This meeting was about reviewing the activities and performance of the London Borough of Lewisham Pension Fund since the previous meeting. It included consideration of reports about training, accounts, risks, procurement, the Pension Regulator’s new General Code of Practice, and other general updates about the activities of the fund. A significant proportion of the meeting was also scheduled to be held in private.

General Update Part One

This was the most significant topic scheduled to be discussed during the meeting. It covered a variety of topics about the day-to-day operation of the Pension Fund.

Draft Pension Fund Annual Report

The report pack includes the draft Pension Fund accounts for 2023/24, which were published at the beginning of June 2024. The accounts were scheduled to be audited by the newly appointed auditors KPMG, with the main audit work taking place in September and October 2024. The draft accounts show that the total value of the Pension Fund increased by £180m in 2023/24 to £1.837bn. This is attributed to changes in global markets mainly caused by the lowering of inflation and better global trading forecasts.

The pack also included a draft of the Pension Fund Annual Report. This details the financial position of the Pension Fund, how its investments have performed and is intended to be a comprehensive summary of its activities, enabling the public to understand how the fund is managed. Both the Annual Report and the audited accounts were scheduled to be presented to the Pension Investment Committee on 20 November 2024.

Procurement of Actuarial, Governance and Advisory Services

The invitation to tender for these services was published on 20 August 2024 using the National LGPS framework. The closing date for submissions was 4 October 2024, with the new contract expected to start on 1 December 2024.

Risk Register

The Pension Investment Committee is responsible for reviewing the Pension Fund’s Risk Register every six months. However, the two most recent meetings of the committee were cancelled because of restrictions in place during the pre-election period. The Risk Register was reviewed by members of the Pension Investment Committee on 19 September 2024, with any comments made being recorded in the meeting minutes.

The report pack describes the purpose of the Risk Register as follows:

Its design is based on a template provided by the Pensions Regulator. Risk ratings fall into four categories: RISK NUMBER CATEGORY HOW THE RISK SHOULD BE MANAGED OF RISKS Red 0 (16-25) Immediate action required, senior management involved Amber/Red Senior management attention needed and 7 (10-15) management responsibility specified Amber/Green Manage by specific monitoring or response 21 procedures (5-9) 8 Green Manage by routine procedures, unlikely to need specific or significant application of resources (1-4)

The report pack also details a number of changes made to the risk ratings of individual risks within the Register. The risk score for Environmental Social and Governance risk was increased from 4 to 9. This is because:

by following investments that meet higher ESG criteria (protection of consumers, labour rights, diversity and inclusion policies, human rights, health and safety etc.) there is a risk that the pension fund will obtain lower investment returns.

The risk rating for Financial Risk was reduced from 9 to 4. This is because the fund has a new policy and procedures for reporting late payment of contributions to personal pension schemes, and the fact that Lewisham Homes transferred its staff to the Council in October 2023, meaning that:

[Lewisham Homes is] the biggest external employer in the fund... which has further reduced the risk of pension payment failures.

The risk rating for Fraud or Fraudulent Behaviour was also reduced from 6 to 3. This is because:

the recent internal and external audits have not required the management to make any changes to its current working practices and procedures therefore we have confidence that this is being monitored satisfactorily.

Annual Business Plan

The Annual Business Plan sets out the major milestones for the fund in 2024/25 and lists the policies and reports that will be presented to the Pension Investment Committee during the year. It also lists all of the fund’s policies with their review dates.

The Pension Investment Committee is responsible for reviewing the Annual Business Plan each June, however, this year’s meeting was cancelled because of the pre-election period. The Annual Business Plan was instead reviewed by the members of the Pension Investment Committee on 19 September 2024.

The Annual Business Plan lists the following milestones for the 2024/25 financial year:

Milestone Date Review and Evaluation of the Business Plan September 2024 Administration Strategy November 2024 Data Improvement Plan November 2024 Engagement Policy September/November 2024 Draft Pension Fund Accounts presented November 2024 Approval of the Pension Fund Annual Report November 2024 Actuarial and advisory procurement contract Sept – Nov 2024

The plan also included a commitment to reporting on the performance of fund managers each quarter, reviewing the Net Zero Pathway Report and Climate Risk Report in September 2024, and holding training sessions for committee members. The business plan also lists the following targets for the administration of the Pension Investment Committee:

• Members to attend at least 75% of Pension Committee meetings each year. • Draft committee minutes to be issued within seven weeks of a meeting • Committee papers to be sent out at least five working days before a meeting. • To regularly review and agree changes to strategy/policy documents. All strategy/policy documents will be considered by Committee at least every three years, even if no changes are recommended.

The Pension Regulator’s General Code of Practice

This topic was the second most significant issue scheduled to be discussed during the meeting. It concerned a report about the Pension Regulator’s new General Code of Practice, which came into effect in March 2024. It described some of the new requirements contained in the Code, including:

New obligations include a requirement to establish an effective system of governance (ESOG) and, for schemes with 100 members or more, to complete their own risk assessment (ORA) to examine the effectiveness of the ESOG, note any risks and determine how these potential risks are mitigated.

It also described the steps officers had already taken to comply with the new requirements, including the use of a “GCOP tool checker”, purchased from Hymans Robertson. The tool had identified areas where the fund was fully compliant, but had also shown that further work is needed in other areas.

The Pension Board was scheduled to receive the GCOP tool checker in December, along with a report being presented to the Pension Investment Committee on 20 November 2024 setting out:

The GCOP Action Plan with associated timescales...

Training Log

This item concerned a report providing an update on the training log for members of the Pension Board between March 2022 and September 2024. The report pack included a list of training courses attended by the Chair of the Pension Board, Stephen Warren, the Employer Representatives Sherene Russell-Alexander and Mark Booker, and the Scheme Representatives Mark Adu-Brobbey and Gary Cummins. It also included a list of suggested training events and conferences, with details of dates, locations, cost and website links.

Actions Log

The report pack included a list of rolling actions to be taken by the Pension Board following previous meetings. It listed the actions, who was responsible for them, a description of any comments made about them, the expected completion date, and whether they had been completed.

Breaches Log

The report pack included a note that there were no breaches to report.

General Update Part Two

This part of the meeting was scheduled to be held in private. The report pack describes the grounds for excluding the press and public from this part of the meeting as follows:

It is recommended that under Section 100(A)(4) of the Local Government Act 1972, the press and public be excluded from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information as defined in paragraphs 3, 4 and 5 of Part 1 of Schedule 12(A) of the Act, as amended by the Local Authorities (Executive Arrangements) (Access to Information) (Amendments) (England) Regulations 2006:- Item 11. General Update – Part Two s:\msb\word\teams\msb\newcttee\open\o&sbuspan\2019\18 june\item 7 exclusion of the press and public.doc

Work Programme

This concerned a report about the Pension Board’s Work Programme. It listed the operational and strategic tasks scheduled for the Board over the next four quarters. This included an update on the Pension Fund’s Statement of Accounts and Annual Report, monitoring investment performance, reviewing the arrangements for pooling the Fund’s assets, considering the Risk Register, reviewing the Data Improvement Plan, the Administration Strategy and the Annual Business Plan, reviewing the Terms of Reference and Membership of the Board, and receiving updates about the Pension Regulator’s Code of Practice.

Declarations of Interest

The report pack includes a reminder that members of the Pension Board are required to declare any personal interests they have in any item on the meeting agenda. There are three types of interest:

(1) Disclosable pecuniary interests (2) Other registerable interests (3) Non-registerable interests.

The report pack explains each type of interest, the requirements for declaring them, and what impact declaring an interest has on a member’s ability to participate in the discussion and vote on a decision.