Agenda and minutes
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Contact: Cheryl Hardman Email: cherylh@surreycc.gov.uk
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APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
Minutes: Apologies for absence were received from Philip Walker.
The Chairman informed the Committee that Mike Goodman had been promoted to the Cabinet and so had stood down from the Surrey Pension Fund Board. She thanked Mr Goodman for his work on the Board, in particular with the establishment of the Risk Register.
Tim Evans had been appointed to the Board. He is a knowledgeable Member with 35 years experience in pensions. |
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MINUTES OF THE PREVIOUS MEETING [14 FEBRUARY 2014]
To agree the minutes as a true record of the meeting. Minutes: The Minutes were agreed as an accurate record of the meeting subject to a change to the date on which the Minutes were to be agreed. |
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DECLARATIONS OF INTEREST
To receive any declarations of disclosable pecuniary interests from Members in respect of any item to be considered at the meeting.
Notes: · In line with the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012, declarations may relate to the interest of the member, or the member’s spouse or civil partner, or a person with whom the member is living as husband or wife, or a person with whom the member is living as if they were civil partners and the member is aware they have the interest. · Members need only disclose interests not currently listed on the Register of Disclosable Pecuniary Interests. · Members must notify the Monitoring Officer of any interests disclosed at the meeting so they may be added to the Register. · Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest.
Minutes: There were no declarations of interest. |
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QUESTIONS AND PETITIONS
To receive any questions or petitions.
Notes: 1. The deadline for Member’s questions is 12.00pm four working days before the meeting (9 May 2014). 2. The deadline for public questions is seven days before the meeting (8 May 2014). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Minutes: There were none. |
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An action tracker is attached, detailing actions from previous meetings. The Board is asked to review progress on the item listed. Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. Many of the actions from previous meetings would be addressed at the current meeting.
Actions/Further Information to be Provided: None.
Resolved: That the actions tracker was noted and the committee agreed to remove the completed actions from the tracker.
Next steps: None. |
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MANAGER ISSUES AND INVESTMENT PERFORMANCE
This report is a summary of all manager issues that need to be brought to the attention of the Pension Fund Board, as well as manager investment performance.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report. He highlighted the recommendation by the Fund’s independent advisor that attention be given to the question of rebalancing. The Chairman suggested that the committee return to this issue at the end of the meeting. 2. The committee had previously asked at what rate did Surrey County Council charge for loans (Action Review ref: A5/14). This information was included in the committee report. Such rates were assessed by speaking with money market brokers on the morning such transactions were planned to take place. 3. The Chairman suggested that the list of strategies, policies and reporting frameworks approved by the Board underlined how much work had been undertaken in the past year. The Board now had a comprehensive set of strategies and policies. She thanked officers for their hard work. 4. The Strategic Manager – Pension Fund & Treasury highlighted the improved performance of the markets over the past few weeks and stated that the estimated market value of the Fund as of 15 May 2014 was £2,806m.
Tony Elias joined the meeting.
5. With regard to the performance of Fund Managers, the Strategic Manager – Pension Fund & Treasury highlighted the under-performance of Franklin Templeton in Quarter 4 and the significant out-performance of Majedie.
Tim Evans joined the meeting.
