Agenda and minutes

Apologies were received from Councillors Russell Mellor, Richard Scoates and Stephen Wells.

Members present declared an interest as members of the Bromley Local Government Pension Scheme.

The minutes were agreed.

In accordance with the Council’s Constitution, questions to this Committee must be received in writing four working days before the date of the meeting. Therefore please ensure that questions are received by the Democratic Services Team by 5pm on Friday 1^st November 2013.

There were no questions.

Report RES13202

Summary details were provided of the investment performance of Bromley’s Pension Fund for the first two quarters of 2013/14 along with information on general financial and membership trends of the Fund and summarised information on early retirements.

AllenbridgeEpic provided further detail on investment performance and Baillie Gifford also provided brief commentary on recent developments in financial markets, their impact on the Council’s Fund and the future outlook.

The market value of the Fund rose during the September quarter to £601.8m (compared to £582.4m at 30^th June 2013). The comparable value at 30th September 2012 was £509.2m. By 25^th October 2013, the Fund value had risen to £621.3m.

Mr Stevenson provided a brief update on investment performance - the quarterly performance of the Bromley Fund being positive.

Councillor Grainger suggested the fixed income element of the Fund at 20% should be smaller given higher returns he felt could be achieved from other investments. Mr Stevenson recommended there should be no rebalancing until Phases 2 and 3 of the Investment Strategy had concluded. Additionally, it would not be possible to confirm proportions until the Actuary report had been received. Going forward, Mr Stevenson recommended that 20% of the Fund continue to be given to fixed income; some £100m in fixed income provided a good diversity on a global absolute return mandate. It was possible to invest up to £120m in fixed income.

Fixed income assets provided cash for the Fund which was cash positive (income from equities being re-invested). Councillor Grainger suggested having a couple of cash flow scenarios; Mr Stevenson suggested a cash projection(s) at the next meeting, before taking decisions on Phase 3 of the Investment Strategy. 

Members were advised that revised figures for the actuarial valuation were due by the end of the following week. They would show an increase in employer contributions and an increase in the deficit. It might be possible to keep the employer’s contribution rate stable by extending the deficit recovery period, but this would need to be agreed with the actuary. Councillor Grainger suggested that it was necessary to know the yield target at the current deficit recovery period. Councillor Reddin asked whether there could be an additional three years to the official deficit recovery period to help provide a cushion against any merger scenario. The Chairman felt that such matters could be looked at when the valuation figures were available.

Mr Stevenson advised that that L B Bromley’s fund with Baillie Gifford was “hard closing” to new monies for Diversified Growth Funds. As the fund was underweight, Baillie Gifford would be prepared to allow L B Bromley to “top-up” funds when Phase 3 of the investment strategy was complete.

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.

RESOLVED 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 following summaries

refer to matters

involving exempt information

The exempt minutes were agreed.

Report to follow

Report RES13203

Members considered an initial report from the Fund’s Investment Adviser on Phase 3 of the revised investment strategy (fixed income).

Printed copies of reports from the Council’s Fund Managers are circulated to Sub-Committee Members with this agenda. Representatives of Baillie Gifford will be attending the meeting for this item.

Quarterly performance reports (to 30th September 2013) from Baillie Gifford and Fidelity had been circulated to Sub Committee Members prior to the meeting along with quarterly reports (to 30th September 2013) from Standard Life Investments and Baillie Gifford in respect of the Diversified Growth Fund investments.

Representatives from Baillie Gifford attended the meeting to present their investment review and answer questions.