Agenda and minutes

The agenda and reports associated with this minute can be found at:-

http://committees.aberdeencity.gov.uk/ieListDocuments.aspx?CId=506&MId=3813&Ver=4

Please note that if any changes are made to this minute at the point of approval, these will be outlined in the subsequent minute and this document will not be retrospectively altered.

The Committee was requested to determine that the following items of business, which contained exempt information as described in Schedule 7(A) of the Local Government (Scotland) Act 1973, be taken in private – items 11 (Investment Strategy Update), 12 (Investment Strategy Review) and 13 (Asset and Investment Manager Performance Report).

The Committee resolved:-

in terms of Section 50(A)(4) of the Local Government (Scotland) Act 1973, to exclude the press and public from the meeting during consideration of items 11, 12 and 13, so as to avoid disclosure of exempt information of the class described in paragraph 6.

The Board resolved:-

to note the decision of the Committee.

The Committee and Board had before them the minute of the Pensions Committee and Board meeting of 17 December 2015.

The Committee and Board resolved:-

to approve the minute as a correct record.

The Committee and Board had before them the minute of the additional Pensions Committee and Board meeting of 18 January 2016.

The Committee and Board resolved:-

to approve the minute as a correct record.

The Committee had before it a motions list prepared by the Head of Legal and Democratic Services.  In relation to the motion from Councillor Kiddie requesting a report on ethical investments in respect of the Pension Fund, it was noted that the report from KPMG (article 10 of the minute of 17 December 2015 refers) would not solely satisfy the terms of the motion, and so as Councillor Kiddie was not in attendance at the meeting, the item would remain on the motions list.

The Committee resolved:-

to note the motions list.

The Board resolved:-

to note the decision of the Pensions Committee.

The Committee had before it a report by the External Auditor which set out the annual audit plan 2015/16 for the North East Scotland Pension Funds.  The Committee heard that it was the final year of Audit Scotland’s five year audit appointment and that the Assistant Auditor General was currently concluding a procurement process for the appointment of public sector auditors for the next five year cycle.  It was expected that this appointment would be confirmed within the next couple of months.

The report set out the summary of planned audit activity and the key audit issues and risks.  The report also set out the proposed audit fee for 2015/16 which had been agreed with the Head of Finance.  Members heard that although it was difficult to predict if there would be a change in fees as a result of the change to the auditor, any alteration would still be framed within the context set by Audit Scotland.

The Committee resolved:-

to note the report and the audit plan for 2015/16.

The Board resolved:-

to note the decision of the Committee.

The Committee had before it a report by the Pensions Manager which provided an update on any changes to the North East Scotland Pension Fund and the Aberdeen City Council Transport Fund strategies.

With reference to article 1 of the minute of the meeting of the Pensions Committee and Board of 18 January 2016, the report requested that members agree a date in June 2016 to undertake a visit to London to receive presentations from Fund Managers.  It was proposed that the visit take place on 30 June / 1 July 2016.  Following some discussion of the proposed dates, the Clerk undertook to contact members outwith the meeting to ascertain their availability.  Separately, it was noted that the EU Referendum date of 23 June could potentially affect attendance at the Pensions Committee and Board meeting of 24 June, and the Clerk advised that she would contact members to confirm their attendance to ensure that the meeting would be quorate.

Appended to the report was the Pensions Administration Strategy December 2015; as well as an update on the Annual Review of Scheme Documentation.  The report noted that as a result of the annual review, there had been revisions to the following policies:-

·         Governance Policy

·         Governance Compliance Statement

·         Training Policy (Pension Committee)

·         Communication Policy

·         Statement of Investment Principles

Finally, the report included an updated signatory list for the North East Scotland Pension Fund, as it was noted that there had been a number of recent staffing changes.

The report recommended:-

that the Committee –

(a)       approve contract continuation for the Benefits Administration Software provider (as set out in section 5.4.1 of the report);

(b)       agree a two day date in June for Fund Manager presentations;

(c)       review and approve policy document changes as noted in Appendix 2 of the report;

(d)       approve the Pension Fund signatory list as noted in Appendix 3 of the report, for implementation as at 1 April 2016;  and

(e)       note the remainder of the report.

The Committee resolved:-

(i)        to approve the recommendations contained in the report;

(ii)       to note that the Clerk would contact members about the proposed dates of 30 June and 1 July for the visit to London to meet with Fund Managers; and

(iii)      to note that the Clerk would also contact members to confirm attendance at the Pensions Committee and Board meeting of 24 June 2016.

The Board resolved:-

to note the decision of the Committee.

