Issue - meetings

(a)        The Committee noted the updated funding and hedging position for the Fund and the        progress being made on the various elements of the Risk Management Framework; and

(b)        The Committee noted the new dynamic equity protection strategy now in place which puts the Fund in a good strategic position in the run up to the next Actuarial Valuation.

The Chairman handed this item of the agenda over to Mr Middleman. He stated that the estimated funding level was 92% at the end of May which was ahead of target by 12%. Mr Middleman reminded the Committee on the following key points;

• The Flightpath critically involves managing risk and getting better outcomes for Funds in terms of employer contribution rates.  This is critical as to why we are doing all the work currently on updating the equity protection.
• The FRMG have looked at different options on the equity protection and concluded a more dynamic strategy gives a better risk adjusted return and protection for the funding position in most scenarios.
• After discussing the approach with various parties it has been decided that the structure will be rolled on a daily rolling basis using a counterparty investment bank (JP Morgan).  Mercer advised that this was the best option overall (in terms of value for money, flexibility and capability) after discussing with a number of parties.
• This will still be through the Insight investment vehicle and therefore as part of the Flightpath structure and was implemented on 24^th May.
• Further details and training on the new strategy would be provided to the committee over the next few meetings as part of the training plan.

In terms of the Flightpath strategy, Councillor Llewelyn Jones asked for clarification in regards to the pooling of the strategy.

Mr Middleman agreed with Councillor Llewelyn Jones point on the complexity of the flightpath and it is important that WPP could accommodate the strategy before it was made part of the pool. This is some way off and due diligence on the approach to this would be required before it should be agreed to transition it into the pool.  This was recognised by the pool operator as dialogue has been ongoing from the start.

RESOLVED:

(a)        The Committee noted the updated funding and hedging position for the Fund and the        progress being made on the various elements of the Risk Management Framework; and

(b)        The Committee noted the new dynamic equity protection strategy now in place which puts the Fund in a good strategic position in the run up to the next Actuarial Valuation.