The Avon Pension Fund Committee met on Friday 18 September 2026 to discuss significant governance changes, an annual climate progress update, and a review of risk management. The committee also reviewed the performance of the pension fund's administration and received updates on relevant legislation and ongoing governance matters.

Governance Changes

The committee was scheduled to consider a report on governance changes, which included revised draft documents for review and approval. These changes are a result of the Local Government Pension Scheme (Amendments) Regulations 2026, which came into force on 1 April 2026. The report outlined a new suite of documents for approval, including the Committee's Terms of Reference, Governance Strategy, Representation Policy, Training Policy, Conflicts of Interest Policy, Scheme of Delegation, and Decision Making Matrix. Key discussion points included the composition of the committee, policy on substitutes, and training requirements for members, with consequences for non-compliance. The report also detailed the proposed appointment and remuneration arrangements for the Independent Person, to be agreed by the Chair and Vice-Chair. An implementation plan was also presented, outlining key milestones for September, November, and December 2026, and March 2027.

Annual Climate Progress Update

A report was presented on the annual climate progress update, focusing on the Avon Pension Fund's Climate Position Statement. This statement aims to formally document the fund's investment beliefs and objectives regarding climate change, including its targets for achieving net zero by 2045. The report highlighted that the fund's listed equity and corporate bond portfolios were ahead of the decarbonisation pathway required to achieve net zero by 2045. However, it noted that future progress would increasingly rely on underlying company decarbonisation rather than asset allocation decisions, underscoring the importance of a robust collective approach to climate under LPPI, including active engagement with companies. The Mercer analysis, presented as Appendix 3, showed progress against climate targets, with listed equity and corporate bond portfolios materially ahead of the decarbonisation pathway. Areas for progress included stewardship and engagement, with 85% of material sectors' financed emissions subject to active engagement, and divestment targets, where further progress was required to achieve the 2030 target. The report also noted that the fund was ahead of its target for climate solutions allocation.

Risk Management Review

The committee received a quarterly review of the risk register. The report highlighted that while no risk scores had changed, a new risk, NR18 People experience loss with staff leaving and internal moves, had been added to reflect the risk of losing experience from the Fund, particularly within the Member Services Team. Mitigating actions for this new risk include active recruitment, cross-team working, and plans for further digital and process improvements. The Fund's top three risks were identified as NR06 (Loss of IT, including cyber attack & loss of power), NR10 (Failure to earn investment returns as per Funding Strategy), and NR02 (Regulatory Changes).

Pension Fund Administration Performance Report

A report was presented on the pension fund administration performance for the period up to 31 July 2026. The report indicated that 87% of cases were completed within Service Level Agreement (SLA) times in Q1, against a target of 90%. Retirement quotes were identified as an area for process improvement, with only 60-70% of quotes resulting in a member proceeding with retirement. The report also detailed a 9.4% vacancy rate within the Operations team, impacting performance, particularly in the Member Servicing team. Updates were provided on project priorities, including a focus on deferred benefit processing and retirements, and the ongoing work to comply with regulations, such as the McCloud remedy and survivor benefits.

Legislation Update

The committee was updated on the latest legislative developments affecting the Local Government Pension Scheme (LGPS). The report detailed changes following the appointment of a new Prime Minister and ministerial reshuffles, as well as the progress of the Pension Schemes Act 2026. Updates were provided on the Fit for the Future regulations, including easements in compliance timescales and supporting guidance on investment strategy statements, fund governance, and asset pooling. The report also covered the Access and Fairness consultation, with phase one changes implemented and phase two details awaited. Information on the Pensions Dashboard programme and updates on pension taxation, including Inheritance Tax, McCloud remedy, and the abolition of the Lifetime Allowance, were also presented. Finally, the report noted changes to the SCAPE discount rate and the ongoing work to implement updated actuarial factors.

Governance Update

The committee received an update on governance matters, including the Committee Workplan for the year ahead, the provisional training programme for 2026, and the quarterly monitoring report for the Fund's service plan. An action plan for compliance with The Pensions Regulator's (TPR) General Code of Practice was also presented. The training programme, refreshed by Hymans, reflects the new knowledge and skills requirements set out in the Fit for Future regulations. The service plan monitoring report detailed progress against project activities, including annual projects, regulatory work, and transformation initiatives. The TPR General Code of Practice action plan outlined ongoing actions to ensure compliance with regulatory requirements. The committee was also informed about the upcoming annual report to Council.