PENSIONS PANEL 11 June 2013 Title: University of East London Presentation Report of the Divisional Director of Finance Open Report (with a private and confidential For Information appendix) Wards Affected: None Key Decision: No Report Author: Contact Details: David Dickinson, Group Manager Pensions Tel: 020 8227 2722 and Treasury E-mail: david.dickinson@lbbd.gov.uk Accountable Divisional Director: Jonathan Bunt, Divisional Director of Finance Accountable Director: Graham Farrant, Chief Executive Summary: The purpose of this report is to provide Members with supporting papers for the University of East London Presentation on a proposal by the University of East London (“UEL”) to tailor their own investment strategy to suit our specific investment objectives. The Panel is recommended: i. To note letter dated 13 May 2013 from the UEL in response to the letter dated 19 April 2013 from the Divisional Director of Finance; and ii. To agree to have a separate meeting to be arranged for late June 2013 to discuss the UEL proposal.
1. Introduction 1.1 At the 19 June 2012 meeting the Panel received a presentation from Mr Dusty Amroliwala, Pro Vice-Chancellor at the University of East London (UEL), on an outline proposal aimed at assisting UEL to manage its ongoing obligations to the Pension Fund through a bespoke investment strategy. 1.2 Mr Amroliwala explained that UEL’s funding arrangements were to change in the near future and, as a result, it was necessary for UEL to consider a range of issues which would enable it to continue as a viable, going concern. UEL’s obligations to the Pension Fund have placed a significant burden on UEL’s balance sheet. In order to reduce that burden and allow UEL to have greater surety over its ongoing obligations, UEL had taken professional advice from its appointed Pension Adviser, Mercer Limited, and had identified two alternative investment strategy options which would enable UEL to have much greater control of its assets within the overall pension Fund. 1.3 Mr Amroliwala advised that, at the current point in time, UEL was not seeking any commitment from the Panel as to the way forward but merely wished to make the Panel aware of the issues that it faced and to receive the Panel’s support to UEL undertaking more detailed feasibility work with its appointed Pension Adviser and to formally liaise with the Council’s officers and advisers. 1.4 The Panel noted the concerns expressed by Bernie Hanreck on behalf of his colleagues at UEL and agreed to the progression of discussions between the respective parties, which would be the subject of further reports to the Panel as appropriate. 1.5 Following the presentation last June, correspondence has been exchanged between officers and the UEL to discuss the proposal with a view to identifying how it could be implemented in principle. 1.6 A meeting was held on 4 February 2013 between officers, the UEL and Mercer Limited, with the key actions agreed from the meeting being: • for officers to investigate whether it would be possible for the UEL to separately identify their portion of the assets held within the fund; and • if this were possible, to separate the assets from the main fund to allow them to potentially manage them under a separate investment strategy. 1.7 A response was provided, following discussions with the Fund’s actuary, Hymans Robertson, and custodian State Street, with the response outlined in Appendix 1 of this report. 1.8 Subsequently the UEL asked to present to this Panel preferred mechanism to enable the UEL to tailor its own investment strategy to suit their specific investment objectives. 1.9 The UEL presentation seeks to provide more detail to Members on the proposal but it is not expected that a decision will be made at this meeting. The presentation will be based on the points outlined in their letter dated 13 May 2013 and included with this report as Appendix 2.
1.10 To allow Members to discuss the proposal, a separate meeting will be arranged at the Barking Town Hall towards the end of June 2013. Background Papers Used in the Preparation of the Report: None List of appendices: Appendix 1: Letter from the Divisional Director of Finance dated 19 April 2013 Appendix 2: Letter from Mr Dusty Amroliwala dated 13 May 2013
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