6. Members expressed some concern about Newton’s performance. The Surrey Pension Fund Advisor confirmed that Newton was still pursuing a thematic based investment philosophy. Changes to the global equity team had been made in 2012, which had resulted in a reduction in the number of stocks held in the portfolio from around 120 to 80 holdings in order for the manager to demonstrate greater conviction in its investment ideas. It was noted that Newton had maintained a relatively cautious approach to investing which had been reflected in their portfolio. Given the strong rise in markets over the last couple of years it was questioned whether Newton had been too slow to change its view, which may have impacted relative performance. He advised keeping an eye on Newton. The Chairman asked the Surrey Pension Fund Advisor to keep a watching brief on Newton and suggested that the Board review whether to invite Newton to a future meeting after a further quarter’s performance results are published (Action Review ref: A9/14). 7. Officers confirmed that CBRE had been high on the agenda over the past 18 months. The performance target for the mandate had been discussed with them and subsequently revised. The allocation to CBRE has also been increased through additional funding which was specifically aimed to help the manager reduce the portfolio’s exposure to the closed-ended European property holdings. The Mercer representative explained that while the UK element of the property portfolio was doing well, the European property funds continued to detract from relative performance. However, this wasn’t as much of a problem now as it was. 8. The Surrey ... view the full minutes text for item 21/14 |
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PRIVATE EQUITY INVESTMENT PERFORMANCE REVIEW
The Surrey Pension Fund has a commitment to invest 5% of the fund in private equity. This is achieved by investing in funds of funds and directly managed funds, managed by a number of private equity specialists.
The Pension Fund Board reviews the private equity strategy annually. This report is the 2013/14 review.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report and highlighted that estimates suggest that the target level of return sought from the Surrey private equity programme had been exceeded. 2. There was concern that one specific manager was reluctant to share its Internal Rate of Return (IRR). The Surrey Pension Fund Advisor stated that IRRs tend to show Investment Managers in a good light so it was worrying that the manager would not share this information. The Strategic Manager – Pension Fund & Treasury agreed to request the data for the various funds. 3. Following a discussion about the measurement of private equity performance and the value of using the IRR to present performance, the Chairman requested that future reports present a cash flow analysis of how payments are received over time (Action Review ref: A10/14).
Actions/Further Information to be Provided: Future reports on private equity performance to present a cash flow analysis of how payments are received over time.
Resolved: 1. That the Board notes the current position on the Fund’s Private Equity investment performance; and 2. That the Fund continues to commit to follow on funds of the existing private equity managers as they become available and subject to each case going to the Pension Fund Board for approval.
Next steps: None.
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PENSION FUND BUSINESS PLAN 2013/14: OUTTURN REPORT AND FINAL 2014/15 PLAN
The 2001 Myners Report recommended that local authority pension funds approve an annual business plan in respect of the objectives required for the ensuing year. Business planning is regarded as an important tool, assisting in the identification of how service delivery can be maximised within resource constraints. This report sets out the outturn of the annual business plan for 2013/14.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report and then the Pension Manager provided an update on preparation for the new LGPS 2014 scheme. He stressed the lengths the officers had gone to, to keep the Pension Fund membership informed. 70-80 presentations had been made to employee members of the fund and seven employer workshops had taken place. Guidance notes had also been issued. The major changes that payroll departments had to undertake were impressed upon the Board. However all deadlines had been met. 2. The results of the Governance Self-Assessment completed by members of the Board were tabled and are attached as Annexes 1 and 2. The Strategic Manager – Pension Fund & Treasury explained that the rating was from 1 (good) to 5 (poor). The average rating was then calculated for each question and presented alongside the range of responses. The Chairman felt that the big issues to be taken from the self-assessment were that the Board does not have enough time to be truly effective and that meetings do not allow sufficient focus on the ‘big picture’ strategic issues. She opened up a discussion on how this could be addressed. Members felt that there was value in having additional training and informal discussions between formal Board meetings. The Board wished to develop a general consensus on where the market is headed and an understanding of what other Pension Fund Boards were doing. Pre-meetings with the Pension Fund Board Advisor and the Mercer representative were also supported to ensure that members had the right questions when meeting Fund Managers. There was little support for increasing the number of formal Board meetings. The possibility of having a smaller Investment Sub-Committee was discussed to allow changes to the Investment strategy to be driven through. However there was some concern that this would lead to some members of the Board being more informed than others. The Strategic Manager – Pensions Fund & Treasury was asked to bring a report recommending a way forward for the Board (Action Review ref: A11/14). 3. The Chairman suggested that a training needs analysis be carried out by the Board later in the year, adapting the CIPFA questions used previously by the Pension Fund Panel (Action Review ref: A12/14).
