Issue - meetings

Report attached.

Officers informed the Committee that they had undertaken a review of the performance of the Pension Fund’s Custodian, State Street. State Street had performed the role of Custodian since 31 December 2004. The role of the Global Custodian falls in to two main categories:

·         Safe Keeping and Custody; and

·         Investment Accounting and Reporting.

·                     Safe Keeping and Custody

This referred to the maintenance of accurate records and certificates of the ownership of stock and ensuring that dividend income and other distributions were received appropriately. The Custodian had also managed the tax position of the fund, claiming back any recoverable overseas, withholding tax paid on dividends received and maintaining the tax records of the fund.

·                     Investment Accounting and Reporting

State Street had produced accounting reports that were similar to those produced by the fund’s investment managers. They had kept a record of the book costs and the holdings in the various asset classes and had also provided an independent market valuation of the fund. This has been done for each of the investment managers’ portfolio as well as at the total fund level. State Street records have, therefore, been considered to be master records and these records had been used for producing the accounts. Reports currently produced by State Street had been in a format that could be used to comply with the International Financial Reporting Standards (IFRS).

Performance had been reviewed against a number of set criteria and officers had indicated that they were satisfied with the safe keeping and custody functions provided by State Street custodians and had been pleased with the investment accounting and reporting functions.

Officers had identified issues with a number of reconciliations, however, they were confident that these could be resolved with State Street.

The Committee have been advised that the cost of the custodian service has been reduced in recent years due to the fund’s use of pooled funds which consequently have reduced the custody and transaction changes.

The Committee noted the report.