Agenda and minutes
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APOLOGIES FOR ABSENCE AND SUBSTITUTIONS
Minutes: An apology was received from Mr Stuart Selleck. |
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MINUTES OF THE PREVIOUS MEETING - 23 September 2016
To agree the minutes as a true record of the meeting. Minutes: The Minutes were approved as an accurate record of the previous meeting subject to the following amendment:
That the last paragraph of Minute 58/16 should read:- Mr Essex asked a final supplementary question in relation to his fourth question and asked whether the Committee would consider complimenting different investments to which the Chairman replied that investments would be considered on their own merit.
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DECLARATIONS OF INTEREST
All Members present are required to declare, at this point in the meeting or as soon as possible thereafter (i) Any disclosable pecuniary interests and / or (ii) Other interests arising under the Code of Conduct in respect of any item(s) of business being considered at this meeting NOTES: · Members are reminded that they must not participate in any item where they have a disclosable pecuniary interest · As well as an interest of the Member, this includes any interest, of which the Member is aware, that relates to the Member’s spouse or civil partner (or any person with whom the Member is living as a spouse or civil partner) · Members with a significant personal interest may participate in the discussion and vote on that matter unless that interest could be reasonably regarded as prejudicial. Minutes: Councillor Tim Evans declared that he was in receipt of a small pension from the Surrey Pension Fund.
John Harrison declared that he was in receipt of a pension from UBS. |
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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 (7 November 2016). 2. The deadline for public questions is seven days before the meeting (4 November 2016). 3. The deadline for petitions was 14 days before the meeting, and no petitions have been received.
Minutes: One question was submitted by Mr Stephen McDonald and three questions submitted by Mr Alburn Thurston. Questions and responses were tabled at the meeting and are attached as an annex to these minutes.
Mr Stephen McDonald was present at the meeting and as a supplementary question asked why the Committee continued to invest in fossil fuels. He cited a statement made by Mrs Hazel Watson that oil prices had collapsed and would not recover for the foreseeable future and that she had said the committee were in general agreement with this.
The Chairman responded that the investment strategy was reviewed annually and that the investment strategy was available online. She also pointed out that whilst Members may have their individual opinions they were not necessarily the collective view of the Committee. Mr McDonald was encouraged to stay for the next item on the agenda where the Chairman would make a statement regarding the Pension Fund Investment Strategy.
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ACTION TRACKING AND FORWARD PLAN
An action tracker is attached, detailing actions from previous meetings. The Board is asked to review progress on the item listed. Additional documents: Minutes: Key points raised during the debate: a) Tracker A3/16 – The Chairman reported that she had a meeting set up with Marcus Jones MP to discuss the pooling proposals and would report back to the next meeting of this Committee. b) The Chairman stated that she had had many queries regarding investments in fossil fuel and asked the Committee if they felt it appropriate to request that the Local Pension Board scrutinise the Investment Strategy when it was reviewed. c) At the next meetings with fund managers that Members ensure that companies with increased investment in oil companies are engaging with the Local Authority Pension Fund Forum (LAPFF). A Member reported that oil companies’ strategies were becoming more sensitive to public views. d) With regard to the Forward Plan the Chairman requested that the actuarial valuation be a separate agenda item from the Manager Performance item.
Resolved: 1. To request that the Local Pension Board scrutinise the Pension Fund Investment Strategy when the Committee had reviewed it. 2. To receive a report back to the next meeting following discussions of pooling proposals with Marcus Jones MP.
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This report provides details of a written policy statement and guidance for breaches of the law in respect of all activities of the Surrey Pension Fund. The Committee are asked to approve the Breaches of Law Policy and Guidance.
Additional documents: Minutes: Declarations of interest:
None.
Witnesses: Neil Mason, Senior Advisor Pension Fund
Key points raised during the discussion: a) It was pointed out that there had been an omission to paragraph eight of the main report which should include the Strategic Director for Finance. b) The Chairman thanked officers for a very well written report.
