Archived decisions

AT A MEETING of the PENSION FUND PANEL held at The Castle, Winchester on Friday 15 September 2006.

Chairman:

p Councillor T.K. Thornber, CBE

Vice Chairman:

p Councillor M.F. Cartwright

Councillors:

p F.G. Allgood p M.N. Kemp-Gee

p B.D. Dash p A.R. Ludlow

p A.G. Dowden p J.J.W. Maxwell

a P.R.C. Hutcheson

Co-opted members:

p Councillor I.R. Carr (Test Valley Borough Council)

p Councillor J Moulton (Southampton City Council)

p Mr E.W. Hughes (pensioners' representative)

a Mr D. Offord (contributors' representative)

Independent adviser:

p Mr H. Cole.

96 APOLOGIES FOR ABSENCE

    Apologies for absence were received from Councillor P.R.C Hutcheson and Mr D. Offord.

97 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 M.F. Cartwright declared a personal prejudicial interest in connection with the report on Property - Future Investment Management Arrangements (Minute 109 below refers) and left the room during the discussion of this item.

98 CHAIRMAN'S COMMUNICATIONS

    No Chairman's communications were received.

99 DEPUTATIONS

    No deputations were received.

100 MINUTES

    The Minutes of the meeting held on 26 May 2006 were confirmed as a correct record and signed by the Chairman.

101 APPOINTMENT OF REPRESENTATIVES TO THE PANEL

    The Panel considered a report of the County Treasurer (Item 6 in the Minute Book) regarding the nomination by the Hampshire and Isle of Wight Local Government Association (HIOWLGA) of Councillor Jeremy Moulton of Southampton City Council as the representative on the Pension Fund Panel of the Hampshire unitary authorities, in succession to Councillor Tom Blair. HIOWLGA had also nominated Councillor Steve Wemyss of Portsmouth City Council as deputy representative.

    RESOLVED:

    (a) That the nominations of HIOWLGA be accepted and Councillors Jeremy Moulton and Steve Wemyss be appointed to serve as the main and deputy representatives respectively of the unitary city councils of Portsmouth and Southampton for an initial period of two years until 30 September 2008.

    (b) That, if they were still available, Councillor Wemyss should then be invited to take over as the main representative with effect from 1 October 2008 and that Councillor Moulton be invited to serve as his deputy for a two-year period ending on 30 September 2010.

102 NEW LOOK LOCAL GOVERNMENT PENSION SCHEME

    The Panel considered a report of the County Treasurer (Item 7 in the Minute Book) on a consultation paper issued by the Government on proposals for a new look Local Government Pension Scheme, following a lengthy review of the scheme. The Government had sought views on four options for the new look scheme and had asked a number of questions as listed in Appendix 1 to the report. The Government planned to introduce the new look scheme from 1 April 2008. The consultation paper also proposed a number of variations to the flexible and early retirement arrangements.

    Option A was similar to the existing final salary scheme and had the lowest cost for employers according to the Government Actuary's Department. It included an automatic lump sum on retirement which could be increased by the employee commuting part of their annual pension. Option B was also a final salary scheme but with a higher accrual rate. There would be no automatic lump sum on retirement but employees could commute part of their annual pension to a lump sum. This option was the most expensive for employers. Option C was a career average scheme where benefits would be calculated according to the employee's average salary over their career instead of their final salary. A lump sum would only be payable if the employee chose to commute part of their annual pension. Option C would be more expensive than Option A. Option D was a hybrid scheme retaining features of option C but allowing employees a one-off choice to pay additional contributions to obtain benefits linked to their final salary.

    The Panel had previously supported an increase in the employee's contribution rate from 6% to 7%, with the aim of achieving a 1:2 ratio between employee and employer contributions. This would be feasible for Option A, taking account of the past service deficit. The consultation paper also considered a possible cost sharing mechanism where the employees would share the risk of future liabilities and investment returns with the employer. This would be difficult to achieve without imposing national contribution rates on each individual local fund.

    RESOLVED:

    (a) That Option A be supported and that the proposed response in Appendix 1 of the report be submitted to the Government by 29 September.

    (b) That the flexible retirement variations be accepted as long as they were cost neutral.

    (c) That the employee contribution rate be increased to 7% for all contributors.

    (d) That a ratio of 1:2 between employee and employer contribution rates be adopted in the longer term to cover the full cost of Option A.

    (e) That a future cost sharing mechanism not be supported.

103 ECONOMIC AND FINANCIAL BACKGROUND

    The Panel noted a report of the Panel's adviser, Mr Harvey Cole, (Item 8 in the Minute Book) on the economic and financial background and the possible implications for the Panel's investment strategy. The Panel used the paper as background to the selection of new investment managers.

104 EXCLUSION OF PRESS AND PUBLIC

    RESOLVED:

    That the public be excluded from the meeting during the following items of business, as it is likely, in view of the nature of the business to be transacted or the nature of the proceedings, that if members of the public were present during that item there would be disclosure to them of exempt information within Paragraph 3 of Part 1 of Schedule 12A to the Local Government Act 1972, and further that in all the circumstances of the case, the public interest in maintaining the exemption outweighs the public interest in disclosing the information, for the reasons set out in the reports.

105 PROPERTY UPDATE (EXEMPT)

    The Panel considered an exempt report of the County Treasurer (Item 10 in the Minute Book) on progress on sales and purchases and other matters affecting the Fund's property portfolio since the Panel's meeting on 26 May 2006.
    [SUMMARY OF A MINUTE WHICH CONTAINS EXEMPT INFORMATION]

106 ADVICE ON ALTERNATIVE INVESTMENT OPPORTUNITIES (EXEMPT)

    The Panel considered an exempt report of the County Treasurer (Item 11 in the Minute Book) on the arrangements for procuring advice on alternative investments in the short and long term.
    [SUMMARY OF A MINUTE WHICH CONTAINS EXEMPT INFORMATION]

107 REVIEW OF INVESTMENT MANAGEMENT (EXEMPT)

    The Panel considered an exempt report of the County Treasurer (Item 12 in the Minute Book) on the next stages in the recruitment of investment managers for the Hampshire Pension Fund. The report provided background information for the selection of future managers.
    [SUMMARY OF A MINUTE WHICH CONTAINS EXEMPT INFORMATION]

108 INDEX TRACKING MANAGERS - FUTURE INVESTMENT MANAGEMENT ARRANGEMENTS (EXEMPT)

    The Panel considered an exempt report of the County Treasurer (Item 13 in the Minute Book) setting out details of the firms shortlisted to provide index tracking investment management of portfolios of UK index linked bonds and UK equities.
    [SUMMARY OF A MINUTE WHICH CONTAINS EXEMPT INFORMATION]

109 PROPERTY - FUTURE INVESTMENT MANAGEMENT ARRANGEMENTS (EXEMPT)

    The Panel considered an exempt report of the County Treasurer (Item 14 in the Minute Book) setting out details of the firms shortlisted to provide property investment services.
    [SUMMARY OF A MINUTE WHICH CONTAINS EXEMPT INFORMATION]