Contact: Anthony Dodridge, (01962) 847407; email: [email protected]

1 Summary

1.1 This report outlines changes affecting the representation on the Pension Fund Panel for the unitary authorities and employees. It also reviews the arrangements for the Panel's meetings with the fund managers now that one year has expired since their appointments in January 2007.

1 Recommendations

a) That the appointment of Councillor Dennis Harryman as the representative of the unitary authorities on the Pension Fund Panel to replace Councillor Jeremy Moulton be confirmed.

b) That no change is made to the existing arrangements for the representation of unitary authorities on the Pension Fund Panel.

c) That the nomination of Julie Murdoch as the deputy for the employee representative on the Pension Fund Panel be accepted.

d) That the proposals for the Pension Fund Panel's meetings with the fund managers in 2008 set out in the report be confirmed.

e) That the remainder of the report be noted.

2 Representative of the unitary authorities

2.1 Following the recent change in administration at Southampton City Council, Councillor Jeremy Moulton has been withdrawn as the unitary authorities' representative on the Pension Fund Panel. The City Council has nominated Councillor Dennis Harryman to take his place. Councillor Moulton has expressed his appreciation of the support shown to him by the Panel since his appointment in September 2006. The Chief Executive and County Treasurer have written to Councillor Moulton to thank him for his contribution to the Panel's work.

2.2 The Panel had previously agreed that the unitary authority representative should alternate between Portsmouth and Southampton City Councils every two years. Councillor Steve Wemyss of Portsmouth City Council, who has been Councillor Moulton's deputy, is due to take over from Councillor Moulton on 1 October 2008 and, under the current arrangements, will therefore take over from Councillor Harryman on that date. Councillor Harryman will then take the role of deputy representative for the following two years.

3 Request for additional representation for the unitary authorities

3.1 Prior to the recent change of administration at Southampton, the then Leader of Southampton City Council, Councillor Alec Samuels, wrote to the Leader of the County Council in November 2007 to request that the existing arrangement of a single representative for the two unitary authorities be reviewed.

3.2 Councillor Samuels argued that the relative size of the two unitary authorities in terms of membership and contributions (around 25%) warranted a separate representative for each of them. He also pointed out that alternating the representative between Southampton and Portsmouth every two years means that there is no continuity of representation. He suggested that a separate representative for each of the two unitary authorities could be achieved by way of a corresponding reduction to the number of County Council members from nine to eight.

3.3 In response to Councillor Samuels, the Leader pointed out that the County Council is the administering authority and has full accountability for Pension Fund investments. This responsibility determines the higher proportion of County Council members on the Panel.

3.4 The Pension Fund Panel includes two councillors representing the unitaries and the district councils. There are also representatives for scheme pensioners and employees, together with an independent adviser. The Panel is considered to be as large as is manageable in respect of the business covered and its existing membership appears to reflect good practice as adopted by other local government pension funds.

3.5 Further extension of the Panel's membership would create similar pressure for more representation from district councils and other employers proportionally and possibly from employees. Other bodies such as the Police, Fire and Higher Education authorities are not independently represented and their inclusion would certainly make the Panel very cumbersome.

3.6 Continuity could be improved by not alternating the representative between the unitary authorities every two years. One of the unitaries could be nominated to undertake the role for, say, four years with the other unitary authority acting as deputy; the arrangements could then be reversed for the next four year period.

3.7 Employers are regularly updated with the Panel's policies through general communications, the annual report and annual general meeting.

3.8 The new administration at Southampton City Council has not indicated whether it wishes to continue with Councillor Samuels' request but the Panel may want to consider whether the current arrangements of one representative only for the two unitary authorities should be confirmed.

4 Employee representative

4.1 As previously reported to the Panel, the unions were asked to put forward a deputy for the employee representative on the Panel, Phillip Reynolds, to attend the Panel's meetings if Mr Reynolds were to be absent. They have now nominated Julie Murdoch, the Branch Secretary for Hampshire UNISON.

5 Training

5.1 Full training opportunities will be provided as appropriate for the new representatives, as well as existing Panel members. Details of the Local Government Pension Scheme `Fundamentals VII 2008' training course have been sent to the new representatives. This course is run on an annual basis by the Local Government Employers organisation. It lasts three days, spread over a number of months, and starts in October 2008. A number of Panel members have attended this course in previous years.

6 Frequency of the Panel's meetings with the fund managers

6.1 The Panel agreed in May 2007 a timetable for its meetings with the fund managers following the implementation of the new investment management arrangements at the start of 2007, subject to a further review after the first year's experience.

6.2 The timetable and frequency of the meetings took account of the increase in the number of managers and the range of risks in their portfolios. Since then the Panel has agreed to add the alternative investments adviser Bramdean to the list of managers who meet the Panel every six months, so that the current arrangements are as follows.

6.3 Meetings for the Panel with Legal & General and State Street would be arranged in the unlikely event that a major problem arose with their index tracking portfolios.

6.4 Similar arrangements apply to the Fund's custodian Northern Trust. The County Treasurer will report to the Panel's next meeting on 23 May 2008 on Northern Trust's performance as custodian since their appointment two years ago. It is intended that this will then become an annual report to the Panel on Northern Trust. The Panel will have the opportunity at the meeting on 23 May 2008 to consider whether they wish to meet representatives of Northern Trust in the future.

6.5 The Panel may also want to consider if it wishes to meet Hewitts, the actuary, on an annual basis, or every three years with the update of the triennial actuarial valuation.

6.6 The current timetable for the Panel's meetings with the managers in 2008 is summarised below.

6.7 In addition, the County Treasurer meets the managers at least once a quarter to review their progress.

6.8 These arrangements have worked well over the last year and have balanced the overhead of frequent meetings with the risks associated with each manager's portfolio. They can be kept under review each year. There is currently more of an overhead with the alternative investments portfolio but this should reduce as the investments come on stream over the next few years.

Section 100D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have been relied upon to a material extent in the preparation of this report.

NB: The list excludes:

None.

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