Resolved: The Breaches of Law Policy and Guidance, included as Annexes 1 to 5 of the main report were unanimously approved.
Reason for decision The Pension Fund Committee must be aware of the legal requirement to report breaches of law in relation to all activities of the Surrey Pension Fund. A Breaches Policy is a crucial tool for the Fund in reducing risk and providing an early warning of possible malpractice. |
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ADMINISTRATION AUTHORITY DISCRETIONS
This report seeks approval of the written policy statement in respect of the discretions that can be exercised by the Administering Authority in relation to LGPS Regulations. Additional documents: Minutes: Declarations of interest: None
Witnesses: Neil Mason, Senior Advisor Pension Fund
Key points raised during the discussion: An error was pointed out in paragraph 5 of the report – in the first and last sentences of that paragraph 2.12 should read 2.11.
Resolved: The Statement of Policy for AA Pensions Discretions, included as Annex 1 to the report, was unanimously approved.
Reason for decision: The Pension Fund Committee must be aware of the discretions that can be exercised by the administering authority under the LGPS Regulations. The publication of an AA Discretions Statement of Policy allows the AA to demonstrate a transparent decision making process and clarity of governance. |
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REVISED STATEMENT OF INVESTMENT PRINCIPLES
It is part of good governance that the Pension Fund Committee should review and approve its Statement of Investment Principles (SIP) and Core Belief Statement on a regular basis.
Additional documents: Minutes: Declarations of interest: None
Witnesses: Phil Triggs, Strategic Manager Pensions and Treasury
Key points raised during the discussion: The Strategic Manager Pensions and Treasury stated that the most recent statement had needed to be amended as a result of recent new private equity opportunities.
Resolved: 1. To approve the Statement of Investment Principles as shown in Annex 1 to the report. 2. To approve the Core Belief Statement shown in Annex 2 to the report.
Reason for decision: The Pension Fund Committee must review and approve all working documents produced for the Pension Fund.
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EXCLUSION OF THE PUBLIC
Minutes: Resolved: That under Section 100(A) of the Local Government Act 1972, the public be excluded from the meeting for the start of the following item of business on the grounds that it would involve the likely disclosure of exempt information under the relevant paragraphs of Part 3 of Schedule 12A of the Act.
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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 Surrey Pension Fund Committee, as well as manager investment performance.
Additional documents: Minutes: Declarations of interest: None
Witnesses: Phil Triggs, Strategic Manager Pensions and Treasury John Harrison, Independent Advisor Barry McKay, Hymans Robertson
Key points raised during the discussion: Notes from meetings with Fund Managers and officers were briefly discussed.
Darwin:- 1. The meeting went into closed session at 11.40am to discuss exempt information from a meeting had with officers and Franklin Templeton. The meeting reopened to the public at 11.53am. 2. The Committee discussed the investment opportunity in Darwin Leisure Development Fund. It was noted that Darwin Leisure Property Fund had done very well with Surrey Pension Fund’s investment of £20m in 2013 which had increased in value by 36.8% to £27.3m. 3. The Strategic Manager Pensions and Treasury explained that Darwin Leisure Property Fund had reached its optimum size hence the opening of the new project Darwin Leisure Development Fund. The new project would focus on parks with potential for redevelopment and sites which had planning permission that had not yet been implemented. The new fund, unlike Darwin Leisure Property Fund, would also utilise gearing at a level of around 20% to help finance acquisitions and redevelopment. 4. The Darwin Leisure Development Fund would require a lock in of 10 years and fees would be 75 basis points reducing to 50 basis points after one year. Mercer confirmed that Darwin had a B+ rating and that the fees were acceptable. The Committee noted that Surrey’s investment in the Property Fund could not be transferred to the Development Fund due to the lock in period. 5. The Darwin Leisure Development Fund would require a lock in of 10 years. The Committee noted that Surrey’s investment in the Property Fund could not be transferred to the Development Fund due to the lock in period. 6. Members raised several issues of regarding the Development Fund that required further response: · Redistribution of profits from the closed Property Fund investment · What contingencies were in place between Darwin failing and an individual leisure park failing · The Committee would need to consider further the 10 year lock in period · How quickly was Darwin expecting to raise the whole £300m · Reassurance was requested on the sustainability of the holiday park and that the market was not saturated.
