The Pension Fund Committee for Durham County Council convened to discuss the overall value and performance of the pension fund, review the Local Pension Board’s annual report, and consider a regulatory update, as well as review the Pension Fund's Service Plan for the coming three-year period. The committee also planned to discuss the internal audit plan, and the external audit strategy. Some items, particularly those concerning commercially sensitive investment information, were scheduled to be discussed in a closed session, excluding the public.

Regulatory Update

The committee was scheduled to receive a briefing on recent developments affecting the Local Government Pension Scheme (LGPS), as well as broader matters of interest.

Items for discussion included:

• The Levelling Up White Paper, specifically concerning LGPS local investment plans. The report pack noted that the Pension Fund had already committed capital to an impact investment in the North-East to support SME finance in the region.
• A consultation on the LGPS, and the next steps on investments. The report pack noted that the Fund had responded to the consultation, and worked with pooling partners to formulate a collective response.
• HM Treasury's Pensions Review, and the terms of reference for phase one.
• A consultation on changes to the LGPS, intended to improve fairness and access.
• A review of the LGPS 2022 fund valuations, and preparations for the 2025 valuation. The report pack noted that work was underway to prepare for the 2025 triennial valuation, and officers would consider the implications of revisions to guidance on producing the Funding Strategy Statement (FSS).
• Mandatory Taskforce on Climate-related Financial Disclosures (TCFD) reporting.
• The Cost Control Mechanism.
• The McCloud judgement[^1] [^1]: The McCloud case relates to age discrimination found in the reformed public sector pension schemes.
• The Fair Deal policy on strengthening pension protection.
• Changes to the LGPS valuation cycle, and the management of employer risk.
• Ongoing consultations on Guaranteed Minimum Pensions (GMP).
• Changes to the LGPS revaluation date, and the Lifetime Allowance.
• The Department for Education (DfE) guarantee.
• The LGPS Scheme Advisory Board (SAB), and its review of academies, Tier 3 employers and good governance in the LGPS.
• SAB's correspondence on LGPS audit.
• SAB's review of responsible investment guidance.
• SAB's statement on the 2025 Actuarial Valuation.
• SAB's commentary on the updated legal opinion from Nigel Giffin KC, regarding fiduciary duty.
• The SAB's Annual Review.
• Public sector exit payments caps.
• The UK Stewardship Code 2020.
• Increasing the UK minimum pension age.
• The Pensions Regulator (TPR) Code of Practice.
• Boycotts, Divestment and Sanctions.
• Pension scams, and new restrictions on transfers.
• The stronger nudge initiative.
• The Pensions Dashboard.

The report pack included the SAB's summary of advice from Nigel Giffin KC on investments and non-financial considerations, which stated:

As a fiduciary, the administering authority should not pursue its own views of what was or was not desirable or acceptable as an investment from an ESG perspective. It had to give effect to the wishes of scheme members about how their pension funds should be invested, and consistent with a proper pensions purpose.

The report pack also included the SAB's statement on the 2025 actuarial valuation, which stated:

After many years in which deficit payments were required from employers, some scheme employers may be hoping for a reduction in contributions in the 2025 Actuarial Valuation. This expectation will have been informed by reports that many LGPS funds are expected to be in a position of considerable surplus at the 2025 Actuarial Valuation.

Pension Fund Service Plan

The committee was scheduled to review and approve the Pension Fund Service Plan for 2025/26 to 2027/28. The plan outlines the fund's aims, objectives, and intended actions for the three-year period, with a focus on sustainable service delivery and operational resilience.

Key strategic actions outlined in the plan include:

• Completing LGPS pooling, and assessing opportunities from the 2030 pooling vision.
• Developing a satellite asset allocation to achieve local impact.
• Reviewing governance arrangements, and the fund's investment strategy.
• Implementing requirements of the McCloud remedy.
• Connecting to the national pensions dashboard.

The report pack included a summary of the Fund's key policy documents, including the Investment Strategy Statement, the Funding Strategy Statement, the Training Policy, the Communications Policy, and the Governance Compliance Statement.

Overall Value of Pension Fund Investments

The committee was scheduled to receive an update on the overall value of the Pension Fund investments to 31 March 2025. The report pack noted that the value of the Fund at 31 March 2025 was £3.702 billion, a decrease of £10 million (or 0.27%) in the fourth quarter of 2024/25. The report pack also included details of fund rebalancing activity undertaken during the quarter, with £54 million transferred from Global Equity Alpha to Sterling Index Linked Bonds in January 2025.

Performance Measurement of Pension Fund Investments

The committee was scheduled to receive an overview of the investment performance of the Pension Fund to 31 March 2025. The report pack included a performance report from Northern Trust, the Fund's custodian, showing fund managers' benchmarks, total fund performance, and individual fund managers' performance against benchmarks.

Local Pension Board Annual Report

The committee was scheduled to receive an overview of the work completed by the Local Pension Board during 2024/25. The report pack noted that the Board had considered a broad range of areas in assisting the Administering Authority to secure compliance with regulations, and ensuring the effective and efficient governance and administration of the Local Government Pension Scheme. The report pack also included a summary of the Fund's performance against Pension Administration KPIs during 2024/25, and the Fund's Communications Policy.

Internal Audit Plan 2024/25

The committee was scheduled to be informed of the work carried out by Internal Audit during the period 1 April 2024 to 31 March 2025 as part of the 2024/25 Internal Audit Plan. The report pack noted that of the eight assurance audits planned for 2024/25, a final report was issued in the period for one of these, regarding bank reconciliation. The report pack also included details of significant deficiencies in internal control identified during the prior period audit, and the progress made to address these deficiencies.

External Audit Strategy Memorandum

The committee was scheduled to discuss the external audit strategy for the year ending 31 March 2025. The report pack included a summary of the audit approach, including significant audit risks and areas of key judgement, and details of the audit team. The report pack also included a confirmation of the auditor's independence.