Present:-

Devon County Council:-

Councillors Gilbert (Chairman), Edgell, Hannon and Radford

Other Employers

Councillor Parker Delaz Ajete (Plymouth City Council)

Councillor Edwards (Exeter LGA Devon)

Councillor O Dwyer (Torbay Council)

Ms D Healy (Dartmoor National Park Authority)

Union and Retired Members: Non-Voting Observers:-

Mr Franceschini, Mr Lomax and Ms Rimron

Apologies:-

Councillors Hill and Hosking (Devon County Council)

Also in Attendance

Mr Nicholls and Mr Henshaw (Pension Board)

Councillor Hook (Devon County Council)

*101 Minutes

RESOLVED that the minutes of the meeting held on 18 September 2015 be signed as a correct record.

*102 LGPS Update: Pooling of Investments

The Committee considered the Report of the County Treasurer (CT/15/104 - text only | pdf CT/15/104) outlining progress on the proposal to set up a South West Regional pooling arrangement, alternative options, and the impact of the Markets in Financial Instruments Directive from the European Union.

Members discussed the challenge for administering authorities to respond to Government s investment pooling agenda, without the legislation being in place or having guidance available.

The County Treasurer advised the Committee that as pension funds would be obliged to pool their investments, it would therefore it would be beneficial for the Pension Fund to be proactive and develop pooling investment options at this stage, rather than have an arrangement imposed on them at a later date.

The County Treasurer also advised the Committee that further information regarding the pooling agenda was expected to be released in the next few days and that the Chairman might convene a Special Meeting of the Committee in the New Year to agree the Pension Fund s response to the proposals.

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

RESOLVED that the work undertaken to date in response to the Government s investment pooling agenda be noted.

*103 Pension Board

The Committee received the minutes of the meeting held on 22 October 2015.

*104 Communications Strategy

The Committee considered the Report of the County Treasurer (CT/15/105 - text only | pdf | supplementary information CT/15/105) outlining the revised Communications Policy, which set out the Fund s policies on the provision of information and publicity about the Scheme to members, representatives of members and employing authorities.

Following Members comments the County Treasurer undertook to amend the Communications Policy to reflect the change in name of the National Association of Pension Funds to the Pensions and Lifetime Savings Association referred to in paragraph 6.5, and to amend the heading of paragraph 4 to better describe the Pension Fund s communication standards.

It was MOVED by Councillor Gilbert, SECONDED by Councillor Parker Delaz Ajete and

RESOLVED that the revised Communications Policy be approved.

*105 Treasury Management Strategy

The Committee considered the Report of the County Treasurer (CT/15/106 - text only | pdf CT/15/106) outlining proposed changes to the Pension Fund s Treasury Management Strategy to bring it in line with the County Council s policy.

Members questioned the reasoning for the need for the Pension Fund s Treasury Management Strategy to be aligned with that of the County Council, sighting the fiduciary duty of the Fund to seek to obtain the best financial return possible for its members, and raising concern over the current credit rating of Barclays Plc.

In response, the County Treasurer advised the Committee that despite the downgrading of Barclays credit rating, the bank was no longer considered a significant risk. Barclays remaining off the Pension Fund s counterparty list raised some difficulties for the Pension Fund, with Barclays also being the Pension Fund s bankers. There were also administration benefits to the County Council and Pension Fund Treasury Management Strategies being aligned, although these were not insurmountable.

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

RESOLVED that the Pension Fund s Treasury Management Strategy be further considered at the next meeting of the Committee alongside any updating of the counterparty list.

*106 Investment Management

The Committee considered the Report of the County Treasurer (CT/15/107 - text only | pdf CT/15/107) on the current Fund Value and Asset Allocation against target. The County Treasurer reported that the last two quarters had seen a negative absolute return of -5.8%, which was significantly below the Fund benchmark, which consequently impacted on the longer term figures meaning that the rolling 3 year return was 1.0% below benchmark and the 5 year return was below benchmark by 0.7%. However, the return for the financial year to date was marginally better than the Local Authority Pension Fund average for the period.

The negative return was in part attributed to wider market conditions including the Greek debt crisis and concerns about the health of the Chinese economy. Diversified growth funds had also underperformed their cash plus benchmarks over the period, contributing over half of the total fund under performance.

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

RESOLVED that the Report and compliance with the 2015/16 Treasury Management Strategy be noted.

*107 Ethical Investment Policy

In accordance with Standing Order 23(2) Councillor Hook had requested that the Committee consider reviewing its approach to ethical investment, in particular in relation to the Pension Fund s investment in fossil fuels.

A briefing paper (CT/15/108 - text only | pdf CT/15/108) had been provided by the County Treasurer outlining the Pension Fund s current approach to ethical investment.

Members discussed:

the possibility of disinvesting Pension Fund monies from fossil fuels and reinvesting in green energy funds, where the Pension Fund s fiduciary duty would still be met;

the range investments which could be considered unethical, (e.g. tobacco, arms, pharmaceuticals) and about which the Pension Fund is regularly lobbied, recognising that disinvesting in all of these industries would ultimately be detrimental to the Pension Fund;

the prospect of the fossil fuel industry becoming a less financially viable investment option in the future;

the importance of consulting with Pension Fund members on ethical investment options;

the opportunities that investment pooling arrangements may bring for alternative investment opportunities.

*108 Applications for Admitted Body Status

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

(a) Cormac

(b) Glen Cleaning

*109 Committee Training

The County Treasurer reported that a training session would be held that afternoon for Members of the Investment and Pension Fund Committee and the Pension Board, including sessions on long term performance and the 2016 Actuarial Valuation.

*110 Dates of Future Meetings

Dates of future meetings of the Committee are published at:

https://new.devon.gov.uk/democracy/calendar/

*DENOTES DELEGATED MATTER WITH POWER TO ACT

The meeting started at 10.00am and finished at 11.20am.

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