The Pensions Committee of Hertfordshire Council met on Friday 10 July 2026 to review the Fund's risk register, employer risks, and governance overview. Key decisions included noting the Pension Fund Risk Register Report, approving updates to future risk monitoring, and commenting on the draft audit plan.

Pension Fund Risk Register Report

The committee reviewed the Pension Fund Risk Register for the period January to March 2026. Alison Sharpe, Pensions Governance Manager, presented the report, highlighting three risks exceeding the tolerated threshold: ineffective management of the Fund (A1), skills or knowledge gaps at the Administering Authority (A2), and ineffective investment decision-making (C5). Risks A1 and A2 were primarily attributed to the retirement of the Head of Pensions, though the role has since been filled. The ongoing recruitment to backfill the Pensions Governance Manager position and uncertainty surrounding the Fit for Future framework contributed to these risks remaining above tolerance. Risk C5 remains above tolerance due to the move to a new asset pool. For the Fire Pension Scheme, risks A1 and A2 reflect similar underlying factors, with risk E1 (poor administration) remaining above tolerance due to delays in the McCloud remedy.

Councillor John Graham raised concerns about the long-term risks and the impact of potential local government reorganisation on the council's covenant. Barry, an investment advisor, responded that investment advisors and the new pool take a long-term view and continually monitor performance and risks. Taryn Ahlberg, Head of Pensions, added that the covenant would likely remain the same even with reorganisation, as the council already manages a large number of employers.

Councillor Tim Williams sought further clarification on risk E1, poor administration, particularly concerning the McCloud remedy and LPPA's role. Alison Sharpe explained this related to ensuring LPPA administered the scheme appropriately amidst significant regulatory change.

The committee was asked to review and note the contents of the report.

Employer Risk

Alison Sharpe also presented the Employer Risk Report for January to March 2026, which focuses on risks associated with individual employers. During the quarter, the number of risks in the red category increased from seven to nine. Of these, eight were considered true red risks. One risk related to a ceased employer with an outstanding deficit has since been addressed through a debt-spreading agreement. Four employers remain with no indemnity arrangements, which are historical employers from a time when such arrangements were not required. The funding levels for these employers are positive, and they continue to be monitored. The remaining three risks relate to employers who were late in providing LG 221 contribution forms or paying contributions for two consecutive months; these employers have been fined and are being closely monitored.

Councillor Tim Williams inquired about the process for historical employers and the possibility of physical intervention. Alison Sharpe confirmed that while ideally red risks would be eliminated, these employers are in a good funding position and are contacted if they do not wish to provide an indemnity.

Councillor Tim Williams also questioned the reasons for late payments and returns, and the administrative effort involved. It was explained that this often occurs with smaller employers or due to issues with payroll providers, and while processes have been streamlined, it remains a manual task.

Councillor Matthew Hurst questioned why no charges were made for late payments in February 2026, and it was clarified that these were likely first offences, as the administration strategy waives charges for the first instance. Calvin Horner, a new member, asked if this was an increasing issue, and while not believed to be, Alison Sharpe noted that March, being year-end, might see an increase due to employers being up against it.

The committee was asked to comment and note the contents of the report and approve updates to future risk monitoring.

Governance Overview

Taryn Ahlberg, Head of Pensions, introduced a new report providing an overview of key governance developments affecting the fund, including regulatory changes, governance planning, policy reviews, and compliance activities. This report will evolve over time, with a budget monitor to be included in future.

Key regulatory updates included the confirmation of the LGPS Access and Fairness reforms, effective from April 2026, and a partial response to the Access and Protections consultation allowing elected members to join the pension fund. The Fit for the Future guidance was published on 29 June, with regulations coming into force on 30 June. The report also detailed governance forward planning, committee forward plans, and a schedule of policy and strategy reviews. The Fund is currently 72% compliant with the general code of practice, with five areas outstanding.

Rachel Carter, Chair of the Health Scrutiny Committee, inquired about the LGPS Access and Fairness changes, particularly concerning the 70% female membership and historical pension disparities due to maternity commitments. Chris, from LPPA, explained that fairness reforms primarily related to unpaid maternity leave and other types of unpaid leave, providing options to pay back contributions. Alison Sharpe clarified that during maternity leave, contributions are typically based on assumed pensionable pay, meaning the pension continues to build up as if full pay were received.

Councillor Tim Williams reiterated the value of this comprehensive governance overview report, highlighting the usefulness of the appendices and forward planner.

The committee was asked to comment and note the contents of the report.

