The Pensions Committee of Hertfordshire Council met on Wednesday 4 March 2026 to discuss the Hertfordshire Local Government Pension Scheme (LGPS) Risk Register and employer risk and governance. The committee was also scheduled to review the Hertfordshire LGPS and Firefighters Pension Scheme (FPS) Q3 2025/26 LPPA performance report, the Fund's Business Plan for 2026-27, and the Funding Strategy Statement and Valuation Report.

Pension Fund Risk Register Report

The committee was scheduled to review the Hertfordshire LGPS Risk Register Dashboard and Summary, and the Hertfordshire Fire Pension Scheme Risk Register Dashboard and Summary. The report detailed the Fund's approach to managing identified risks, with a focus on the period from 1 October to 31 December 2025. Risks were categorised under five overarching themes: The Governing Body, Risk Management, Funding & Investment, Additional Investment Matters, and Administration & Payment of Benefits. A risk matrix was used to assess risks based on likelihood and impact, with recommended actions aligned to the severity of each risk. Three risks were noted as exceeding the tolerated risk threshold for the LGPS: ineffective management of the Fund's governance, skills or knowledge gaps within the administering authority, and ineffective investment decision-making. For the Fire Pension Scheme, the same governance and skills gaps were identified as risks, alongside poor administration, including delays in implementing regulatory changes related to McCloud Immediate Choice – Retrospective Service Statement payments.

Employer Risk and Governance

This report was scheduled to provide a quarterly update on Employer Risk and Performance for the Pension Fund for the period 1 October to 31 December 2025. It detailed the current status of risk monitoring for Scheme Employers and measured the performance of the Administering Authority against indicators set out in the Administration Strategy. The report categorised employers as RED (high risk), AMBER (medium risk), or GREEN (low risk) based on their potential impact on the Pension Fund. The number of employers in the 'red' risk category remained at seven, with six identified as true red risks due to issues such as outstanding cessation deficits, lack of indemnity arrangements, and amalgamated green and amber risks. The report also detailed movements in outstanding Admission Agreements and provided an update on the Administering Authority's performance against key indicators, including audit reviews, late payments, and treasury management performance.

Hertfordshire LGPS and FPS Q3 2025/26 LPPA Performance Report

This report, prepared by the Hertfordshire's appointed pensions administrator, LPPA, was scheduled to provide an update on performance during Q3 2025/26 and more recent activity in Q4. It included separate appendices for the Fire Pension Schemes (FPS) and the Local Government Pension Scheme (LGPS), detailing membership numbers, performance against contractual and non-contractual targets, customer satisfaction, engagement activity, and The Pensions Regulator data scores. The report also covered complaints, appeals, and breaches for both schemes, with Appendix G outlining the work of LPPA's Complaints Board in reviewing trends and driving service improvements. Key themes identified included delays in processing early leaver cases, clarity of the trivial commutation process, and frustrations with the Mimecast secure email system. The report also provided details on employer monthly returns, noting a dip in performance for small and medium employers in December due to a payroll provider issue.

Pensions Fund Business Plan for 2026-27

This report was intended to provide members of the Pensions Committee with a plan of business items for the financial year 2026-27. Key activities scheduled for progression or delivery included pension fund policy updates, implementation of key projects such as data quality and contract monitoring with the Local Pensions Partnership, review of the Fund's Investment Strategy, implementation of LGPS regulatory changes, transition of assets into the Border to Coast Pension Partnership (BCPP) pool, a review of Pension Fund Governance effectiveness, and member training. The report highlighted the importance of a longer-term view in business planning to identify potential resource pressures and prioritise work. It also noted the requirement for Pensions Committee members to develop and acquire knowledge and understanding for their roles, with training to be delivered by officers and third-party advisors.

Funding Strategy Statement and Valuation Report

This report was scheduled to provide the Pensions Committee with a summary of the Funding Strategy Statement (FSS) consultation feedback, proposed actions in response, an update on the consultation engagement plan, and the proposed final FSS and draft Valuation Report for approval. The FSS is a regulatory requirement reviewed every three years in collaboration with the Fund's actuary, Barnett Waddingham. The consultation period for the draft FSS ran from 10 November to 19 December 2025. Appendix A was to summarise the feedback received and proposed next steps, while Appendix B was to present the final draft FSS and Appendix C the draft Valuation Report, which would include the updated funding position, contribution requirements, valuation methodology, investment performance, and regulatory developments. The committee was asked to note and comment on the report and approve the final draft FSS and Valuation Report.

