Present:-

Devon County Council:-

Councillors Gilbert (Chairman), Brook, Dezart, Edgell, Greenslade, Hannon, Hill, Radford, Randall Johnson and Squires.

[NB: Councillor Hannon present from Minute 39 onwards]

Unitary and District Councils:-

Councillors Edwards (Exeter - LGA Devon)

Union and Retired Members: Non-Voting Observers:-

Mr Franceschini and Mr Lomax

Also in Attendance:-

Councillor Hicks (South Hams - LGA Devon Substitute Representative)

Apologies:-

Devon County Council: Councillor Wright

Plymouth City Council: Councillors P Smith and Stark

*37 Minutes

RESOLVED that the minutes of the meeting held on 28 February 2014 be signed as a correct record.

*38 LGPS Consultation: Opportunities for Collaboration, Cost Savings and Efficiencies (Minute *12/13 September 2013)

The Committee considered the Report of the County Treasurer (CT/14/33 - text only | pdf CT/14/33) on the above further Government consultation paper published in the light of responses to the call for evidence on the future structure of the Local Government Pension Scheme and a report by Hymans Robertson, an independent pensions consultancy.

The County Treasurer s Report:

outlined and commented on the two main proposals for reform in the latest consultation involving Common Investment Vehicles and passive Fund management of listed assets;

pointed out that the Government had decided not to consult on the merger of Funds at this time and to keep decisions about asset allocation with the local Fund authorities.

It was MOVED by Councillor Randall Johnson, SECONDED by Councillor Brook and

RESOLVED

(a) that the County Treasurer be asked to draft a response to the consultation on LGPS Opportunities for Collaboration, Cost Savings and Efficiencies and circulate it to members of the Committee for comment;

(b) that the County Treasurer, in consultation with the Chairman/Vice-Chairman, be authorised to submit the final response on behalf of the Devon Pension Fund.

*39 Annual Internal Audit Report 2013/14 and the Internal Audit Plan 2014/15

The Committee considered the Report of the County Treasurer (CT/14/35 - text only | pdf | supplementary information CT/14/35) on the Annual Internal Audit Report 2013/14 and the Internal Audit Plan 2014/15.

Internal audit was able to provide reasonable assurance on the adequacy and effectiveness of the Devon Pension Fund s internal control environment during 2013/14. The Internal Audit Plan for 2014/15 allowed for up to 50 days of internal audit support for risk based systems reviews and compliance testing for which a Service Level Agreement was required.

It was MOVED by Councillor Gilbert, SECONDED by Councillor Brook and

RESOLVED

(a) that the Annual Internal Audit Report for 2013/14 be accepted;

(b) that the Internal Audit Plan for 2014/15 be approved;

(c) that the County Treasurer be authorised to implement the Service Level Agreement relating to the Internal Audit Plan.

*40 Actuarial Valuation (Minute *20/22 November 2013)

The Committee considered the Report of the County Treasurer (CT/14/36 - text only | pdf CT/14/36) confirming the results of the 2013 triennial actuarial valuation and drawing attention to the proposed revision of the Devon Pension Fund s Funding Strategy Statement to reflect the outcome of the valuation and assumptions made about the Fund s future performance.

It was MOVED by Councillor Gilbert, SECONDED by Councillor Hannon and

RESOLVED

(a) that the Report be noted;

(b) that the draft Funding Strategy Statement, once completed in conjunction with the Actuary, be issued to all Fund employers for consultation, and a report brought to the September Committee meeting.

*41 Investment Management Report

The Committee considered the Report of the County Treasurer (CT/14/37 - text only | pdf CT/14/37) on the current Pension Fund value and asset allocation against target, Fund performance and Treasury management stewardship 2013/14.

The Report stated that:

the Fund value at 31 March 2014 stood at 3.1358 billion compared with 3.0067 billion at 31 March 2013;

the Fund s equity holdings remained significantly above their target allocation of 55% at 31 December 2013 as a result of the higher returns on equity markets over the last 12 - 18 months in comparison with other asset classes, although agreed infrastructure commitments would bring the allocation to equities back in line with the target;

the Fund return for 2013/14 was 4.7%, 1.7% below the Fund's customised benchmark. While this was disappointing, the rolling three year return was showing a positive return of 0.1% above benchmark;

unallocated cash on deposit was being maintained at a very low level, and amounted to 35,000,000 at 31 March 2014.

It was MOVED by Councillor Gilbert, SECONDED by Councillor Edgell and

RESOLVED that the Report and the compliance with the Devon Pension Fund s 2013/14 Treasury Management Strategy be noted.

*42 Global Custodian Services Contract Review (Minute *27/28 February 2014)

The Committee considered the Report of the County Treasurer (CT/14/38 - text only | pdf CT/14/38) on the evaluation under the National LGPS Framework Agreement of bids for a new contract for specialist custody services for the Devon Pension Fund.

It was MOVED by Councillor Gilbert, SECONDED by Councillor Radford and

RESOLVED that the proposed appointment of Northern Trust to the role of Global Custodian for the Devon Pension Fund be noted.

*43 Applications for Admitted Body Status

The Committee noted that applications for admitted body status from the following had been approved under delegated powers:

(a) Viridor - in relation to staff transferring to Plymouth City Council to run the new Materials Recycling Facility in Plymouth;

(b) The Children s Society and Barnardos - in relation to staff transferring to Plymouth City Council to run Children s Centres.

*44 Dates of Future Meetings

2014

12 September

21 November

2015

27 February

*45 Exclusion of Press and Public

RESOLVED that the press and public be excluded from the meeting for the following item of business under Section 100(A)(4) of the Local Government Act, 1972 on the grounds that it involves the likely disclosure of exempt information as defined in Paragraph 3 of Schedule 12A of the Act, namely information relating to the financial or business affairs of a person other than the County Council, disclosure of which would be likely to inhibit the free and frank provision of advice and exchange of views for the purposes of deliberation, in accordance with Section 36 of the Freedom of Information Act, 2000, by virtue of the fact that the public interest in maintaining the exemption outweighs the public interest in disclosing the information.

*46 Investment Management Review

The Committee considered the Report of the County Treasurer (CT/14/39) reviewing the investment strategy of the Devon Pension Fund in the light of investment performance during 2013/14, the recent Actuarial Review and the latest Investment Management Report (Minute *41 refers).

It was MOVED by Councillor Greenslade, SECONDED by Councillor Brook and

RESOLVED

(a) that further training be provided for the Committee on Liability Driven Investment (LDI) with a view to making an LDI investment in the future when the timing was more beneficial;

(b) that proposals for the future investment of and management by mandates in relation to multi-sector credit and other funds as set out in the Report be endorsed;

(c) that the Fixed Interest allocation be maintained below the target level for the time being;

(d) that the emerging market exposure be maintained at the current time but that the situation continue to be monitored;

(e) that the dynamic currency hedge be continued in relation to the North America, Europe and Japan funds managed by State Street Global Advisors;

(f) that the alternative indexation option be further investigated and a report brought to the next meeting of the Committee;

(g) that approval be given for an investment in the Hermes Infrastructure Fund.

*DENOTES DELEGATED MATTER WITH POWER TO ACT

The meeting started at 10.00am and finished at 11.35am.

The Minutes of the Committee are published on the County Council s Website at: