The Warwickshire Local Pension Board met to discuss the Warwickshire Pension Fund's governance, business plans, investments, and administration. The board was also scheduled to review regulatory and policy updates, as well as minutes from previous Pension Fund committees.

The following topics were included in the report pack for discussion:

Governance Review

A report on the governance of the Warwickshire Pension Fund was prepared by AON, an external advisor, comparing current governance arrangements against the Pensions Regulator General Code and a good governance report from the Scheme Advisory Board.

The review was commissioned by the Fund to identify areas for development and prepare for potential biennial reviews. The report noted that such reviews could have ramifications for funds that do not meet acceptable standards, potentially leading to external intervention or reorganisation.

The AON report considered compliance with the Pensions Regulator General Code. The report identified some areas rated amber or red, but found the Fund to be in a good position compared to other funds, with substantial evidence of policies already in place.

• 83% of the 318 checks were fully compliant (green)
• 14% were compliant in some but not all areas (amber)
• 3% were not currently compliant (red)

The red-rated items included:

• Recruitment Policy for Local Pension Board Members
• Conflicts of Interest
• Business Continuity
• Own Risk Assessment (ORA)
• Administration
• Publishing Board Information
• Policy for Unavailable Data

The AON report also considered the governance practices of the Fund against good practice, utilising the AON governance framework standards and having regard to the expected requirements of the Scheme Advisory Board’s Good Governance review.

The overall conclusion of this review was that the governance of the Fund is of a high standard in the vast majority of areas and demonstrates best practice in a number of areas.

Key positives:

• Good coverage of the required policies and strategies
• Good compliance with the Pensions Regulator General Code of Practice
• Good engagement at the Local Pension Board
• Generally clear and concise reports and verbal updates to pension fund committees and the Local Pension Board

Key recommendations included that the Fund considers:

• Operating a single Pensions Committee
• The question of member and employer representation in the pension fund committee (or committees).
• Updating business planning to consider a rolling 3 year or medium term planning horizon
• Updating the Terms of Reference of the Pension Committee and Local Pension Board
• Reviewing longer term training requirements for committee and board members
• Documenting a recruitment and retention policy for the Local Pension Board

Of the 176 detailed questions being considered, 57% were rated green, 30% amber, and 13% red.

An action plan was scheduled to be developed to consider which issues and recommendations are appropriate to action, prioritise those that are for action, and plan the timetabling and resourcing of them as appropriate. This plan will be brought to the Staff and Pension Committee, and will be shared with the Local Pension Board for oversight.

Business Plan Update

The Warwickshire Pension Fund Business Plan for 2024/25 was scheduled to be discussed. The plan sits alongside other key documents which govern the strategy and operations of the Warwickshire Pension Fund, including the Administration Strategy, Investment Strategy Statement and Funding Strategy Statement. All activities for 2024/25 are flagged as either completed or green (on track or ongoing). Items 26 and 29 are now recorded as Amber. Both items were due to be completed by March 2025 but are now due for completion in the 2025/26 year and are recorded in the Business Plan for 2025/26.

Of the 30 items in the business plan:

• 8 were completed
• 20 were green
• 2 were amber
• 0 were red

The Warwickshire Pension Fund Business Plan 2025/26 was also scheduled to be discussed. The Business Plan will be used to guide and direct the Fund, provide clarity and alignment on goals and objectives, and establish key initiatives for the forthcoming three financial years. The 2025/26 Business Plan has regard to that approach and the Fund will continue to consider longer term planning into the 2026/27 Business Plan development.

The 2025/26 Business Plan, as approved by the Staff and Pensions Committee in March 2025, is attached at Appendix 1.

The Fund’s fundamental objectives are that:

• Pension benefits are paid to members accurately and on time; and
• The funds are available to pay benefits when they fall due.

To do this the Fund will:

• Ensure the governance arrangements of the Pension Fund allow officers, employers, pension fund committee and Pension Board members to discharge their responsibilities efficiently and effectively;
• Deliver a high-quality pension administration service, working effectively with scheme employers and maintaining a constant focus on data quality and customer service; and
• Ensure the financial sustainability of the Fund through effective forecasting of long-term liabilities, determination and collection of appropriate contributions and generation of an appropriate risk adjusted return from the fund's investments.

Key actions and performance indicators for the Fund are organised into the categories of administration, investment, and governance / management.

Governance, Regulatory and Policy Update

The report pack included an update on governance issues affecting the Warwickshire Pension Fund, including the forward plan, risk monitoring, updated policies, training, and regulatory updates.

The forward plan operates on a rolling annual basis and covers the year ahead.

A review of the Fund’s Risk Register is conducted on a quarterly basis. During that review the inherent and residual score of each named risk is considered and amended where necessary, no risk scores have changed but risk controls, causes and consequences have been updated where appropriate.

The risk causes and consequences added since the previous review are:

• Pension Dashboard requirements not met
• Governance Failure
• Employer Risk

An interim review of the Fund’s training policy has been completed while the results from the full governance review are compiled. Updates to the policy were made to meet the requirements of the General Code of Practice.

The Admissions and Terminations Policy has been updated to include the new cessation approach for contractors without a guarantor.

A workshop was held for members of the Local Pension Board and Pension Fund Investment Sub Committee on the actuarial assumptions that will be used for the 2025 formal valuation of the Fund.

In advance of a comprehensive review of the Fund’s risk register, a training session will be arranged to cover Local Government Pension Scheme risk monitoring and risk register maintenance.

An updated Training Plan asks that each member of the Committee and Local Pension Board completes two LGPS Online Learning Academy (LOLA) modules per quarter.