Actions/Further Information to be Provided: 1. A report to be brought to the next meeting of the Surrey Pension Fund Board on how to address the results of the Governance Self-Assessment. 2. A training needs analysis to be conducted later in the year.
Resolved: 1. That progress with regard to the Business Plan objectives in respect of the 2013/14 financial year be noted. 2. That the final version of the 2014/15 Business Plan be approved.
Next steps: None.
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ACTUARIAL VALUATION 2013: OUTCOME
Report setting out the final outcome of the 2013 triennial actuarial valuation in respect of the Surrey County Council Pension Fund.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report and acknowledged the work of the Pensions Administration Team in terms of ensuring high quality data is held in respect of the Fund’s membership. 2. The disbanding of the pooling arrangements in respect of parish councils and other admitted bodies as a result of the actuarial valuation was highlighted. The timing of introducing individualised contribution rates for employers according to their own liability profile was challenging because of the budget-setting timetable across employer bodies. This meant the consultation was not possible which had led to some dissatisfaction with the process followed. However, the Fund had no option but to accept the recommendations from the actuary so the outcome of any consultation would have been the same as what happened in practice. Members highlighted the difficulties that parish councils have in explaining the impact on the parish council precept to parishioners. 3. The Strategic Manager – Pension Fund & Treasury introduced the Funding Strategy Statement which had been consulted upon since the previous Surrey Pension Fund Board meeting. He also confirmed that District and Borough Councils had flexibility to reduce their deficit recovery period.
Actions/Further Information to be Provided: None.
Resolved: 1. That the report be noted and the 2013 Actuarial Valuation and Rates & Adjustments Certificate be adopted. 2. That the final version of the Funding Strategy Statement be approved.
Next steps: None.
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PENSION FUND RISK REGISTER
Surrey County Council, as administering authority for the Surrey Pension Fund, is responsible for the delivery of benefit promises made to members of the Surrey Pension Fund. It achieves this by setting objectives and goals with varying timeframes. Risks lie in failing to meet the intended goals.
Risks that are established as an issue must be identified and evaluated via a risk register. The risks must be prioritised with existing controls or new controls implemented to mitigate the risks. This should be recorded in a risk register, which needs monitoring on a quarterly basis. Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report, highlighting the changes since the previous meeting. The risks of bond yields falling and pay & price inflation had been reassessed and were now listed as the top two risks for the Pension Fund. Although longevity had fallen to the third risk it was still a core risk for the Fund. Mitigating actions outlined for the top three risks were not considered sufficient to address the risks and so the net risk score was the same as the total risk score. 2. The mismatching of assets and liabilities had been raised from the 15th risk on the register to the fourth risk. The Chairman stated that she was not convinced that assets and liabilities mismatching was that high a risk for the Fund. The Hymans Actuary suggested that if the Fund took a full asset to liabilities matching approach now the contributions required would be unaffordable. However, the Board needs to check that the Fund is not taking more risks than necessary. 3. Members suggested that the Board needs to focus on the long-term future and getting to full funding. The Mercer representative suggested that the Investment Strategy review later on the agenda would help the Board develop a clear idea of where it wants to get to and the Strategy that should be in place when it gets there. 4. Members queried what assumptions Hymans Robertson uses for the potential reduction in the workforce as a result of the pressures that the public sector is under. The Hymans Actuary responded that there is a risk of the workforce collapsing and this has been addressed through risk management processes. If payroll shrinks, this would have an impact of reduced contributions to the Fund. Mitigating actions are listed for the workforce diminishing in a short period of time. 5. Members suggested that some of the risks appear very similar, eg risks 1, 2, 4 & 10. Officers agreed that the risks could be reviewed to make the register more concise but the Board was also reminded of the objective for the register to be explicit (Action Review ref: A13/14). Members requested for Risk 36 to be dropped from the register (Action Review ref: A14/14). A further risk to address the implementation of the proposed changes to the LGPS was requested (Action Review ref: A15/14).