Appendix A - Hertfordshire Pension Fund Funding Strategy Statement – summary of consultation feedback and proposed actions

This appendix was to summarise the feedback received during the FSS consultation and outline proposed next steps. It indicated that most employers did not raise material concerns, with 75% of formal respondents having no further comments. The Department for Education (DfE) raised queries regarding the target funding level and minimum contribution rate for academies, which were answered. Two employers submitted detailed concerns about investment returns, discount rates, contribution-setting methods, and other related matters. The report noted that these two responses shared identical content and layout, suggesting potential collaboration or shared advice. The appendix was also to detail the FSS consultation process, including employer forums, one-to-one surgeries, and communication activities.

Appendix B - Hertfordshire Pension Fund Funding Strategy Statement

This appendix was to present the final draft of the Funding Strategy Statement for approval. It would outline the Fund's approach to managing employer liabilities, risks, actuarial assumptions, and the calculation of employer contributions. The document would detail key funding principles, including the funding target, management of risk, links to the Investment Strategy Statement, and how employer contributions are calculated, including primary and secondary rates. It would also cover policies on employer events such as joining, exiting, and termination, as well as deferred debt agreements and debt spreading arrangements.

Appendix C - Draft Valuation Report

This appendix was to present the draft Valuation Report, which would be finalised by Barnett Waddingham after the approval of the Funding Strategy Statement. The report was expected to summarise key results, including the updated funding position, contribution requirements, valuation methodology and assumptions, investment performance, and relevant regulatory developments, such as the new reporting requirement for the Gender Pensions Gap. The Rates and Adjustments Certificate, detailing individual employer contribution rates for the period 1 April 2026 to 31 March 2029, was to be included in Appendix 8 of this report.

Appendix D - Gender Pensions Gap

This appendix was to report on the gender pensions gap within the fund, as required under the LGPS Regulations 2013. The reporting approach would be consistent with guidance from the Scheme Advisory Board. The analysis would rely on membership data from the 2025 actuarial valuation and would calculate the Gender Pensions Gap (GPG) as the difference between the average pension accrued by males and females, expressed as a percentage. The appendix was to provide fund-level analysis for active and pensioner members, including tables and charts detailing the number of members, mean age, mean pay, and mean pension amounts by gender. An employer category analysis was also to be included.

Appendix E - Climate risk analysis

This appendix was to present the results of scenario analysis on the Fund's assets and liabilities concerning climate risk, conducted in line with key principles agreed by LGPS actuarial firms. The analysis would consider projected funding levels under various climate-related scenarios relative to the agreed 2025 valuation basis. Three climate scenarios from Moody's Analytics, broadly based on Network for Greening the Financial System (NGFS) scenarios, were to be described: Delayed transition, Current policies, and Fragmented world. A fifth scenario, Late and inadequate action, created by Barnett Waddingham, was also to be included. The impact on the funding position under each scenario was to be considered in a graph. The analysis aimed to assess the robustness of the funding strategy against climate change risk and any potential contribution impacts.

Appendix F - Decisions Log

This appendix was to provide a high-level audit trail of key funding strategy decisions made throughout the valuation process. It would detail the review of actuarial assumptions, agreement of funding strategy parameters, and stakeholder engagement activities, including employer forums, surgeries, and correspondence. The appendix was also to summarise the final Funding Strategy Statement's approval at the Pensions Committee meeting on 4 March 2026.

Appendix G - Dashboard

This appendix was to present a dashboard summarising the key results of the actuarial valuation.

Appendix H - Rates and Adjustments Certificate

This appendix was to set out the primary and secondary contributions payable by each employer for the period 1 April 2026 to 31 March 2029, as required by Regulation 62 of the LGPS Regulations. It would detail the primary rate for the whole Fund and the secondary rates for individual employers, reflecting their specific circumstances and recovery plans. The certificate would also include general notes on contribution payments, prepayment policy, and exclusions such as early retirement strain and augmentation costs.