This meeting was scheduled to discuss the Local Government Pension Scheme (England and Wales): Fit for the Future consultation, the appointment of a new Independent Advisor, and a number of training and risk management issues. It also received a verbal report on the most recent valuation of the Pension Fund.

Local Government Pension Scheme: Fit for the Future Consultation

The committee were scheduled to be provided with information about the Local Government Pension Scheme (England and Wales): Fit for the Future consultation, and the Council's response to it. The consultation sought views from stakeholders on three key areas. These included potential reforms to the way in which Local Government Pension Schemes (LGPSs) invest using pooled funds, including setting new requirements for schemes to set out a target range for investment in their local area, and making it compulsory for schemes to delegate all investment decisions to the pooled fund they use. The second area the consultation asked for feedback on was how to encourage greater local investment by LGPS funds, and the third was about how to improve the governance of LGPS funds, including requiring each administering authority to publish a governance and training strategy that includes a conflict of interest policy, and requiring each administering authority to appoint a senior LGPS officer with overall delegated responsibility for managing and administering the scheme. The committee were scheduled to note that the Council submitted a response to the consultation on 16 January 2025.

Appointment of Independent Advisor

The Committee were scheduled to be asked to ratify the decision to reappoint John Raisin Services Ltd as Independent Advisor to the Pension Fund. The Council originally appointed John Raisin Financial Services Ltd for three years from 16 November 2017, and extended the contract to September 2023. The contract has been rolling since then with the agreement of the committee. A procurement process to appoint a new Independent Advisor began in January 2025, and four eligible applications were received before the closing date of 19 February 2025. The preferred supplier chosen using the scoring criteria, and approved by the Strategic Director of Resources and the Chair of the Pension Committee, was John Raisin Services Ltd.

Redemption of Darwin LPF holdings

The committee was scheduled to be asked to make an in principle decision to redeem the Council's remaining K unit holdings in the Darwin LPF fund, and delegate to officers the creation of a redemption plan. The committee had already agreed to redeem its D unit holdings in the fund in June 2024, and submitted a redemption request to Darwin on 20 November 2024. Darwin notified the Council that the request had been deferred in line with the prospectus, and that its board would be in touch shortly to discuss the redemption. The report notes:

The recommendation following the Q3 performance further decline we believe it could be prudent to submit a redemption request for the K units, subject to discussions with Darwin about how they intend to meet the existing redemption request.

Rebalancing framework

The committee were scheduled to be asked to agree to a new rebalancing framework and policy. If the total amount invested in equities and fixed income exceeded the target allocation, there had previously been no effective way to rebalance the fund, and if the Council had excess cash, it was difficult to invest without increasing existing overweight positions. Because the Diversified Growth Funds are now part of the 'Alternatives' bucket¹ of the fund, it is now possible to use them to implement an effective rebalancing mechanism. The report stated:

The recommended Rebalancing Framework and Policy is attached in appendix1 is approved, to provide Officers with delegated authority, and a pre-specified framework, to be able implement rebalancing in the future

Investment of surplus cash

The committee was scheduled to be asked to agree to invest surplus cash balances in the Diversified Growth Funds, and to delegate the decision of how to do so to officers. After agreeing that a balance of £20 million was a prudent amount to retain in the Pension Fund bank account, officers estimated that the surplus as of 28 February 2025 was £44 million.

Training Report

The committee was scheduled to be asked to note the Hymans Training Summary, and for those members who had not already done so, to complete their Training Needs Assessments so that a formal plan could be developed. The report also described the Hymans online training modules that are available to committee members, board members and officers.

The Hymans training covers most of the generic area’s within the required training, but does not cover WF pension fund specific information. These modules were refreshed during 2024 and new modules added along with the opportunity to attend live sessions, recordings of these sessions are also available to view on the portal.

Risk Report

The committee was scheduled to note the Risk Register, and were to be provided with a detailed overview of the four risks that are currently flagged as amber:

• Funding Risk
• Investment Pooling Risk
• Manager Performance Risk
• Responsible Investment, Environmental, Social and Governance (ESG) Risk

Pension Fund Expenses

The committee were scheduled to be asked to agree a new expenses budget for 2025/26 of £2.099 million, to delegate responsibility for all spending decisions on this budget to the Strategic Director of Resources, and to agree that the budget be monitored on a quarterly basis. The 2024/25 outturn for expenses was £2.225 million, so the proposed new budget would be a decrease of £125,309. The report explained that this had been achieved through negotiation with external advisors, a reduction in the scope of reports produced, and the end of several projects, partially offset by CPI increases to other costs.

The Pensions Regulator General Code of Practice

The committee was scheduled to be provided with an update about the Pension Regulator's new General Code of Practice, which came into force on 27 March 2024, and the Pension Fund's compliance with it. The report notes:

Although this new Code is 171 pages long it is significantly shorter than the ten codes it replaces. The General Code includes content which is both updated and new.

The committee was scheduled to be asked to agree to an action plan to address any areas where further work was required to achieve full compliance with the code.

External Audit Update

The committee was scheduled to be updated on the progress of the four outstanding external audits for 2020/21, 2021/22, 2022/23, and 2023/24. The committee was scheduled to be told that the accounts for 2020/21, 2021/22 and 2022/23 have been signed off by Ernest and Young, and that KPMG, the new external auditors, have signed off the 2023/24 accounts. The report notes that:

There were no material changes to the draft accounts provided.

Pension Fund Administration Services

The committee was scheduled to receive an update about the Council's pension administration partnership with the Pension Shared Service. The committee were scheduled to note that overall performance was ahead of target, with a score of 99.7% compared to a target of 96.72%. The report also contained the results of the most recent TPR data quality tests, which scored 95.9% for common data and 86.1% for scheme-specific data.

Investment Performance

The committee was scheduled to be updated on the performance of the fund’s investments. As of 31 December 2024 the Pension Fund investments were valued at £1,131.6 million, an increase of £31.1 million since the end of the previous quarter. The report noted that the fund returned 2.9% in the quarter to 31 December 2024, underperforming the benchmark of 3.6% by 0.7%. The report explained that:

Over the 12 months to 31 December 2024 the fund returned 9.9% underperforming the benchmark of 14.1% by 4.2%, mainly due to the drag on returns from the LCIV Global Alpha Growth Paris Aligned Fund LCIV Global Equities Focus Fund, LCIV Emerging Market Equity, Darwin Property Leisure Fund and other illiquid assets.

The committee was also scheduled to receive commentary on the performance of the individual fund managers. For example, the report noted that the Darwin Leisure Property Fund had seen a serious performance issue, with an annualised return of -19.6% over the three years to 31 December 2024. The committee was scheduled to be told that officers, the Independent Advisor, and Mercer met with a number of the fund managers during the quarter, including GIP, Newton, Nordea, UBS, London CIV and Invesco. The committee was scheduled to note that they had invited London CIV to the March meeting.

Verbal reports

The committee was also scheduled to receive verbal reports on the following topics:

• Options for Investment
• Divestment discussion
• Valuation