This meeting of Hackney Council's Pensions Committee included training for the Committee Members on several topics, a quarterly update on the Pension Fund's performance and the ongoing work to produce a new business plan. It also included discussion of responsible investment matters and an update on the work of the Responsible Investment Working Group.

Training for Committee Members

The meeting started with training on contribution rate modelling for employers in the scheme. This was provided by Hymans Robertson, the Fund's Actuary. The training covered:

The Committee’s fiduciary duty to obtain an actuarial valuation of the assets and liabilities of the pension fund as at 31 March 2025, a report by an actuary in respect of the valuation and a rates and adjustments certificate prepared by an actuary. ¹

The training covered the Hackney Pension Fund's current funding strategy, a review of that strategy, the outlook for other employers in the scheme, and the modelling of Hackney Council's own employer contribution rate.

The meeting also included a presentation by Joanne Donnelly of the Local Government Association (LGA) about the work of the Scheme Advisory Board (SAB). The presentation covered the SAB’s recent publication of legal advice about the Local Government Pension Scheme (LGPS) and the implications of the situation in Gaza. The LGA also provided training on the fiduciary duty of Pensions Committees in the context of the LGPS, the role of the Pensions Committee and future developments in the LGPS.

High Level Monitoring Report

The report pack included a report on high level monitoring of the Pension Fund. The report covered the work that is being done to produce a refreshed business plan for the fund, and provided an update on the Fund’s strategic objectives scorecard, risk register and breaches register.

Draft Business Plan 2024-26

This item introduced the process for developing a new business plan for the Pension Fund covering the 3 years from 2024/25 to 2026/27. The plan will set out the key tasks that the Fund needs to undertake in order to achieve its objectives.

The primary objectives, as set out in the report pack, are:

Governance Objectives

● aim to act in the best interests of the Fund’s members and employers. ● have robust governance arrangements in place, to facilitate informed decision making in a transparent manner, supported by appropriate advice, policies and strategies. ● Ensure that the London Borough of Hackney Pension Fund is appropriately managed and that its services are delivered by people who have the requisite knowledge and skills. ● Act with integrity and be accountable to our stakeholders for our decisions, ensuring they are robust and well based. ● Understand and monitor risk. ● Ensure compliance with the appropriate legislation and statutory guidance, and to act in the spirit of other relevant guidelines and best practice guidance. ● Clearly articulate our objectives and how we intend to achieve those objectives through business planning, and we will continually measure and monitor success. ● Ensure the confidentiality, integrity and accessibility of the Fund's data, systems and services are protected and preserved.

Funding Objectives

● Take a prudent long-term view to secure the regulatory requirement for long-term solvency, with sufficient funds to pay benefits to members and their dependants. ● Use a balanced investment strategy to minimise long-term cash contributions from employers and meet the regulatory requirement for long-term cost efficiency. ● Where appropriate, ensure stable employer contribution rates. ● Reflect different employers’ characteristics to set their contribution rates, using a transparent funding strategy. ● Use reasonable measures to reduce the risk of an employer defaulting on its pension.

Investment Objectives

● Set an appropriate investment strategy so as to: ● Achieve an expected return in excess of the return required by the Fund’s triennial valuation and Funding Strategy Statement. ● Achieve a VaR 95 of < 13.5%. Value-at-Risk 95% (VaR 95) is a risk metric which measures the minimum expected decrease in assets in a downside scenario that has a 5% chance of occurring. This metric allows the Fund to quantify a potential downside scenario with respect to the impact on the assets. 13.5% is intended as a soft limit to assist the Fund in setting an appropriate risk budget. ● Ensure expected liability outflows are broadly covered by asset income.This is measured by the proportion of assets in income distributing mandates and the proportion of cash outflows expected to be matched over the next 5 years. ● Aim to achieve net zero emissions by 2040 and set appropriate interim targets to assist in achieving this. ● Increase local or “levelling up” investments to 5% over time. ● Aim to implement asset allocation decisions via the London CIV (the Fund’s asset pool) where appropriate and will monitor the proportion of Fund assets invested via the pool accordingly. ● Monitor the funding level through the triennial valuation and ongoing monitoring processes. ● Ensure that the Fund continues to invest responsibly taking account of environmental, social and governance issues, whilst adhering to its overarching fiduciary duties. Specifically, to ensure that the following investment beliefs are incorporated into the Committee’s decision-making: ● Environmental, social and corporate governance issues can have a material impact on the long-term performance of investments; ● The UN Sustainable Development Goals highlight investment risks and potential opportunities as well as areas in which asset owners can have a positive impact; ● Engagement with managers, and through them with investee companies, can have a material impact on progress towards the chosen goals as well as on investment performance; and ● Responsible investment is relevant to the performance of the entire Fund across asset classes.

Administration Objectives

● Deliver an efficient, quality and value for money service to its scheme employers and scheme members ● Ensure payment of accurate benefits and collect the correct contribution from the right people in a timely manner. ● Ensure the Fund’s employers are aware of and understand their role and responsibilities under the LGPS regulations and in the delivery of the administration function. ● Maintain accurate records and communicate all information and data accurately, and in a timely and secure manner. ● Set out clear roles and responsibilities for the Council and Equiniti and work together to provide a seamless service to scheme employers and scheme members. ● Continuously review and improve service provided.

Communication Objectives

● Promote the scheme as a valuable benefit and provide sufficient and up to date information so members can make informed decisions about their benefits. ● Communicate in a plain language style ● Ensure the Fund uses the most appropriate means of communicating, taking into account the different needs of different stakeholders. ● Look for efficiencies in delivering communication including greater use of technology ● Evaluate the effectiveness of communications and shape future communications appropriately.

The meeting included a discussion of the process that will be used to develop the plan, a consideration of the draft objectives, and agreement on the next steps in the process.

Quarterly Update Report

The Committee was provided with a quarterly update report that covered governance matters, a summary of the market activity during the quarter, the Fund’s investment performance update, and an administration and communications update.

This report included discussion of the London Collective Investment Vehicle’s (LCIV) Emerging Market Equity, Sustainable Equities, Global Alpha Growth Paris Aligned and Multi-Asset Credit (MAC) Funds.

The report also included an update on the work of the Fund’s Responsible Investment Working Group, which is the subject of a separate report to this meeting.

The report concluded with a pensions administration and communications update covering the transition to the new administration partner - the Local Pensions Partnership Administration (LPPA), the McCloud remedy, Pension Saving Statements, Annual Benefit Statements, training and other administrative matters.