Agenda and minutes

Apologies were received from Councillors Eric Bosshard, Julian Grainger and Russell Jackson. Councillor Richard Scoates attended as alternate for Councillor Julian Grainger.

All Members present along with Mr Glenn Kelly declared a personal interest as Members of the Bromley Local Government Pension Scheme. Councillor Stephen Wells also declared a personal interest at item 12 of the agenda as an employee of Shell Oil. The Chairman also enquired at item 12 whether there was any level of company ownership above which it was necessary to make a declaration and it was agreed to confirm the position.

The minutes were agreed.

• Investment in Property (Minute 19 – 11^th November 2010)

A report will be provided to the Sub Committee after 1^st April 2011.

A report on the matter outstanding - investment in property – would be provided to the Sub Committee’s meeting after 1^st April 2011.

To hear questions received in writing by the Legal, Democratic and Customer Services Department by 5pm on Friday 4^th February 2011 and to respond.

There were no questions.

Report DR11001

Members were apprised of the investment performance of Bromley’s Pension Fund for the first three quarters of the 2010/11 financial year. Information was also provided on general financial and membership trends of the Pension Fund along with summarised information on early retirements.

For 2009/10 the quarterly and cumulative performance of the Council’s two fund managers showed that Baillie Gifford was 6.3% above their benchmark for the year, while Fidelity were 4.4% above benchmark. An overall ranking of 2% was achieved in the year and medium and long-term returns had been extremely good. Bromley’s Fund had been ranked in the second percentile over the last three years, in the first percentile over five years and in the fifth percentile over ten years. In 2010/11 to date, Bromley’s Fund has achieved rankings of 94% in the June quarter and 6% in the September quarter.

A summary of the performance of the two fund managers for the first three quarters of 2010/11 was provided with further detail at Appendices 1 to 3 of report DR11001.  

Baillie Gifford returned 7.5% in the December quarter (1.3% above benchmark) and achieved a cumulative return of 9.3% in the period 1^st April 2010 to 31st December 2010 (2.8% above their benchmark). In the latest quarter, the WM Company attributed their relative outperformance to a combination of asset allocation (0.5%) and stock selection (0.7%). The main positive contributions from asset allocation and stock selection were from UK bonds and from European and UK equities respectively.

Fidelity returned 6.3% in the December quarter (0.2% above benchmark) and achieved a cumulative return of 5.9% in the first half year (0.4% below their benchmark). In the latest quarter, the WM Company attributed their relative outperformance to asset allocation (-0.3%) and stock selection (+0.4%). The negative asset allocation impact was mainly in UK Bonds, while the main stock selection impacts were seen in North American and Global equities.

Concerning medium and long-term performance data,comparative returns over one, three, five and ten years were shown for both Baillie Gifford and Fidelity for periods ended 31st December 2010 and 31^st March 2010. Baillie Gifford’s one, five and ten year returns to December 2010 (19.2%, 8.1% and 6.5% respectively) were better than those of Fidelity (14.6%, 7.5% and 5.7% respectively), although Fidelity’s three year return (6.7%) was marginally better than that of Baillie Gifford (6.6%). Performance since the revised benchmarks were adopted in 2006 had been particularly strong. More detailed performance was also shown relative to benchmark in the medium and long term for the whole fund and for Baillie Gifford and Fidelity individually.

In discussion Members made a number of comments. Concerning the Pension Fund Revenue Account and Membership, the Chairman enquired about administration costs. The Director referred to Fidelity having a performance related fee structure and although capping was being looked at the fee did correspond to the return on the fund. The Chairman asked for a report on funding administration costs at the Sub Committee’s next  ...  view the full minutes text for item 30.

Report DR11010

The role of the Sub-Committee was reviewed for the benefit of new Members and information was provided on:

·  the Sub-Committee’s terms of reference (including a brief description of how its functions are exercised and some general background);

·  financial and membership information about the fund;

·  the fund’s Governance Policy Statement;

·  the fund’s Statement of Investment Principles setting out the framework within which investments of the fund are managed; and 

·  the fund’s Funding Strategy Statement.

RESOLVED that the report be noted.

The Chairman to move that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

The Part 2 minutes were agreed.

A representative of Barnett Waddingham will attend to present this item.

A presentation was provided by a representative from Barnett Waddingham on the 2010 valuation of the Bromley Pension Fund.

The Draft Valuation Report will follow.

Report DR11011

In the light of difficult budgetary circumstances Members considered a report outlining options – including a recommended option - for reducing the deficit associated with the Pension Fund.

RESOLVED that the report be noted and Council be recommended to agree that the pension deficit be recovered over 12 years.

Printed copies of reports from both Fund Managers i.e. Fidelity and Baillie Gifford are circulated to Sub-Committee Members with this agenda. Representatives of Fidelity will attend the meeting to speak on this item.

Quarterly performance reports (to December 2010) from Fidelity and Baillie Gifford had been circulated prior to the meeting and two representatives from Fidelity attended the meeting to present the Fidelity review and answer questions from Members.

Thanks to the Director of Resources

In concluding the meeting the Chairman announced that the Director of Resources would be retiring at the end of the financial year. The Chairman wished to place on record his appreciation and the appreciation of the Sub Committee to the contribution made by the Director to the Sub Committee’s work over the past ten years and more widely to the Director’s contribution to the Council’s work as a whole during this time.