The Hertfordshire Pension Fund Committee met on Friday 10 July 2026 to review the fund's risk register, employer risk, governance, and performance. Key decisions included noting the Pension Fund Risk Register report, approving updates to employer risk monitoring, and commenting on the Governance Overview report.

Pension Fund Risk Register

The committee reviewed the Pension Fund Risk Register for the period January to March 2026. Three risks were identified as exceeding the tolerated risk threshold for the Hertfordshire Local Government Pension Scheme (LGPS): ineffective management of the fund (Risk A1), skills or knowledge gaps at the Administering Authority (Risk A2), and ineffective investment decision-making (Risk C5). Risks A1 and A2 were primarily attributed to the retirement of the Head of Pensions, though the role has since been filled. Recruitment for the Pensions Governance Manager position is ongoing, and uncertainty surrounding the Fit for the Future framework also contributed to these risks remaining above tolerance. Risk C5 remains above the threshold due to the ongoing transition to the new asset pool, Border to Coast.

For the Hertfordshire Fire Pension Scheme, three risks also exceeded the tolerated threshold: ineffective management (Risk A1), skills or knowledge gaps (Risk A2), and poor administration, including delays in implementing regulatory changes (Risk E1). The retirement of the Head of Pensions was a factor for A1 and A2, with recruitment underway. Risk E1 is linked to delays in McCloud remedy payments, although significant progress has been made in issuing Remedial Service Statements.

The committee reviewed the contents of the report, including the LGPS and Fire Pension Scheme Risk Register Dashboards and Summaries.

Employer Risk

The committee received an update on employer risk and performance for the Pension Fund for January to March 2026. The number of employers categorised as 'red' risk increased from seven to nine. Of these, eight were considered true red risks. These included one ceased employer with an outstanding deficit, who has since signed a debt spreading agreement and will now be monitored as an amber risk. Four employers had no indemnity arrangements, which are historical cases from a time when regulations did not require such security. The remaining three red risks related to employers who were late in providing contribution forms or paying contributions for two consecutive months; fines have been issued, and these employers are being closely monitored.

The report also detailed updates to risk monitoring, including changes to how ceased employer deficits and outstanding admission agreements are categorised. The committee was asked to comment on and note the report.

Governance Overview

This new report provided an overview of key governance developments affecting the fund, including regulatory changes, governance planning, policy reviews, and compliance activities. Significant regulatory updates included the confirmation of the LGPS Access and Fairness reforms, effective from April 2026, and the publication of guidance for the Fit for the Future framework. The report also outlined the governance forward plan, policy and strategy review programme, and the fund's compliance with the General Code of Practice, which stood at 72% compliant with five areas outstanding. The committee was asked to comment and note the report.

Hertfordshire LGPS and FPS Q4 2025/26 LPPA Performance Report

The committee received an update on performance from the Local Pensions Partnership Administration (LPPA) for the fourth quarter of 2025/26. For both the Fire Pension Scheme (FPS) and the Local Government Pension Scheme (LGPS), LPPA was meeting or exceeding service level targets for casework performance and contact centre average wait times. Customer satisfaction scores for contact centre calls were generally positive, though retirement satisfaction scores showed volatility due to low response rates. The report also detailed project updates, including progress on the McCloud remedy and the Pensions Dashboard. The committee was asked to note and comment on the report and appendices.

Training Update

This report provided an update on training undertaken by committee and local pension board members during 2025-26, along with the results of recent knowledge and understanding assessments. It highlighted the increasing importance of training due to new statutory requirements from the Fit for the Future reforms, which extend formal knowledge and understanding requirements to committee members and officers. The report detailed the training plan for 2026-27 and presented the results of knowledge assessments, which showed an average score of 80% in funding, 68% in administration and communication, 60% in investment, and 58% in governance and legislative context. The committee was asked to note the report and the expectation of a future training strategy.

Draft Audit Plan

KPMG LLP presented their draft audit plan for the pension fund accounts for the year ended 31 March 2026. The plan outlined their approach to the external audit, focusing on key risk areas including management override of controls, the completeness, existence, and accuracy of investments, investment valuations, and the actuarial position. The planned statutory audit fee for 2025-26 was £113,000. KPMG confirmed their independence from the pension fund. The committee was asked to note and comment on the audit plan.

Investment Strategy Statement

The committee reviewed the draft Investment Strategy Statement (ISS) and Responsible Investment (RI) Policy following a one-month consultation period. Two responses were received: one from a Pension Board member with no comments, and one from an employer supportive of the proposals. Consequently, no changes were proposed to the draft ISS. The report also provided an update on the new ISS, which needs to align with the 2026 regulations, with a plan to present the draft to the committee in September 2026, followed by consultation in the autumn. The committee was asked to note and comment on the report.

Investment Performance and Funding Update Report as at 31 March 2026

Mercer provided an update on the fund's investment performance for the quarter ending 31 March 2026, noting that the overall performance was negative 0.6%, underperforming the benchmark of negative 0.1%. However, the fund's absolute performance over one and three years was positive. Barnett Waddingham provided an approximate update on the funding position, showing a surplus of £986 million, with a funding level of 115.9% as at 31 March 2026. The committee was asked to note the investment performance report.

Other Part I Business

The committee noted the dates of future meetings and discussed the possibility of converting informal meetings to formal ones if agendas warranted it. The committee also noted the upcoming absence of Stephen Fillsworth and thanked him for his work.

The meeting then moved into Part II business, with the press and public excluded.