Investment Principles.

    RESOLVED:

    (i) That the report and the current extent to which the Fund complies with the Government's ten principles be noted.

    (ii) That the revised Statement of Investment Principles be approved for publication.

    (iii) That the County Treasurer report to a future meeting of the Panel providing guidance on how the Panel might use its shared voting powers to intervene in companies in the financial interest of the Fund if the Government legislates to enforce that duty.

    (iv) That a business plan, including a training plan, for the Fund be prepared for consideration by the Panel at its meeting in November 2002.

    (v) That, in future, induction training be organised for any new members of the Panel.

    (vi) That a new asset/liability study be commissioned from the actuary in 2005 following the completion of the next triennial actuarial valuation as at March 2004, and that this be used to review the scheme-specific benchmark and the role of alternative investment classes.

    (vii) That a report on transaction costs be prepared for consideration by the Panel at its meeting in November 2002 and annually thereafter.

    (viii) That the County Treasurer contact Deutsche and Schroders for justifications of their continued use of soft commission arrangements and re-assurance that best execution is not compromised, and that a report be submitted to the Panel at its meeting in November 2002.

    (ix) That a report on fees paid to the managers be submitted to the Panel at its meeting in November 2002.

21 INDEPENDENT ADVISER TO THE PANEL

    The Panel considered a report of the County Treasurer (Item 3 in the Minute Book) on arrangements made by other county administering authorities to appoint independent advisers to assist their investment panels. The County Treasurer, in consultation with the Chairman, made arrangements for Harvey Cole as an Honorary Alderman to receive a copy of the papers for each of the Panel's meetings and act as an independent "sounding board" for the Panel.

    RESOLVED:

    (i) That the Panel continues its current arrangements and does not appoint an independent adviser, as it has sufficient skills, information, resources and advice to take decisions effectively, meeting the first of Myners' principles.

    (ii) That the action of the County Treasurer, in consultation with the Chairman in inviting Harvey Cole as an informal independent sounding board for the Panel be endorsed, and that he be invited to future meetings of the Panel as appropriate.

    (iii) That the remainder of the report be noted.

22 REPRESENTATION

    The Panel considered a report of the County Treasurer (Item 4 in the Minute Book) reviewing the appointments of the employee and pensioner representatives to the Panel, and looking again at the current arrangements for representation for the other employers in the Fund. The Panel discussed the options of inviting voting or non-voting representatives from the other major employers in the Fund. They noted that the County Council alone is responsible for the administration of the Fund and that the Panel could become unwieldy if membership increased. The Annual General Meeting (AGM) and the Annual Report kept other employers informed about the Fund and the AGM gave other employers the opportunity to raise concerns.

    RESOLVED:

    (i) That the appointments of E.W Hughes as pensioner representative, Derek Offord as employee representative and Phillip Reynolds as deputy employee representative, be extended to March 2004.

    (ii) That the Panel's current policy on representation be reaffirmed so that the County Council, as administering authority, remains responsible for the Fund, but that the position on representation from other employers be reviewed periodically.

23 ACTUARIAL VALUATION OF THE PENSION FUND AS AT 31 MARCH 2001

    The Panel received and noted a report of the County Treasurer (Item 5 in the Minute Book) on the outcome of the actuarial valuation at 31 March 2001.

24 THE FUTURE OF THE LOCAL GOVERNMENT PENSION SCHEME

    The Panel considered a report of the County Treasurer (Item 6 in the Minute Book) on recent concerns about pension costs for private sector employers, including falling funding levels and the implementation of Financial Reporting Standard (FRS) 17. The report highlighted that it is a statutory requirement for all local authorities to provide a pension scheme for eligible employees under the Local Government Pension Scheme. Although employer contribution rates for the Hampshire Fund had risen, they had only returned to the levels reached in the 1970s and early 1980s.