Border to Coast: 7. The Strategic Manager Pensions and Treasury introduced the update on this particular item in the report and explained the various stages. Stage 3 was split into two phases. The first phase included finalisation of a detailed project plan, approval of the next stage budget (£300k per Partner Fund), set up of shell company, and drafting, evaluation and award of tenders for all required advisory services between now and January 2017. If the timeline was adhered to it was hoped to have a report for approval at full Council in March 2017. 8. The Chairman explained that the S151 officer had some concerns about finance and legal officers having enough information to propose an agreement to Council. The S151 officer would be seeking further legal advice ... view the full minutes text for item 81/16 |
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KEY PERFORMANCE INDICATORS AND ADMINISTRATION UPDATE
In line with best practice, Surrey Pension Fund Committee members will be supplied with Pension Fund key performance indicators (KPIs) on a quarterly basis, covering investment and administration practices. This paper also includes an update on administration issues.
Additional documents: Minutes: Declarations of interest: None
Witnesses: Neil Mason, Senior Advisor Pension Fund
Key points raised during the discussion: The Senior Advisor explained that in the New Year the service areas and Key Performance Indicators would be reviewed with regard to whether they were still appropriate.
Resolved: The Committee noted the report and the Key Performance Indicators statement shown in Annex 1 to the report.
Reason for decision: To comply with best practice.
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This report provides a summary of the Fund’s share voting process in Q2 of 2016/17 (1 July 2016 to 30 September 2016).
Additional documents: Minutes: Declarations of interest: None
Witnesses: Phil Triggs, Strategic Manager Pensions and Treasury
Key points raised during the discussion: The Committee considered the summary of the Fund’s share voting process in Q2 of 2016/17 (1 July 2016 to 30 September 2016).
Resolved: 1. The report was noted. 2. The Responsible Investment and Stewardship Policy was approved.
Reason for decision: The Pension Fund Committee must be aware of the voting actions pertaining to the segregated portfolios of shares held within the pension fund.
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PENSION FUND RISK REGISTER
The Pension Fund Committee to assess the revised Risk Register in Annex 1, making any suggestions for amendment/additions as necessary.
Additional documents: Minutes: Declarations of interest: None
Witnesses: Phil Triggs, Strategic Manager Pensions and Treasury
Key points raised during the discussion: 1. The Strategic Manager Pensions and Treasury introduced the report and reported that a there was new risk pertaining to economic turmoil in the USA following the election results on 8 November 2016. The gilt yield and its relationship to the Fund discount rate following the approval of a CPI based rate has been removed and pay and price inflation has been split into two separate risks. 2. It was also reported that the risk of cyber security would be discussed at the next meeting of the Committee.
Resolved: The revised Risk Register as Annex 1 to the report was noted.
Reason for decision: A solid framework of risk management was required in order to manage the considerable risk environment surrounding the governance and investment of the pension fund. |
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HOT TOPICS - BULLETIN
This is the first copy of a regular bulletin to the Surrey Pension Fund Committee FOR INFORMATION ONLY. It will contain hot topics and items of interest for the Committee.
Minutes: Declarations of interest: None
Key points raised during the discussion: The Chairman stated that this item would be a standing item in order to keep the Committee informed of relevant issues without overburdening the agenda. The bulletin would be quarterly and for information only.
Resolved: The Committee noted the bulletin.
Reason for decision: To keep the Committee informed of relevant issues without overburdening the agenda. |
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DATE OF NEXT MEETING
The next meeting of Audit & Governance Committee will be on 10 February 2017. Minutes: The date of the meeting was noted. |