Hertfordshire LGPS and FPS LPPA Performance Report

Alison Sharpe and Chris Batts from LPPA presented the performance report for the Hertfordshire LGPS and Fire Pension Schemes. Chris Batts provided a summary, noting that casework performance and contact centre wait times were meeting service level targets. Satisfaction levels, however, tended to fluctuate. Significant regulatory changes were underway, including access and fairness reforms, LGPS for elected members, escape factor changes, McLeod, and local government reform.

Chris Batts detailed the progress on several projects, including communication of access and fairness changes to employers and members, identification of death cases for survivor benefit equalisation, and the inclusion of elected members in the scheme. He also discussed the decrease in the escape discount rate and its impact on benefit calculations, noting that transfers of benefits and early retirement quotations were on hold pending factor testing. McLeod updates include the inclusion of underpin details and benefit statements by August 31st. The service improvement programme has taken a backseat due to the volume of regulatory change, but automation for the active retirement process is expected later in the year.

Councillor John Graham questioned the contact centre statistics, suggesting that average wait times might mask instances where pensioners exceeded the four-minute target. He proposed measuring the mean or mode and tracking the number of disappointed pensioners. Chris Batts acknowledged that some calls do exceed the timescale due to complexity and contact centre turnover, but stated that most dissatisfaction stems from the subject matter of the call rather than the wait time. The committee agreed to request more detailed customer satisfaction responses in future reports.

The committee was asked to note and comment on the report and appendices.

Training Update

Taryn Ahlberg presented an update on training undertaken by the committee and local pension board during 2025-26, and the results of recent knowledge and understanding assessments. The Fit for the Future reforms are increasing training and knowledge requirements, now extending to committee members and officers. Hertfordshire already operated on this basis, but the requirements are now statutory and require evidence of training. Training was delivered through various channels, with varying attendance rates. E-learning module completion rates were modest.

The results of knowledge assessments were encouraging, with committee members achieving an average score of 80% in funding, 68% in administration and communication, 60% in investment, and 58% in governance and legislative context. The analysis identified areas for future training. A training plan for 2026-27 was proposed, and a training strategy will be developed for future approval.

Calvin Horner, a new member, raised issues with sound quality when using Citrix for training videos, suggesting it might be a Citrix problem. Alison Sharpe confirmed that Barnett Waddingham reported no issues with the videos, and suggested trying different systems or devices. Councillor Tim Williams noted that Citrix is being phased out.

The committee was asked to note the report, commit to undertaking training, approve the proposed training plan for 2026-27, and note the expectation of a training strategy. The recommendations were carried unanimously.

Draft Audit Plan

Robert Winterton, Finance Manager, introduced the draft audit plan from KPMG LLP. Sudhansu Dadeesh, Audit Manager from KPMG, presented the plan, outlining the approach to the external audit of the pension fund financial statements for the year ended 31 March 2026. Key audit risks identified include management override of controls, completeness, existence and accuracy of investments, investment valuations, and the actuarial position. KPMG confirmed their independence.

Councillor John Graham raised concerns about the clarity of KPMG's approach to fraud detection, specifically regarding management override of controls. Sudhansu Dadeesh reassured the committee that strict procedures are in place to assess this area. Councillor Tim Williams noted that a similar report had been presented to the Audit Committee, which agreed with the process.

The committee was asked to note and comment upon the KPMG audit plan.

Investment Strategy Statement

Phillip Prasad, Investment & Pooling Analyst, presented the draft Investment Strategy Statement (ISS) following a one-month consultation period. Two responses were received, one from a Pension Board member and one from a large employer, both expressing support and no proposed changes. The committee was informed that the new ISS, based on 2026 regulations, is planned for presentation in September, with consultation to follow in the autumn.

The committee was asked to note and comment on the content of the report and approve the final draft of the Investment Strategy Statement and Responsible Investment Policy.

Investment Performance and Funding Update Report

Rob Addison presented the Investment Performance and Funding Update Report as at 31 March 2026. He highlighted that a funding position section had been added, prepared by Barnett Waddingham, providing an approximate update. The funding position as at 31 March 2026 was approximately 115.9%, representing a surplus of £986 million.

Robbie, from Mercer, presented the investment performance report, noting that the figures were a snapshot as of 31 March 2026 and that market conditions had changed significantly since then. On an absolute basis, the fund's performance was positive over one and three years, exceeding the discount rate. However, relative performance against the benchmark was behind. He noted that Bailey Gifford's performance was a significant detractor, attributed to its concentrated portfolio.

The committee was asked to note the investment performance report.

Other Part One Business

The dates of future meetings were noted. The Chair thanked Councillor John Graham for attending and acknowledged the upcoming absence of Stephen Fillsworth for a few months, thanking him for his work. The committee then moved to Part Two business, excluding the press and public.

The meeting was confirmed as held, and decisions were made.