Agenda item

Ann Berresford, Carolan Dobson and Tony Earnshaw withdrew from the meeting in accordance with their declarations of interest.

The Head of Business, Finance and Pensions presented the report. He reminded Members that the appointment of two Independent Members with voting rights had been a feature of the Fund’s governance arrangements since 2006. The Independent Members had been initially appointed for 2.5 years until June 2009, and then for a full four-year term ending in June 2013, so that the appointments would provide continuity over the Council’s electoral cycle. As the Fund would experience wide-ranging changes over the next few years, it was proposed that it would be beneficial to have some continuity of independent trusteeship over this period. (Governance guidelines suggest that independent members should not be appointed for more than nine or ten years in total, because of the risk of them losing their independence). One Independent Member had indicated a wish to be reappointed for a new full term, whilst the other would be happy to continue for the short term if so appointed. Recruitment of Independent Members is a lengthy process, and would need to be started well before the end of existing appointments.

One option debated was to extend until the end of 2013 the term of the Independent Member not wishing to be reappointed for a full term, when the Strategic Investment Review and valuation should have been concluded, thus providing the necessary continuity. Turning to the Independent Investment Advisor, he said that the current post-holder had been appointed for a three-year term due to expire in October 2012. The appointment had been made before the appointment of JLT as the Fund’s investment consultant, and it appeared that it was not common for LGPS funds to have both independent consultants and independent advisors.

The Chair suggested that in future the appointments of the two Independent Members could be staggered, to reduce the risk of losing both at the same time. This would be facilitated by extending one of the appointments to the end of 2013, with the other staying for a further term. The Committee would then have the benefit of the experience of both the current Independent Members during the next valuation cycle.

There was a debate about whether or not to extend the current term for one Independent Member to the end of 2013 in order to retain their experience over the triennial valuation, following which it was agreed that the term for the one Independent Member should not be extended.

Members then discussed the role of the Independent Investment Advisor. The Chair noted that the recommendation was to extend the current appointment to November 2013. The Investments Manager said that the review of the Investment Strategy would commence in October or November of this year, and that it was hoped to complete it by November 2013. The Chair suggested that “or until the conclusion of the review of the Investment Strategy, if later” should be added to the recommendation at 2.1. Members agreed. The Vice-Chair and Chair of the Investment Panel said that because of the uncertainties facing the Fund over the next couple of years, additional independent advice during this period would be valuable, though he would not wish to suggest that the post should continue indefinitely. A Member asked whether it was the role of the Independent Advisor to provide more than just investment advice. The Investment Manager said that the role was to provide independent investment advice to Members, and, if necessary, to challenge the advice given by officers and the investment consultants. Mr Finch commented that he knew of other local authority pension funds which retained an independent advisor in addition to investment consultants. The Chair suggested that Committee should give weight to the view of the Chair of the Investment Panel about the value of the Independent Advisor in the short term.

After discussion it was RESOLVED:

(i)  that one of the Independent Members should be re-appointed for a further term of four years and that the appointment of the other should terminate, as planned, in June 2013;

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(ii)  that the Chair and Vice-Chair in consultation with officers should arrange a recruitment process to commence in 2012 to recruit a new Independent Member;

(iii)that the appointment of the Independent Investment Advisor should be extended to November 2013 or to the conclusion of the review of Investment Strategy, if later.