    The Department for Transport, Local Government and the Regions had recently completed a stocktaking exercise of the Local Government Pension Scheme in May 2002, concluding that no major changes in the scheme's benefit package were necessary. Consultation papers on a number of other topics raised by the stocktaking exercise will be issued by the Department.

    RESOLVED:

    That the developments and concerns about pension costs be noted, and that the results of the stocktaking exercise on the Local Government Pension Scheme be welcomed with further reports made when the consultation papers are received or other changes are made.

25 EQUITABLE LIFE UPDATE

    Councillor T.K. Thornber CBE declared an indirect pecuniary interest in this item. The County Treasurer advised that this interest was not so relevant as to require Councillor Thornber to relinquish the chair.

    The Panel received a report of the County Treasurer (Item 7 in the Minute Book) on developments since the meeting on 30 October 2001 in respect of Equitable Life. The compromise scheme had been approved by policyholders and had been implemented. The penalty for policyholders wishing to withdraw from the with-profits fund had been increased to 14% and again to 20% from 1 July 2002. Bonus rates had been reduced.


Individual policyholders paying Additional Voluntary Contributions (AVC) to Equitable Life's with-profits fund had been urged to reconsider in view of the poor prospects for the fund. They had not yet been prohibited from making such payments.

    RESOLVED:

    (i) That the latest developments on Equitable Life be noted.

    (ii) That the County Treasurer write to policyholders to update them on developments.

    (iii) That Equitable Life be instructed that, in future, Additional Voluntary Contributions be invested in the building society fund rather than the with-profits fund.

26 PENSIONS FOR ELECTED MEMBERS - UPDATE

    The Panel received a report of the County Treasurer (Item 8 in the Minute Book) on the lack of progress since the Department for Transport, Local Government and the Regions asked for comments on a consultation paper on pensions for elected members in October 2001.

    RESOLVED:

    That the lack of progress by the Government on pensions for elected members, despite allowing just over one month's time for consultation with local authorities and pension funds, be noted.

27 EXCLUSION OF THE PRESS AND PUBLIC

    RESOLVED:

    That, by virtue of paragraphs 7 and 12 of Part 1 of Schedule 12A of the Local Government Act 1972, the press and public be excluded from the meeting.

28 PART TIME PENSION CLAIMS

    The Panel considered a confidential report of the County Treasurer (Item 10 in the Minute Book) on developments in respect of claims brought by current or former employees of local authorities who were previously denied access to the pension scheme.
    [SUMMARY OF A MINUTE WHICH CONTAINS CONFIDENTIAL INFORMATION]

29 APPOINTMENT OF ETHICAL INVESTMENT MANAGER

    The Panel considered a confidential report of the County Treasurer (Item 11 in the Minute Book) reviewing the appointment of the ethical investment manager.
    [SUMMARY OF A MINUTE WHICH CONTAINS CONFIDENTIAL INFORMATION]

30 ALTERNATIVE INVESTMENT OPTIONS

    The Panel considered a confidential report of the County Treasurer (Item 12 in the Minute Book) summarising the characteristics, advantages and disadvantages of four alternative forms of investment.
    [SUMMARY OF A MINUTE WHICH CONTAINS CONFIDENTIAL INFORMATION]

31 PROPERTY UPDATE

    The Panel received and noted, a confidential report of the County Treasurer (Item 13 in the Minute Book) on the progress of the Fund's property portfolio since the last meeting in May 2002.
    [SUMMARY OF A MINUTE WHICH CONTAINS CONFIDENTIAL INFORMATION]

32 ITEM OF URGENT BUSINESS : UPDATE STOCK MARKETS

    With the agreement of the Chairman, in accordance with Section 100B(4) of the Local Government Act 1972, the Panel received and noted, as a matter of urgency, a confidential report of the County Treasurer (Item 14 in the Minute Book) on recent falls in stock markets, the current views of the Fund's investment managers in the light of those falls and the latest valuation of the Fund as at 30 June 2002.
    [SUMMARY OF A MINUTE WHICH CONTAINS CONFIDENTIAL INFORMATION]

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