The Committee had before it a report by the Head of Finance which set out a request from Xerox (UK) Ltd for admitted body status within the Local Government Pension Scheme administered by Aberdeen City Council.  The Committee heard that the Council must admit a body to the pension fund as ‘an admitted body’ under the Local Government Pension Scheme (Scotland) Regulations 2014, Schedule 2, Part 2, 1(d)(i), providing that the body complied with the regulation as detailed in Appendix 1.

The report recommended:-

that the Committee agree to allow the employees transferring from Aberdeenshire Council to Xerox (UK) Ltd to participate in the Local Government Pension Scheme administered by Aberdeen City Council.

The Committee resolved:-

to approve the recommendation.

The Board resolved:-

to note the decision of the Committee.

The Committee had before it a report by the Head of Finance which set out the management expenses budget/forecast and projected spend for the North East Scotland Pension Fund (NESPF) for 2015/16.

The report recommended:-

that the Committee note the update on the current NESPF management expenses budget/forecast and projected spend for 2015/16.

The Committee resolved:-

to approve the recommendation.

The Board resolved:-

to note the decision of the Committee.

The Committee had before it a report by the Head of Finance which provided members with information and key dates in respect of the 2015/16 Statement of Accounts, including linkages to the plans and timetable of External Audit.

The report advised that the Pensions Committee would receive the Draft Statement of Accounts 2015/16, including the Annual Report, for scrutiny at its meeting on 24 June 2016.

The report recommended:-

that the Committee note the contents of the report.

The Committee resolved:-

to approve the recommendation.

The Board resolved:-

to note the decision of the Committee.

In accordance with the decision recorded under article 1 of this minute, the following items were considered with the press and public excluded.

With reference to article 10 of the minute of its previous meeting, the Committee had before it a report by the Head of Finance which provided an update on the Fund investment strategy and set out proposed actions to secure compliance and adherence to the funds benchmark allocation.

The report recommended:-

that the Committee –

(a)       approve the Global Custodian appointment as set out in section 5.3 of the report;  and

(b)       note the remainder of the report.

The Committee resolved:-

to approve the recommendations.

The Board resolved:-

to note the decision of the Committee.

The Committee had before it a report by the Head of Finance which detailed the outcome of the investment strategy and structure review which had been prepared by officers following the completion of the 2014 Actuarial Valuation.  The report set out the details of the Fund’s current investment strategy and made a number of recommendations to take the strategy forward over the next 5 to 10 years.

The report recommended:-

that the Committee approve –

(a)       that the risk-based framework be adopted to deliver a more diversified investment strategy;

(b)       the Statement of Investment Principles revisions as set out in Appendix 1 of the report.

(c)       the implementation of stage 1 of the risk-based framework with the transfer of £200m from existing equities to diversified growth funds;

(d)       that proposals be brought forward to the Pensions Committee on the implication of stage 2 medium to long term objectives;

(e)       that the Fund incorporate a 5% allocation to infrastructure relevant to local economic growth;  and

(f)        that the Fund formally approach Aberdeen City Council, Aberdeenshire Council and Moray Council with regard to opportunities to meet its allocation to relevant infrastructure.

There followed a lengthy discussion about the opportunities for joint projects.

The Committee resolved:-

to approve the recommendations.

The Board resolved:-

to note the decision of the Committee.

With reference to article 9 of the minute of its previous meeting, the Committee had before it a report by the Head of Finance which provided a review of the investment activity of both the North East Scotland Pension Fund and the Aberdeen City Council Transport Fund for the three month period ending 31 December 2015.  The report was supported by the BNY Mellon Fund Analysis and Performance Report and the quarterly investment reports from Fund Managers.

The Committee received a verbal update from the Pensions Manager on the situation with the Transport Fund.

The report recommended:-

that Committee note the report.

The Committee resolved:-

to approve the recommendation.

The Board resolved:-

to note the decision of the Committee.

With reference to article 11 of the minute of its previous meeting, the Committee heard from the Pensions Manager with an update from colleagues in Legal Services in respect of the ongoing legal matter.

Members heard that the matter was unlikely to be resolved until June / July 2016 as a number of options were currently being considered, and this had taken more time than anticipated.

Following lengthy discussion of the matter, the Convener requested that officers report to Committee at the meeting of 24 June with an update on the situation, to include recommendations for the Committee if the matter was not resolved.

The Committee resolved:-

to note the update and to request that officers provide a report to the next meeting, setting out the current position and any necessary recommendations for Committee to consider.

The Board resolved:-

to note the decision of the Committee.

-        COUNCILLOR BARNEY CROCKETT, Convener