The Hertfordshire County Council Pensions Committee met on Wednesday 29 October 2025, confirming the minutes of the previous meeting and discussing data security risks, the pension fund's statement of accounts, and a responsible investment report. The committee noted the reports presented.

Declarations of Interest

Councillor Tim Williams, Chair of the Pensions Committee, Councillor John Hale, Chair of the Audit Committee, and Councillor Rachel Carter all declared interests relating to their membership of the Hertfordshire Local Government Pension Scheme, or their membership of councils that were employers in the scheme. Councillor Tim Williams said he would seek a dispensation for all members from the Director of Law and Governance.

Update on Risks E4 and E5

Following concerns raised at the last meeting, officers reviewed risks E4 and E5 in collaboration with the Local Pensions Partnership Administration's (LPPA) Chief Technology Officer, and with reference to the pension regulator's guidance. Risk E4 concerns data sharing controls, and has been updated to reflect strength and training certifications and data handling protocols. Risk E5 relates to IT security breaches, and has been revised in light of the regulator's view that such risks are a matter of when, not if. Enhanced controls are in place, but the risk level and tolerance have been increased.

A query was raised as to whether the cybersecurity risk related to the money in the fund or the details of the members, and officers confirmed that it predominantly related to member data.

In response to questions about attacks on LPPA systems, the LPPA Chief Technology Officer, Martin Davidson, said:

There are constantly probes and there are attempts to attack systems all the time. Just to give some assurance, there have been no successful attacks against us.

He added that the LPPA checks its suppliers about their data protection.

Pension Fund Responsible Investment Report

The committee received a report outlining an analysis of the Hertfordshire Pension Fund's decarbonisation progress as of 31 March 2025. Sandy Dickson from Mercer, the fund's investment consultants, presented the report.

The report noted that climate change had been identified as a material risk to the pension fund, and that the fund had set a long-term net zero target of 2050 or sooner, in line with UK government targets.

Sandy Dickson told the committee that the fund was more efficient in its ongoing use of greenhouse gas emissions than the wider economy, and that there had been a material reduction in the carbon footprint over the last year. However, she noted that the fund was slightly behind its target for 2030.

Councillor John Graham asked about Mercer's opinion on environmental, social, and governance (ESG) factors, and whether they were 'dead' given challenges in the United States, and whether investment decisions were being taken on carbon levels, and how this was being balanced against the fund's requirement to make a return to satisfy its pensions.

Sandy Dickson responded that ESG was not dead, and that environmental, social and governance considerations absolutely have financially material impacts. She noted that the committee had previously made a decision to invest in Dodge and Cox, a value manager, which actually caused an increase in the ongoing carbon emissions, but that financially, it made sense to have a diversified portfolio of assets in order to achieve and solve for duty.

Councillor Adrian England, Executive member for Sustainability, said that the reason the council does ESG is because:

we know from the science, we know that there is a legal requirement to reach a certain point by 2050 in the hope that we can create a better world for the 100-year-old man that we're paying a pension for.

He asked what could be done to influence and perhaps move some of the 'dark grey' stakeholding that the fund has. Sandy Dickson said that engagement and stewardship of assets was key, and that collective engagement with like-minded funds was very important. She also noted that the proposed move to Border to Coast¹ would magnify the council's collective engagement ability through scale.

Councillor Alexander Curtis asked whether the value of the collective in terms of what's owned by all members of the committee would not go down by definition if they paid for fund managers and ESG consultants. Sandy Dickson responded that stewarding assets should ultimately deliver long term financial returns, and that it was within fiduciary duty to make sure these things were considered and that investments were being made over the long term to capitalise on long term opportunities.

Councillor Rachel Carter said that the report highlighted that the committee had to think about those future pensions, those future people who are going to depend on it because we are not just here for the short term, but for the making decisions which affect the very long term. She asked whether the policy was more focused on reducing the carbon footprint rather than on countering the other risks from the climate emergency. Sandy Dickson said that the focus was more on transition risk mitigation as well as having a plan of where we have these this duty and target to be net zero by 2050.

Councillor Stuart Roberts asked whether lots of these metrics actually only really measure one thing, which is resource use efficiency, and Sandy Dickson confirmed that they were trying to do that in a few different ways of assessing it.

Pension Fund Statement of Accounts

The committee received a report providing an update on the Pension Fund Statement of Accounts for 2024/25. Rob Winterton, Finance Manager, advised that since the publication of the report, due to financial adjustments, the valuation of the fund had increased by £7.8 million and not £8 million as stated in the report, with Pantheon² increasing by £4.6 million and Macquarie³ increasing by £3.2 million.

Councillor Alexander Curtis asked why there was no letter from any of the fund managers in the accounts, and Patrick Towey said that the CIPFA⁴ code of practice did not require them to be included within the statement of accounts, but that performance reports were separate reports presented to the committee on a periodic basis. He added that there were plans for quarterly reporting to be provided on the pensions website to allow interested parties and stakeholders to have greater insight into the pension investments once the Fund has completed its transition to the Border to Coast Pool.

Councillor John Graham asked how the auditors were satisfied when it came to level three valuations[^6], particularly with infrastructure assets that are incomplete. Rob Winterton said that the auditors have a specialist evaluation team that will review the data received from the manager to satisfy that they're happy with that valuation, and Patrick Towey added that the auditors also request external audit reports from the Level 3 Investment managers to provide further assurance and robustness to the valuation process.

Councillor Alexander Curtis said that he felt uncomfortable with the line in the report that stated that level three assets are long term and often complex, which makes valuation difficult, and asked why the council was buying assets that were too complex to value. He also asked what percentage of the fund was formed of these level three assets. Stephen, whose last name was not provided, said that investments in these sorts of assets are entirely in line with the fund's investment strategy, and that the fund has an investment strategy statement reviewed every three years.

Councillor John Graham said that the important thing the committee needed to consider was how diversified the fund was, and asked for confirmation that the fund operates a diverse range of assets. Patrick Towey confirmed that this was the case.

Councillor Rachel Carter asked whether the fund was protected from overinvestment in the AI sector, and Patrick Towey responded that the fund sets strategic asset allocations to various asset classes, and does some rebalancing each year to make sure that if one of those asset classes grows beyond certain thresholds, it is rebalanced by selling that position and allocating that position to an underfunded manager.

Jonathan, whose last name was not provided, added that all assets are subjective in pricing, and that all of those asset classes, whether they're listed or whether they're private markets, are grounded in principles for working out the value of something. He added that there was also a protection strategy in place on the equity side of the portfolio, so that if markets do drop quite fast and rapidly, there's some protection that we have through an equity strategy that's been in place for a number of years as well.

Councillor Alexander Curtis said that he thought that the asset allocation towards equities was very low, and that there was quite a lot of fees on the cost of making transactions each year, and asked for the number of transactions that have been made, how many purchases, how many sales of equities have been undertaken within the last 12 months. Patrick Towey said that they were not required to disclose that in the fund accounts, but that they could get that from their pool manager.