The Pension Board noted the Council's progress in complying with The Pension Regulator's General Code of Practice, reviewed the training records of the Board Members and the Council's proposed Business Plan. They also noted the performance of the investments managed on behalf of the Fund, and discussed the potential impact of new pooling legislation on the Fund's current investment strategy.

The Pension Regulator's General Code of Practice

The Board received a report on the The Pension Regulator’s General Code of Practice. The Board welcomed the steps the Council had taken so far to ensure it would be compliant with the new code by March 2025. In particular, they noted the purchase of a tool checker from Hymans Robertson, the Council's pensions advisors, to identify the areas where it was not yet fully compliant. They requested a full report in December that would detail the findings of the tool checker and the Council's evaluation of the actions it had already taken to become compliant and the actions it was planning to take. They noted that the two main areas for improvement identified by the tool checker were the Council's Administration Strategy and Data Improvement Plan.

Work Programme

The Board reviewed its current Work Programme up to Quarter 2, June 2025.

Training Log and Forthcoming Training and Events

The Board noted the training log detailing the training undertaken by Members of the Board. The Treasury and Investment Manager requested that Members should notify the Council if they had attended any training events not already included in the log. This was because the Council was required to record this information in the Annual Report. The Treasury and Investment Manager also said that the training being reviewed for the members of the Pension Investment Committee would also be offered to members of the Pension Board. The Board noted that the training log did not contain any records of training undertaken by Mark Booker, and the Treasury and Investment Manager agreed to update the log to record that Mr Booker had completed and passed the core modules of the Pension Regulator's Toolkit.

General Update - Part One

The Board received an update on several general matters that had arisen since the previous meeting.

Pension Fund Accounts and Draft Pension Fund Annual Report

The new auditors, KPMG, expected to complete the audit of the pension fund accounts by the end of October 2024, but the final sign-off might be November or December. The deadline to publish the Pension Fund Annual Report was 1 December 2024. The value of the funds had increased to £1.8bn in the year ending 31 March 2024, reversing the falls in value that had taken place in previous years as a result of the COVID-19 pandemic and the war in Ukraine.

The Chair noted the Annual Report contained a lot of information, but it appeared information had been added incrementally as the order did not seem coherent.

The Chair suggested that for next year's report it may be worthwhile to review the report's structure and style.

Procurement of Actuarial, Governance and Advisory Services

The procurement process for actuarial, governance and advisory services had started. The deadline for submissions to the tender was 4 October 2024. The new contract would start from 1 December 2024.

Risk Register

The risk register had been updated to include tracked changes to highlight where amendments and updates had been made.

The Chair requested, that alongside the report on the Development Improvement Plan in December, the Board would also be provided with information on the implications of the new legislation and the actions already taken and the risk register to be updated, where necessary.

Business Plan 2024/25

The draft Business Plan for 2024/25 had been presented to the Pension Investment Committee on 19 September 2024. The Business Plan sets out what the Committee intended to review during the year, including the General Code of Practice.

The Business Plan proposed that:

Draft committee minutes to be issued within seven weeks of a meeting.

The Chair proposed that this timeline be revised to one week for actions and two weeks for minutes.

General Update - Part Two

Pension Administration

The transfer of staff from Lewisham Homes to the Council on 1 October 2023 had increased the workload of the Pensions Team. The Team had produced the Annual Benefit Statements for 2024, and the audit by the new auditors, KPMG, was ongoing. The Team had purchased the Heywood ISP service. The first phase of work on this service was scheduled to take place in November 2024. The Insights reporting tool was now up and running, and this had provided a greater ability to pick up more data.

The Chair asked the Head of Payroll and Pensions if she was satisfied that the risks to which the scheme was exposed were adequately reflected in the risk register. The Head of Payroll and Pensions advised the risk may be on resources.

Quarter 2 Investment Performance Report

The Treasury and Investment Manager advised that the Quarter 2 Investment Performance Report had been presented to the Pensions Investment Committee and was presented to the Pension Board for information.

Pooling Considerations

The Conservative Government had proposed that local authorities should look to pool more of their investments into bigger funds. This policy had been continued by the new Labour Government, which had said that local authorities may be required to invest through the London Collective Investment Vehicle (LCIV). The Government wanted to use some of the money in the pension fund to invest in the UK. This was likely to cause issues with fiduciary duty on return on investment.

Government had asked authorities for more consultation feedback which would take place week commencing 23 September.

The Treasury and Investment Manager noted that if the council was forced to pool, it may have to sell its equity investments such as Storebrand which could lead to losses from selling before the investment matures and additional fees from transition costs.

The Pension Investment Committee delayed not making a decision on the Harbourvest investment due to anticipated rule changes. An update would be presented to the Pension Board at a later date.

Climate Risk and Net Zero Action Plan

The Treasury and Investment Manager advised that the Pension Investment Committee had agreed a Transition to Net Zero Policy last year. Hymans Robertson carried out an evaluation of carbon reduction each year.

The Treasury and Investment Manager reported good progress in Scope 1 and 2 emissions reduction, and said that Hymans Robertson was confident that the Council would reach its target of 90% reduction in moving equities to low carbon funds. However, there was still work to do in some other areas, and an action plan would be produced that would link with the engagement plan and meetings with fund managers.

Engagement Policy

The draft Engagement Policy had been presented to the Pension Investment Committee in February 2024. The Committee was asked if the Council could start talks with Storebrand and the LCIV. Meetings with Fund Managers would be set up to establish direct engagement. The Government had not yet set a timescale but had said that by March 2025 an explanation would be required as to why the council had not put its investments into pools.

The Chair asked how the council would respond to policy statements from Government that were not actual legislation and asked whether the council was satisfied that in the Annual Report there was sufficient information to explain where they were on the journey, and the challenges in implementation.

The Treasury and Investment Manager advised that the Annual Report had been drafted before the Government’s recent statement; the Annual Report could be amended to provide more information on the direction of travel.