Actions/Further Information to be Provided: 1. Risks to be reviewed to make the register more concise. 2. Risk 36 to be dropped from the register. 3. A risk to address the implementation of the proposed changes to the LGPS to be added.
Resolved: That the Risk Register be noted and amendments made reflecting the discussion at the Board meeting.
Next steps: None.
The Board meeting was adjourned from 11.15am to 11.30am for a short break. |
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REVISED STATEMENT OF INVESTMENT PRINCIPLES
With adjustments to governance practices within the Pension Fund, it is necessary to approve a revised Statement of Investment Principles (SIP).
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the revised Statement of Investment Principles. He explained that the changes were cosmetic and the opportunity had been taken to revise the section dealing with the CIPFA/Myners principles. 2. In response to a question about whether all of the Fund’s Investment Managers were from the UK, the Mercer representative stated that Western Asset Management was headquartered in Pasadena although it had an investment team in London. Franklin Templeton is based in San Francisco but also has an investment team in London. 3. It was suggested and agreed that section 2(ii) of the Statement of Investment Principles should state: “To have a strategic asset allocation that is both well diversified and expected to provide long term investment returns in excess of the anticipated rise in the value of the Fund’s liabilities” (Action Review ref: A16/14).
Actions/Further Information to be Provided: The Statement of Investment Principles to be amended as agreed in point 3.
Resolved: That the revised Statement of Investment Principles be approved subject to amendments as discussed at the meeting.
Next steps: None.
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KEY PERFORMANCE INDICATORS
In line with best practice, Pension Fund Board members will be supplied with Pension Fund key performance indicators (KPIs) on a quarterly basis, covering investment and administration practices. Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. An updated KPI Statement was tabled and is attached to the Minutes as Annex 3. 2. The Pensions Manager introduced the report. The Employer Satisfaction Survey results had now been included and the target performance level had been passed. 3. The Strategic Manager – Pension Fund & Treasury also highlighted the Internal Audit report on Pensions Administration which had been found to be effective. 4. In response to a query, the Strategic Manager – Pension Fund & Treasury explained that the performance in Q4 2012/13 had been very good and it was not possible to continue to replicate such a significant return. Rolling forward, the annual return would be impacted by the dropping out of a quarter’s significantly high performance. 5. The Strategic Manager – Pension Fund & Treasury agreed to include the estimated deficit of the Fund in future KPI Statements, while making it clear that it is an estimated market value and not an actuarial valuation (Action Review ref: A17/14).
Actions/Further Information to be Provided: To include the estimated deficit of the Fund in future KPI Statements, while making it clear that it is estimated market value and not an actuarial valuation.
Resolved: That the KPI Statement be noted.
Next steps: None.
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PENSION FUND ADMINISTRATION SERVICE LEVEL AGREEMENT
A service level agreement between the County Council as Administering Authority for the Surrey Pension Fund and the Pensions Administration Team is set out for the Board to approve.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Pensions Manager introduced the report and highlighted that the welcome packs for new scheme members was an electronic pack. Retired members receive a paper payslip when rates change. 2. The Service Level Agreement would be published on the Pension Fund website once it had been agreed (Action Review ref: A18/14). 3. Members were assured that Internal Audit look at Pensions Administration annually and pointed out that the last report had been included as an annex to the previous item. The service had been found to be effective. 4. Appeals following a complaint against the Pensions Administration team would be heard by a Panel of senior officers: the Pensions Manager, Head of Legal & Democratic Services, and Chief Finance Officer. In response to a query, the Pensions Manager stated that appeals were better dealt with under delegated powers as they could be quite technical and invariably were concerned with ill-health retirements.
Actions/Further Information to be Provided: The Service Level Agreement to be published on the Pension Fund website
Resolved: That the Service Level Agreement be approved.
