Berkshire Pension Fund Panel
Monday 20 January 2014 4.30 pm
BERKSHIRE PENSION FUND PANEL AND ADVISORY PANEL
20 JANUARY 2014
PRESENT: Councillors Lenton (Chairman), Hilton (RBWM), Comber (RBWM), Dudley (RBWM), Hill (RBWM), Tickner (Reading Borough Council), Stanton (Wokingham Borough Council), Worrall (Bracknell Forest).
Officers: Mr Nestor, Mr Greenwood, Mr Pardo and Mr Cook.
Guest: Mr Muir (Fund Actuary)
PART I
42/13 APOLOGIES FOR ABSENCE
Apologies for absence were received by Sue Nicholls and Andrew Brooker.
43/13 DECLARATIONS OF INTEREST
None.
44/13 MINUTES
- RESOLVED UNANIMOUSLY: That the Part I minutes of the meeting of the Panel held on 21 October 2013 be approved.
The Berkshire Pension Fund and Advisory Panel received a presentation from Barnett Waddingham on the 2013 actuarial valuation results.
The Panel was informed that the approach used for valuations is dependent on the questions being asked. The triennial actuarial valuation answers the question about how much will the promised benefits cost.,
The Panel was shown how this valuation was made by projecting all possible benefit payment for each member, attaching a probability to each payment to get an expected payment and then applying a discount to the expected payment to obtain a value. Members were informed that by applying this methodology the value of the benefits accrued was estimated to be £8.1bn.
The Panel was given a summary of the financial and statistical assumptions made for the valuation. Members were requested to note that as a result of reductions in employee numbers and a growth in the number of members drawing benefits the cost of benefits now exceeded contributions received, however, this shortfall is currently being made up by investment income, The Actuary noted that the assets of the Fund were, of course, there to pay benefits in the future. In the long term the Actuary anticipated that employers’ contributions would need to rise to 20% of payroll.
In response to questions the Panel were informed that the 30 year recovery period had been set with discussions between the administration authority (RBWM), the heads of finance of the 6 unitary authorities and the Actuary.
46/13 THAMES VALLEY PROBATION TRUST
The Pension Fund Manager informed Members that the report presented to them was to inform the Panel that, due to a reorganisation of the Probation Service, there was a need to transfer assets and liabilities in respect of the Thames Valley Probation Trust to the Greater Manchester Pension Fund. Members were informed that the transfer would be mandated by Statutory Instrument and result in a loss of £60 million of assets and a proportionate share of liabilities. It was estimated that about 800 members would be affected by the transfer.
- RESOLVED UNANIMOUSLY: That the report be noted.
The Pension Fund Manager informed Members that the report outlined the discussions held with the Department for Communities and Local Government regarding the proposed greater collaboration between Local Government Pension Funds.
The Panel were informed that they were being asked to authorise officers to prepare a business case for a merger with Buckinghamshire and Oxfordshire County Council’s funds. Members were reassured that the work undertaken would be for exploratory purposes with the findings being reported back to the Panel.
In response to questions the Panel was informed that any proposed merger would require Council agreement and consultation with other authorities and this was just the start of a long project. Other authorities had merged administrative functions to get savings from a reduction in posts, this proposal would take this further by making a more resilient fund that was beneficial to all stakeholders. It was anticipated that the business plan would take about three months to complete.
- RESOLVED UNANIMOUSLY: That the Panel authorise officers to build a business case for a merger of funds and that Members noted the discussions held with the Department for Communities and Local Government.
The Panel were presented the results of the 2013 Russell Pension Fund Governance Survey. Members were informed that this was an independent survey undertaken by a firm of pension consultants looking at fund governance and costs. The Fund was the only public sector fund that took part and this provided an opportunity for comparison against the private sector.
In response to questions the Panel was informed that the fund faired well when compared with the private sector especially the low governance costs and that the probable motivation behind the survey was to demonstrate better value for money of their products.
RESOLVED UNANIMOUSLY: That the Panel noted the survey results.
49/13 INVESTMENT IN PRIVATE RESIDENTIAL RENTED PROPERTY
The Pension Fund Manager informed Members that the report outlined the discussions he had undertaken with various parties regarding investment opportunities by the Pension Fund.
The Panel was informed that officers had taken legal and tax advice in being able to get the best return from any possible investment and it had been recommended that a Scottish Limited Partnership be formed for any investment in private rented residential accommodation.
In response to questions the Panel were informed that the Investment Working Group had looked at the type of investment opportunities and it was felt that this should not be regulated housing, any proposed development opportunities would require a business case being brought to the Panel and that the limited partnership could be dissolved if necessittaed by Scottish independence .
- RESOLVED UNANIMOUSLY: That the Panel note the progress made to date and that the Royal Borough is requested to incorporate the General Partner as a limited liability company and a Scottish Limited Partnership (in which the Fund would be the sole Limited Partner), and prepare limited partnership agreements, memoranda and articles of association for use by joint venture vehicles to facilitate investment by the Pension Fund in residential projects.
50/13 LOCAL GOVERNMENT ACT 1972 – EXCLUSION OF THE PUBLIC
- RESOLVED: That under Section 100(A)(4) of the Local Government Act 1972, the public be excluded from the remainder of the meeting whilst discussion takes place on items 5-8 on the grounds that they involve the likely disclosure of exempt information as defined in Paragraph 3 of part I of Schedule 12A of the Act.