Pension Committee 27/6/2011 – Part 5 – Representation on outside bodies, Treasury Management Annual Report

Peter Wallach introduced the next report regarding representation on outside bodies. Hr said the report was about the positions that councillors held on external bodies and that they had on occasion represented the fund regarding collaboration or best practice. It had been previously classed as an approved duty. Currently there were two councillor, the Chair … Continue reading “Pension Committee 27/6/2011 – Part 5 – Representation on outside bodies, Treasury Management Annual Report”

Peter Wallach introduced the next report regarding representation on outside bodies. Hr said the report was about the positions that councillors held on external bodies and that they had on occasion represented the fund regarding collaboration or best practice. It had been previously classed as an approved duty. Currently there were two councillor, the Chair (Cllr Geoffrey Watt) as an Executive Member of LAPFF and Cllr Ann McLachlan as the LGA Labour Group appointment
on the Local Government Pensions Committee.

It was recommended that both be approved and continue. This was agreed.

The committee considered the annual Treasury Management Report. An officer said it was an approved strategy, paragraph 4.5 dealt with counter-party risk. He said he was aware the base rate was at 0.5% so there was not much scope for making money. The report detailed three days (at 4.9) when the Fund had been non-compliant as they had more money with their own bankers than was allowed.

This had happened as a result of receiving income 24 hours before they were expecting it so they had exceeded the limit. However they got the best rate from the bank and this was corrected within 24 hours. At 4.10 they had also had more money than allowed due to a planned property purchases not completing on the scheduled dates. To keep liquidity and as they pay in full outright they had kept the money in the account. In accordance with procedure they had got the OK from the Fund’s Operating Group which met monthly. This was chaired by the Director Finance and reported to the Investment Monitoring Working Party.

Pension Committee 27/6/2011 – Part 4 – Local Government Pension Scheme Reform

There was concern regarding the local government scheme. Averaging 3.2% of income the low paid would be protected, but the middle and higher earners were at risk of opting out which would damage the funding arrangements. At 4.21 the Local Government Employers Organisation had written a letter to the Minister. What was carried forward from the Hutton report was outlined on page 41. The local government response was that there should not be full protection, not tied into final salary. Hutton and the government had counted on membership accrued under the old scheme in calculating final pay. At 4.28 was referenced an important issue the judicial review over the change from RPI (Retail Prices Index) to CPI (Consumer Prices Index) change. This case had been brought by the trade unions and would be going to the High Court in July. The Public Accounts Committee had produced a report on the last changes from 2007/2008 which was in a separate report. There were risks to funding following the outcome of the judicial review, which would impact the levels of deficit and the employer’s contribution levels as set out in the detail report.

Cllr Smith asked about when the judicial review started on the 6th May would reach a decision. The officer answered that it would be considered in July, whether it was quick or not he was unsure. However when the trade unions had launched a challenge to the 85 year rule it had been turned down quite quickly.

Pension Committee 27/6/2011 – Part 3 – Banking Contract, Local Government Pension Scheme Reform

The officer introduced the next report on the banking contract as for noting as it had already been approved by Wirral Council’s Cabinet. The EU regulator had insisted that RBS divest some of its branches which it was doing to Santander. Wirral Council and the Merseyside Pension Fund therefore had to come up with interim arrangements as well as an agreement for tender. The agreement would extend the existing contract to the 31st March 2013. The Director of Finance would extend the contract and switch it to another bank if necessary.

The next report was on Local Government Pension Scheme Reform which the officer said was a “customary report”. He referred those present to paragraph 4.1 in reference to the latest information and the high level negotiations going on about the future of public sector pension between the Treasury and the trade unions. Neither DCLG (Department for Communities and Local Government) or the Local Authority Employers organisation was involved in these negotiations, however unfunded public sector schemes such as the NHS pension scheme were also included in these negotiations.

The officer felt there was a concern that LGPS (Local Government Pension Scheme) needs were not properly catered for. Discussions had not reached a final position and the difficulties of strikes were affecting some local authorities. The content of the trade union discussions was outlined at 4.4/4.5. New schemes were based on career average rather than final salary. It was unknown what the proposed level of benefits and accrued rights would be. The level of replacement income would reduce as pay increases. For example at £11000 it would be 80% replacement rate but over £58000 fall to as low as 50%. Other recommendations affecting the contribution rates were outlined in 4.16 to 4.26.

Pension Committee 27/6/2011 – Part 2 – Audit Fee, Bank Signatories, Internal Dispute Resolution Procedure, Management of Private Equity

The officer said the audit fees were for noting. There was a fixed element and a variable element, as well as a one-off charge of £1400 to make sure the Pension Fund had been successful at transferring investment balances from the old accounting system to the new one.

The total estimated audit fee was £54,065. The Chair and the committee agreed to note the report.

The committee then considered a report regarding the Internal Dispute Resolution Procedure, the officer said following a personnel change there were changes to the names that needed to be made. The Chair thanked them for the report and the change was agreed.

The committee received a report on the management of private equity, an officer mentioned Capital Dynamics and the terms and conditions in the appendix relating to the management of the portfolio. The exempt part related to confidential business matters. Section four had the assessment as set out in the letter, there were long standing private equity investments and it was important it was monitored. Section 4.4 set on the reliance upon the valuation of the private equity portfolio and the review of the contractual arrangements. The officer asked committee members to agree to the report and the appendix (starting at page 173). The report was agreed.

Pension Committee 27/6/2011 – Part 1 Introductions, Declarations of Interest, election of Vice-Chair, Local Government Chronicle Investment Conference (Newport)

The agenda for tonight’s Pension Committee meeting is here.

The Chair said the sound equipment wasn’t working and welcomed people to the first meeting of 2011/2012. He asked those present to introduce themselves. After introductions he asked for declarations of interest. Cllr George Davies declared that his wife was a member of the Fund and that he chaired a Merseyside Board. He also asked if he needed to declare an interest every time or whether it could be recorded and him not needing to do so.

The Chair said he had to declare personal or prejudicial interests in relation to the pension committee agenda.

The minutes of the previous meeting were accepted.

There were two nominations for Vice-Chair, Cllr Cherry Povall and Cllr Ann McLachlan. The vote on Cllr Ann McLachlan was held first. There were five votes for (Cllr Ann McLachlan forgot to vote, but tried to after the votes had been counted), five votes against. The Chair had a casting vote and voted against. Therefore Cllr Cherry Povall was elected as Vice-Chair.

Item 4 was about the Local Government Chronicle Investment Conference in Newport. The Chair asked people if they were going. Cllr Harney said he wasn’t able to go but sending people was valuable. The Chair said he was willing. Cllr McLachlan said she was not available. Cllr Jones asked about the spare place. Cllr Harry Smith said he had “got things to do”. Cllr McLachlan suggested those on the committee were consulted by email so they could consult their diaries, it was agreed it would be delegated to officers.