To receive any apologies for absence.

Apologies for absence were received from Councillors Craig Aston, Rania Kahn, Ahmed Omer and from Non-voting Member John Gray

To note any declarations of interest made by Members, including those restricting Members from voting on the questions detailed in Section 106 of the Local Government Finance Act, 1992.  See attached note from the Chief Executive.

No declarations of personal or prejudicial interest were made.

To confirm as a correct record of the proceedings the unrestricted minutes of the ordinary meeting of the Pensions Committee held on  21 July 2011.

The Chair MOVED and it was

RESOLVED

That the unrestricted minutes of the ordinary meeting of the Pensions Committee held on 21 July 2011 be approved and signed by the Chair, as a correct record of the proceedings.

To receive any petitions

Nil items.

To receive training on the impact of the Hutton review and the implications of the Government’s spending review on cash flow and fund maturity.

Members of the Committee received training on the impact of the Hutton Review and implications of the Government’s Comprehensive Spending Review on cash flow and fund maturity.  The training was delivered by representative from Hymans Robertson Financial Services.

To receive and consider the audited final Pension Fund Statement of Accounts.

The Chief Financial Strategy Officer presented the report circulated at agenda item 6.1.  This contained that audited final pension fund statement of accounts for the period 2010/11.

The Committee was asked to

a          approve the pension fund statement of account

b          approve the pension fund annual report

c          approve the revised funding strategy statement

In his presentation the Chief Financial Strategy Officer highlighted following matters:

• the value of the fund had increased by 8% in the last year.
• performance of the fund relative to benchmark was mid – low range.  This was because the pension fund had been configured for low risk.
• funding level had decreased over time because markets hadn’t performed.
• membership of the fund had increased slightly.
• In last year, £40m had been received into the fund and £30m paid out resulting in a net positive inflow of £10m.
• cash flow would become narrower over the coming years.

RESOLVED

1.         that the pension fund statement of account at Appendix 1 be approved

2.         that the pension fund annual report be approved

3.         that the revised funding strategy statement be approved

To receive an update on the work of the Hutton Commission.

The Chief Financial Strategy Officer presented the report circulated at agenda item 6.2.

The Chair noted that the implications of the final report of the Hutton Commission issued in March 2011 had been discussed as part of the training given by Hymans Robertson earlier in the meeting.  The Chair therefore moved that the report be noted without further discussion.

RESOLVED

That the report be noted

To receive a report of the activities of the Investment Panel, and the performance of the Fund and its investment managers for the period ending 30 June 2011.

The Chief Financial Strategy Officer presented the report circulated at agenda item 6.3.  The Committee was informed that fund value / performance exceeded the benchmark in the last quarter and its value had increased by £10.8m.

In response to questions from the Committee, the following information was provided:

• The pension fund comprised seven fund managers. Schroders invest in property on behalf of the Fund, but had a to carry significant levels of cash through this year as they have not been able to find suitable investments for additional cash allocation that they have received. Their strategy is to invest in conservative properties which contained a rental income stream. 

• Schroeder’s property fund was looking for a 7% return over the next 12 months.   

• It was noted that there had been underperformance in the previous year arising from the costs of property purchases.

RESOLVED

That the report be noted.

To receive a report on the findings of a review of the adequacy of internal control measures put in place by the pension fund managers.  

The Chief Financial Strategy Officer presented the report circulated at agenda item 6.4 which contained the findings of a review of the adequacy of internal control measures put in place by pension fund managers.

Two fund managers (Schroeder’s and Investec Asset Management) had been reviewed and no significant risk level increase was found.  Risk levels had also been reviewed by auditors and it had been found that the risk level had not changed.

Internal control reports for other fund managers had now been received and were being reviewed.  The outcomes would be reported at the next meeting of the Committee in February 2012.

RESOLVED

That the report be noted.

Nil items

In view of the contents of the remaining items on the agenda, the Committee is recommended to adopt the following motion:

“That, under the provisions of Section 100A of the Local Government Act, 1972 as amended by the Local Government (Access to Information) Act, 1985, the Press and Public be excluded from the remainder of the meeting for the consideration of the Section Two business on the grounds that it contains information defined as Exempt in Part 1 of Schedule 12A to the Local Government, Act 1972”.

EXEMPT/CONFIDENTIAL SECTION (PINK)

Under the provisions of Section 100A of the Local Government Act 1972, as amended by the Local Government (Access to Information) Act 1985, the Chair moved that press and public be excluded from the meeting during the consideration of the Section Two business on the grounds that it contained information defined as exempt in Part 1 of Schedule 12A of the Local Government Act 1972.

RESOLVED

That press and public be excluded for the consideration of the following item of business.

To consider an urgent report on the implications of academy conversion on the Pension Fund.

SPECIAL CIRCUMSTANCES AND REASONS FOR URGENCY

·                    The report was unavailable for public inspection within the standard timescales set out in the Authority’s Constitution, because of unavoidable delays in obtaining detailed information required to commission the Actuary’s Report.

·                    The report could not be delayed until the next sitting of the Pension Committee as two LBTH maintained schools are planning to convert to academy status on 1^st December 2011 and 1^st January 2012 and agreement is required on the applicable deficit recovery period prior to the conversion dates.

·                    These dates have been agreed between the schools and the Secretary of State and the Authority would need to explain to the Secretary of State why it cannot achieve them.

To consider an urgent report on the implications of academy conversion on the Pension Fund.

This item was considered in closed session.