Next steps: None.
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CORPORATE GOVERNANCE SHARE VOTING
With the adoption of a share voting policy by the Pension Fund Board, this report provides an assessment of the need for change of the existing Responsible Investment and Stewardship policy and a summary of the Fund’s share voting process in Q4 2013/14.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report. 2. In response to a query about how many votes were taken against the advisor’s recommendation, the Strategic Manager – Pension Fund & Treasury informed the Board that this had happened once during Q4. The Local Authority Pension Fund Forum had recommended that Funds vote against the Barclays remuneration policy and the Surrey Pension Fund followed this advice. The advice from Manifest had been to vote for the remuneration policy as not paying a market bonus would lead to staff leaving. The Chairman stated that the remuneration policy had still been pushed through but the vote was marginal. 3. Members queried why some votes were singled out for consideration by the Board. The Chairman reminded the Board that it had asked officers to send them details of the most contentious/newsworthy votes. 4. The Strategic Manager – Pension Fund & Treasury informed the Board that it was a rare occurrence when votes against company boards were carried. However, he pointed out that while votes against company boards may not be carried at the time of the vote, they often help make the case for change. He gave the example of Marks & Spencer appointing a joint Chief Executive and Chairman. The Local Authority Pension Fund Forum had run a well-supported campaign for separate individuals to hold these posts. The vote against management was not carried although it was a record vote in favour of the resolution at the time. A short time later Marks & Spencer did change their policies and decide to conform to the campaigns objectives.
Actions/Further Information to be Provided: None.
Resolved: 1. That the report on Corporate Governance Share Voting be noted. 2. That the Responsible Investment and Stewardship Policy for 2014/15 be approved.
Next steps: None.
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LGPS REFORM: OPPORTUNITIES FOR COLLABORATION, COST SAVINGS AND EFFICIENCIES
On 21 June 2013, the Department for Communities and Local Government (DCLG) issued a call for evidence on the future structure of the Local Government Pension Scheme. A document was submitted on behalf of the Pension Fund Board, in consultation with the Chairman of the Pension Fund Board. On 1 May 2014, the Government published a further consultation document, which acknowledges the initiatives put in place by many administering authorities with regard to collaboration and the set up of collective investment vehicles.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Hymans Actuary tabled a briefing note summarising the Hymans Robertson cost-benefit analysis of fund merger and asset pooling (attached as Annex 4). A further consultation had been announced on 1 May 2014 by DCLG, which acknowledges the initiatives put in place by many administering authorities with regard to collaboration and the set up of collective investment vehicles (CIVs). Hymans had demonstrated that full Fund mergers would delay savings and so the DCLG consultation now rules out mergers and concentrates on asset pooling. The value of local decision-making had also been recognised by the government. 2. The Hymans Robertson representatives highlighted the finding that over the past ten years Local Government Pension Funds in aggregate would have achieved the same outcome if they had invested passively, with significantly lower fees. However, they argued that they were not recommending that the whole of the LGPS goes passive. Where a Fund has good governance it should continue what it has been doing. Where it has poor governance it could move to a passive investment strategy. The representatives then ran through the consultation questions and highlighted the key issues to be considered. They also stated that the consultation invites thoughts on reducing fund deficits although this is not one of the five consultation questions. 3. The Hymans Actuary confirmed that there are currently no CIVs in the market for the LGPS. The London Boroughs are presently setting up a CIV and counties may be able to use them. 4. The Hymans Robertson representatives informed the Board that there are only eight to ten equity managers across the LGPS. If CIVs are established, they are likely to be run by the same investment managers. Benefits of CIVs could include a reduction in fees. The Chairman stated that some investment managers were already voluntarily reducing fees to merged funds. Further benefits of CIVs would include savings on transactional costs as purchases and sales could be netted off. 5. Members were encouraged by the modification of the government’s plans in response to evidence. 6. The Hymans Actuary suggested that there should be a good response rate to the consultation and that the concepts in the consultation would benefit all funds. 7. The Chairman suggested that poorly run schemes could consider asking well run schemes to take them over. 8. In response to a query, the Hymans representatives stated that a move to passive investment strategies by local authority pension funds would have no impact on the market in aggregate. 9. Members felt that there was a timing issue and that, by moving quickly, greater benefits could be achieved.
