Archived decisions
AT A MEETING of the PENSION FUND PANEL held at The Castle, Winchester on 22 May 2003.
PRESENT:
Councillors: T.K. Thornber, CBE (Chairman); B.D. Dash; Mrs S.M. Glasspool DL; A.R. Ludlow; J. Waddington; D.F. Wright.
Pensioners' representative: Mr E.W. Hughes.
Independent consultant: Mr. H. Cole.
58 DECLARATIONS OF INTEREST
Members were mindful that, where they believed they had a personal or prejudicial interest in any matter to be considered at the meeting, they should, normally at the time of the debate, declare their interest and, having regard to the circumstances described in paragraphs 9,10, 11 and 12 of the County Council's Code of Conduct, consider whether to leave the meeting whilst the matter was discussed.
Councillor J. Waddington declared a pecuniary interest in Royal & Sun Alliance, in connection with the report on Managers' Investment Polices and Performance (Minute No. 69 below refers).
Councillor T.K. Thornber declared a pecuniary interest in Equitable Life and a non-pecuniary interest in Eagle Star, in connection with the report on Additional Voluntary Contributions (AVC) Arrangements (Minute No. 73 below refers).
59 CHAIRMAN'S COMMUNICATIONS
No Chairman's communications were received.
60 DEPUTATIONS
No deputations were received.
61 MINUTES
The Minutes of the meeting held on 29 November 2002 were confirmed as a correct record and signed by the Chairman.
62 GOVERNMENT GREEN PAPER ON PENSIONS AND LOCAL GOVERNMENT PENSION SCHEME CONSULTATION PAPERS - UPDATE
The Panel received and noted a report of the County Treasurer (Item 5 in the Minute Book) updating the Panel on recent consultation papers on pension matters. These included consultation by the Government on the options for changing and improving the Local Government Pension Scheme and on the scope for simplifying its regulatory framework. In addition, the Local Government Pensions Committee had issued a questionnaire to inform its own response to these two Government consultation papers.
The Government had also sought comments on a Green Paper on pensions entitled `Simplifying, Security and Choice and Saving for Retirement', together with a paper on `Simplifying the Taxation of Pensions'. Responses had been made to the papers, following consideration by the Cabinet and Policy and Resources Policy Review Committee.
63 THE FUND'S ACTUARIAL POSITION - UPDATE
The Panel received and noted a report of the County Treasurer (Item 6 in the Minute Book) providing an update by the Fund's actuary Hewitt Bacon & Woodrow on the current funding position and a projection for 31 March 2004 when the next actuarial valuation was due.
The Panel were advised that the funding level had fallen from 88% at the last valuation on 31 March 2001 to 75% at 31 March 2003 and would reach 66% by 31 March 2004 if current stock market conditions persisted. The Fund's shortfall of £271m at 31 March 2001 had risen to an estimated £690m at 31 March 2003. This represented the shortfall if all pensioners and contributors were to take all their benefits now at the same time. It was stressed that such a scenario would not happen. The increase was a result of poor performance by stock markets and improved life expectancy for pensioners. The position would be reassessed by the actuary at the next revaluation of the Fund at 31 March 2004. In the meantime, the Panel were reassured that all pensions and contributions were safe.
The Panel noted and confirmed its decision at the last meeting not to take any further action to vary the employers' rate beyond the increase already planned as a result of the last actuarial valuation from 215% for 2003/04 to 225% for 2004/05. The Panel requested that information be provided to pensioners and contributors to reassure them in the light of recent press articles about the shortfall.
64 QUESTIONS AND COMMENTS FROM HARVEY COLE
The Panel considered a report of the County Treasurer (Item 7 in the Minute Book) introducing a paper prepared by the Panel's independent consultant and sounding board, Mr Harvey Cole, on the economic and market background and the possible implications for the Panel's investment strategy. The Panel used the information as background to question the fund managers.
65 VENUES FOR PENSION FUND PANEL MEETINGS
The Panel considered a report of the County Treasurer (Item 8 in the Minute Book) on the advantages and disadvantages of holding one of the Panel's two meetings with the fund managers each year in London. The Panel were concerned about transport difficulties and the pressure of time to see all the managers on one day. It was suggested that meetings with the main portfolio managers be separated from the meetings with the property manager and from those dealing with other business.
RESOLVED:
(i) That the Panel hold all its meetings during the next year in Winchester and then review whether any future meetings should be held in London.
(ii) That the County Treasurer report further on arrangements to ease the pressure of time on the Panel's sessions with the managers.
66 PENSIONS FOR COUNCILLORS
The Panel considered a report of the County Treasurer (Item 9 in the Minute Book) on the arrangements for pensions for councillors, following amendments to the Local Government Pension Scheme by the Government to extend membership to councillors. The Panel discussed which county councillors should be eligible for membership and which allowances should be pensionable.
It was noted that final decisions would be made by each council following recommendations by their respective Independent Remuneration Panels.
RESOLVED:
That it be a recommendation to Council that all county councillors aged under 70 be entitled to membership of the Local Government Pension Scheme and that both the basic and special responsibility allowances be pensionable.
67 ADMISSION AGREEMENTS
The Panel received and noted a report of the County Treasurer (Item 10 in the Minute Book) on proposed amendments to the Local Government Pension Scheme (LGPS), published by the Government in April 2003, concerning the admission to the LGPS of private contractors to whom staff transfer under a Best Value arrangement.
The Panel were advised that such staff must be offered membership of either the LGPS, a good quality occupational scheme or a stakeholder pension scheme with the employer contributing at least 6% of employees' pay. It was also noted that contractors had to provide an indemnity bond if, based on actuarial advice, the scheme employer assessed there to be a risk of the contractor defaulting on their commitments to the LGPS.
68 EXCLUSION OF 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.
69 MANAGERS' INVESTMENT POLICIES AND PERFORMANCE (CONFIDENTIAL)
The Panel considered a confidential report of the County Treasurer (Item 12 in the Minute Book) summarising the fund managers' portfolios, their investment actions and performance returns over periods to 31 March 2003. The Panel received presentations from each of the fund managers and used the report to question the managers about their actions and performance.
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70 PROPERTY (CONFIDENTIAL)
The Panel considered a confidential report of the County Treasurer (Item 13 in the Minute Book) on the property portfolio including its performance and recent developments. The Panel received a presentation from the property manager, Savills Fund Management, and used the report to question Savills about their actions and performance.
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71 THE FUTURE OF THE ETHICAL PORTFOLIO (CONFIDENTIAL)
The Panel considered a confidential report of the County Treasurer (Item 14 in the Minute Book) on the future of the ethical portfolio. Following consideration of a number of options, the Panel agreed to bring the management of the portfolio in-house as cash, pending further consideration of its future management at the next meeting.
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72 TRAINING SESSIONS - FEEDBACK AND PROGRAMME FOR
8 JULY 2003 (CONFIDENTIAL)
The Panel considered a confidential report of the County Treasurer (Item 15 in the Minute Book) reviewing the training session for the Panel held on 8 May 2003 and looking ahead to the session to be delivered on 8 July 2003.
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73 ADDITIONAL VOLUNTARY CONTRIBUTIONS (AVC) ARRANGEMENTS (CONFIDENTIAL)
The Panel received and noted a confidential report of the County Treasurer (Item 16 in the Minute Book) providing an update on the situation at Equitable Life and the roles of other AVC providers.
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