Regulatory updates included:

• 2025/26 employee contribution bands
• Neonatal Care Leave (NCL) and Pay regulations
• Annual revaluation and pensions increase
• Inquiry on Artificial Intelligence in banking, pensions and other financial services.
• MHCLG plans change to revision of employer contribution rate rules.
• 2026 LGPS Governance Conference
• LGPS Fit for the Future Consultation

Pension Administration

The report pack contained an update on key developments affecting pensions administration and the performance of the Pensions Administration Service (PAS).

The take up of Member Self Service (MSS), split by different types of members, is as follows:

• Active 8,037 41.47% of active members +1.12%
• Deferred 6,573 30.28% of deferred members +0.76%
• Pensioner 5,970 35.85% of pensioners +2.42%
• Dependents 198 9.61% of dependents +0.75%

The PAS is proceeding with preparations for the switch from the current MSS system to Engage, with the aim to go live with the new system in April 2025.

Communications with members to advertise the new system will be staggered, firstly targeting members who have already registered for MSS. Communications will then be issued to members that do not currently use our portal, to advertise the new system and updated functionality.

The Engage system will be used with a multi factor sign on using the SMS messaging system, which will increase security for our member data.

9 out of 16 KPIs are meeting their target; the KPIs that are currently below target and the reasons for this are set out in paragraphs 5.4 to 5.9.

From 1 March 2024 to 28 February 2025 there were 34,126 cases created and 34,292 completed, with a 100.5% open to close variance; that is to say, the PAS has reduced the volume of outstanding work. The team currently have 3,058 tasks open across all membership categories.

There are no red breaches currently. January saw a larger number of green breaches due to one monthly data return that covered 22 employers being delayed because of an issue with the employer contribution rate. The payroll provider working on the data return is engaging with the PAS to resolve the issue.

The fund has two outstanding IDRP cases, which are currently at the second stage of the process.

Seventy-six compliments have been received by the team from the start of the financial year, which relate to a variety of areas such as breaking down complex information for members, speed of service and compassion during difficult processes.

The PAS has now completed stage one of the implementation of the Integrated Service Pathway (ISP) which will connect our administration data to the national dashboard¹. The team is working on fixing data queries that arose from the first stage of implementation. Stage two of the implementation will be completed in August. Upon completion of stage two, the PAS will have a connection to the national dashboard.

The PAS is looking at the return of data for members who hold an additional voluntary contribution (AVC). Communications have begun with both providers, Standard Life and Utmost Life, around the data return options.

The Digital Access Point (DAP) when the system will be available for use by members of the public is yet to be announced but is expected to be in 2026.

The PAS will focus on data cleansing actions in advance of connection to the national dashboard. Procurement has begun for an address and mortality tracing project. The Fund currently hold a pension regulator data score of 94% for common and scheme specific data.

Investment Update

The report pack included a general update on investment related activity, with a focus on ensuring the Fund’s commitment to alternatives and property are appropriate and that cashflow is sufficient to meet capital calls.

As at the end of December 2024, the pension portfolio had a value of £3.13bn which represents an increase of 1.7% from the previous quarter.

A key activity for the Fund remains the building up of investments in alternatives, in line with the approved Investment Strategy (Private Equity, Infrastructure, Private Debt and the new Climate Opportunities fund). Current private market investments and commitments are summarised below.

Alternatives £ invested with £ still to be Total fund managers called £'m £762,000,000 £340,000,000 £1,102,000,000 % of Total 69% 31% 100%

Since the previous quarter the Fund has transferred £20m into an Insight money market fund and £15m to a Lloyds overnight call account both of which are interest earning. It estimated that these transfers will allow the Fund to accrue interest returns estimated at £1.5m in the current calendar year.

The Fund holds actively managed equities through funds within BCPP, and passive equities managed through funds held with Legal & General Investment Management (“LGIM”). These equities carry voting rights.

The report pack included examples of votes taken by Robeco on behalf of BCPP/WPF that have gone against board/management recommendation but in line with the Fund’s voting guidelines:

• BHP Group Ltd
• YouGov Ltd

The report pack also included examples of votes taken by LGIM on behalf of BCPP/WPF that have gone against board/management recommendation but in line with the Fund’s voting guidelines by LGIM:

• Hindalco Industries Ltd
• General Mills
• AeroVironment

The Fund has committed to the BCPP Alternatives Series 3a programme: £75m in Private Equity; £10m in Infrastructure; and £30m in Private Debt.

At its meeting in June 2024, the PFISC approved a total commitment of £200m to the UK Real Estate Fund. Part of this commitment was to be funded from the Fund’s interests in Unite Student accommodation and Octopus Healthcare and agreed that the residual commitment of approximately £192m should be funded from existing investments in the Threadneedle TPEN Fund and Schroders Global Property Fund.

Warwickshire Pension Fund and another partner fund in the BCPP, North Yorkshire Pension Fund (NYPF) hold approximately 25% of the TPEN Fund and they too are looking to fund their commitment to the UK Real Estate Fund from their TPEN holdings. Warwickshire Pension Fund, NYPF and BCPP have agreed to coordinate redemptions out of the TPEN Fund to ensure an orderly exit from the Fund that does not cause significant value loss to either partner fund.

Warwickshire Pension Fund are committing to a range of between £25m and £70m to the UK Real Estate Fund.

Pension Fund Committee Minutes

The report pack included the minutes from the December 2024 meetings of the Pension Fund Investment Sub-Committee and the Staff and Pensions Committee.