The Board adjourned for lunch from 12.50pm to 1.30pm.
10. Members suggested that the initial response to the call for evidence be reviewed and arguments repeated in response to this consultation. 11. The Chairman stressed that the consultation response should highlight good governance and absorb the Hymans Robertson arguments.
Actions/Further Information to be Provided: None.
Resolved: ... view the full minutes text for item 30/14 |
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NATIONAL CHANGES TO THE LGPS
On 1 May 2014, a consultation was published by the Government following the Call for Evidence on the future structure of the LGPS, which was launched on 21 June 2013. The document reflects certain initiatives in terms of collaboration by various LGPS administering authorities that have been announced and implemented.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report and explained the background to the preparation of the paper for South East 7 attached as Annex 1 to the report. He informed the Board that there would be an officer meeting on 28 May 2014 to work on proposals and that he would report back on the outcomes of that meeting (Action Review ref: A19/14). This may be through an informal meeting of the Board. 2. The Chairman informed the Board that the Leader of the Council was particularly keen to look at opportunities for collaboration within the South East 7. 3. The Chairman clarified that while the negotiations were confidential, the report was a public document and had been published on the website. 4. The Chairman informed the Board that Westminster City Council had awarded Surrey with its Pensions Administration and this would come into effect on 1 September 2014. The Surrey Pension Fund already has a partnership with East Sussex which includes pensions administration. This is now fully integrated. There are opportunities to learn from partnerships. For example, Surrey gained a procurement portal from East Sussex and there are functions and practice which has been shared with East Sussex. 5. The Surrey Pension Fund Advisor suggested that there would be other local authorities looking for support on various functions, eg where internal investment managers are close to retirement, funds may look to other local authorities for support. 6. In response to a query about whether there was any limit on the size of mergers or collaboration, the Hymans representatives suggested that there was a scale issue. Large funds were good for infrastructure and liquid assets but not if the investments are being actively managed. Large scale funds can also lead to them being remote from employers although it is possible to keep a local touch while benefiting from limiting replication of written communications. The application of scale requires consideration.
Actions/Further Information to be Provided: Strategic Manager – Pension Fund & Treasury to report back on the outcomes of the officer meeting on 28 May 2014 before the next meeting of the Surrey Pension Fund Board.
Resolved: That the report be noted.
Next steps: None.
The meeting adjourned for a break from 1.50pm to 2.05pm. |
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INVESTMENT STRATEGY REVIEW
Following the actuarial valuation, Mercer has been requested to conduct an investment strategy review of the Surrey Pension Fund.
