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Social Security (Reserve) Fund - investment strategy

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A decision made 16 December 2009 regarding: Social Security (Reserve) Fund - investment strategy.

Decision Reference:  MD-TR-2009-0194

Decision Summary Title:

Amended Investment Strategy for the  Social Security (Reserve) Fund

Date of Decision Summary:

9th December 2009

Decision Summary Author:

Strategic Investments Manager, Treasury

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

N/A

Person Giving

Oral Report:

N/A

Written Report

Title:

Amended Investment Strategy for the Social Security (Reserve) Fund

Date of Written Report:

9th December 2009

Written Report Author:

Strategic Investments Manager, Treasury

Written Report :

Public or Exempt?

Public

Subject: Social Security (Reserve) Fund – Investment Strategy

Decision(s):The Minister for Treasury and Resources decided to amend the Investment Strategy for the Social Security (Reserve) Fund (see Appendix A) and present this investment Strategy to the States for information.

Reason(s) for Decision:

The Social Security (Reserve) Fund was created under the Social Security (Jersey) Law 1974 (Article 31) with the purpose of being a buffer to deal with the longer term funding of the state pension for islanders. The Minister for Treasury and Resources is responsible for the development and maintenance of the investment strategy in consultation with the Social Security Minister. 

The Treasury and Resources Minister has consulted with the Minister for Social Security about amending the existing Investment Strategy for the Social Security (Reserve) Fund and it has been decided that the attached revised investment strategy should be adopted. (see Appendix A.)  

The decision has been made based upon the Treasury and Resources Minister taking appropriate investment advice from the States Investment Advisor.

Resource Implications:

None, other than those indicated in the attached report.

Action required:

Greffier of the States to be requested to present attached Investment Strategy (Appendix A) to the States at the earliest opportunity.

Signature: 
 

Position: Senator P F C Ozouf, Minister for Treasury and Resources

Date Signed:

Date of Decision:

Social Security (Reserve) Fund - investment strategy

TREASURY AND RESOURCES department  

THE SOCIAL SECURITY (RESERVE) FUND INVESTMENT STRATEGY  
 

  1. Purpose of Report

For the Minister of Treasury and Resources to decide to amend the existing investment strategy for the Social Security (Reserve) Fund and for it to be presented to the States.  

  1. Background

 

The Social Security (Reserve) Fund was created under the Social Security (Jersey) Law 1974 (Article 31) with the purpose of being a buffer to deal with the longer term funding of the state pension for islanders. The Minister for Treasury and Resources is responsible for the development and maintenance of the investment strategy in consultation with the Social Security Minister. 
 

  1. Current Situation and Proposal

 

The Treasury and Resources Minister has consulted with the Minister for Social Security about amending the existing Investment Strategy for the Social Security (Reserve) Fund in relation to increasing the asset class control ranges for the fund and it has been decided that the attached revised investment strategy should be adopted. (Appendix A.)  

The Strategic Aim remains unchanged for the fund. The reason for changing the asset class control ranges, are to prevent the fund from suffering constant dealing costs by frequently rebalancing the ranges in order to stay within the tight control ranges under current market conditions. The proposed range changes are as follows:- 

Proposed Range  Current Range

Equities     65 – 90   70 - 90

Property       0 – 15     0 - 15

Bonds/Cash       5 – 35     5 - 22 

 
The decision has been made based upon the Treasury and Resources Minister taking appropriate investment advice from the States Investment Advisor (Hewitt). The Investment Adviser has advised the following:- 

“The revised control ranges allow for a reduction in the equity allocation, and the consequent increase to the bond/cash sector on a tactical basis, as well as accommodating the changes in the percentage allocations to both equities and bonds as a result of short term changes in the market levels of these asset classes.” 
 

  1. Recommendation

It is recommended to approve the revised asset class ranges and to present the revised strategy to the States for information. (Appendix A) 
 

Strategic Investments Manager

Treasury & Resources Department

 

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