Agenda item

The Committee is invited before discussing exempt appendix 3 to pass the following resolution:

The Committee, having been satisfied that the public interest would be better served by not disclosing relevant information, and in accordance with the provisions of Section 100(A)(4) of the Local Government Act 1972, RESOLVES that the public shall be excluded from the meeting for the following item(s) of business because of the likely disclosure of exempt information as defined in paragraph 3 of Part 1 of Schedule 12A of the Act as amended.

The Assistant Investments Manager presented the report. He said that the funding level had fallen 7% over the year from 85% to 78%, largely because of a fall in real gilt yields, which are used to value the liabilities. This had only been partly offset by lower inflation and better than expected investment returns.

Mr Turner commented on the Mercer investment report. He said that there were clear benefits from the changes to investment strategy that the Fund had implemented. The markets seemed to have taken the Greek crisis in their stride. There was a question about when US interest rates would begin to rise. Bond volatility had increased a great deal; it would benefit the Fund if bond prices fell, as this would reduce the liabilities. Gilt yields had risen by about 0.5% since the beginning of the quarter, which was very good for the Fund.

A Member asked about the impact of pension transfers. The Investments Manager said that there had been no applications yet to transfer out of the Fund, but such transfers could impact on cash flow, among other things, and it was an issue that needed to be monitored carefully.

RESOLVED

1. To note the information as set out in the report.

2. To note the LAPFF Quarterly Engagement Report at Appendix 4.

3. To agree minor updates to the Statement of Investment Principles (SIP) as explained in Section 11, and approve the revised SIP in Appendix 5.

4. To note the assessment on the potential impact of the 2014 budget flexibilities on the Fund’s cash flow and liabilities in Appendix 6.