Additional documents: Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report which had been discussed informally with Board members. There was a lengthy debate, with key points including: 2. The Chairman queried why some investment advisors (including Mercer) were recommending that LGPS funds establish a liability-driven investment strategy when funds were still a relatively long way from being fully funded. The Mercer representative explained the need to start implementing changes now to prepare for a change to the investment strategy once the fund was fully funded. If the Board waits until it gets to 100% funding, it will very likely miss the opportunity to move to a new strategy when the time is right as the building blocks won’t be in place. 3. The Mercer representative highlighted the proposed strategy on page 271 of the agenda packs. 4. The Chairman suggested that she didn’t disagree with the strategy but with the timing. She queried the definition used for growth assets which she felt were not currently 91.2% of investments. The Mercer representative highlighted the breakdown of growth assets on page 265 of the agenda packs. There was some debate amongst Members, officers and advisors about the definition applied, in particular in relation to Corporate Bonds. The Mercer representative explained that he considered the main role of this asset class for the Fund was as a return-seeking asset. It was acknowledged that some downside protection was provided relative to adverse movements in the value of the liabilities but that this would not be significant given the low level of interest sensitivity and lack of any direct linkage to inflation. 5. The Chairman suggested that the Surrey Pension Fund was not currently taking excessive risks, given the level of funding. The Mercer representative suggested that as the funding level improves it is possible to take risk off the table and that a clear plan should be in place to achieve this. 6. The Hymans Actuary suggested that there was a question over whether a large deficit matters and whether the Fund should therefore be seeking to reduce risk. The Mercer representative agreed that Surrey needs to decide if it is happy with the current level of deficit risk. The liabilities are likely to continue to increase, even with good performance by investments. 7. The Pensions Regulator stated that it was not clear if the Regulator would have any remit over investment strategies. 8. The Hymans actuary suggested that if it is intended to de-risk in the future, governance should be put in place early on. Procedures should state what the actuary is expected to do and what the Fund’s advisors are expected to so. 9. Members were unhappy to give full approval to the suggested changes at the present meeting. The Chairman requested that three fund managers be invited to an informal meeting of the Board to help it to understand the approach being recommended. It was also suggested that a fee ... view the full minutes text for item 32/14 |
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EXCLUSION OF THE PUBLIC
Recommendation: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the paragraph 3 of Part 1 of Schedule 12A of the Act.
PART 2 IN PRIVATE
Minutes: RESOLVED: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under paragraph 3 of Part 1 of Schedule 12A of the Act.
THE FOLLOWING ITEMS OF BUSINESS WERE CONSIDERED IN PRIVATE BY THE COMMITTEE. HOWEVER, THE INFORMATON SET OUT BELOW IS NOT CONFIDENTIAL.
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STANDARD LIFE GFS FUND (GLOBAL FOCUSED STRATEGIES)
The Pension Fund Board is invited to consider making an allocation to Standard Life’s Global Focused Strategies Fund (GFS), which has recently been launched.
Minutes: Declarations of Interest: None.
Key Points Raised During the Discussion: 1. The Strategic Manager – Pension Fund & Treasury introduced the report. The committee asked a number of questions which were answered by the officers and advisors present, before moving onto the recommendation.
Actions/Further Information to be Provided: None.
Resolved: That an additional £60m be invested into the Standard Life diversified growth funds; with a 70:30 ratio between GARS and GFS. The additional funding to be transferred from passive equities with Legal & General.
Next steps: None.
The Board then returned to Item 6: Manager Issues and Investment Performance to give consideration to making a USD 20m commitment to the Standard Life Secondary Opportunities Fund II (SOF II).
Key Points Raised During the Discussion: 1. Concern was expressed about increasing the Fund’s exposure to Standard Life. 2. Concern was expressed about the opportunity being a Fund of Funds. However, it was also pointed out that this meant the investment wasn’t directly in Standard Life. 3. Members queried what other opportunities exist in the private equity field. The Strategic Manager – Pension Fund & Treasury pointed out that the benefit of this opportunity was that it was a Secondary Opportunities fund. The Mercer representative also reiterated his support for Secondary Opportunities. The Surrey Pension Fund Advisor also felt that this was a good opportunity to be invested in. 4. The Chairman pointed out that this was not a material amount of money.
Actions/Further Information to be Provided: None.
Resolved: That the Board approves making a USD 20m commitment to the Secondary Opportunities Fund II (SOF II).
Next steps: None.
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PUBLICITY FOR PART TWO ITEMS
To consider whether the item considered under Part 2 of the agenda should be made available to the Press and public.
Minutes: RESOLVED: That the item considered under Part Two of the agenda should remain confidential and not be made available to the press and public.
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DATE OF NEXT MEETING
The next meeting of the Surrey Pension Fund Board will be on 19 September 2014. Minutes: The date of the next meeting was noted. |