The Pension Fund Committee of Lancashire County Council met on Friday 8 March 2024, approving the budget for the upcoming financial year and noting the findings of the external audit for 2022-23. The committee also reviewed budget monitoring for the current financial year, received updates on responsible investments, and discussed training plans for committee members.

Lancashire County Pension Fund - External Audit Findings Report 2022-23

The committee noted the findings of the external audit for the Lancashire County Pension Fund's annual accounts for the year ended 31 March 2023. Mr S Basnett, Engagement Manager at Grant Thornton, presented the report, highlighting that national delays in local government audits were impacting the completion of the Fund's accounts. The auditors' final opinion was expected to be presented to the Audit Risk and Governance Committee on 22 April 2024. The committee resolved to note the findings and to be informed of the auditors' final opinion once it was available.

Lancashire County Pension Fund Budget 2024-25

The committee approved the Lancashire County Pension Fund budget for the year ending 31 March 2025. The budget was set considering the latest forecast for the current financial year, actual experience from previous years, information from investment partners, the 2022 actuarial valuation, the current investment strategy, and contractual agreements. The proposed budget indicated a deficit of £52.0 million before accounting for the smoothing of prepayments, but a surplus of £9.3 million once these were factored in.

Budget Monitoring 2023/24 – Q3

A report was presented on the income and expenditure of the Fund for the nine-month period up to 31 December 2023, along with budget and forecast variances for the financial year ending 31 March 2024. The committee noted the financial results and variances presented in the report. The report indicated that overall income was slightly less than budgeted, primarily due to lower-than-anticipated investment income. Expenditure was also slightly below budget, with savings in investment management expenses and fund administration costs.

Responsible Investments Report

The committee received a report from Local Pensions Partnership Investments Limited (LPPI) detailing responsible investment matters during the fourth quarter of 2023. The report highlighted LPPI's strong performance in the Principles for Responsible Investment (PRI) assessment, achieving high scores across modules. It also detailed progress in areas such as climate change metrics, with a decrease in brown exposure and a slight decrease in green activities. Updates were provided on GLIL Infrastructure's new partnership with Bluefield Solar Income Fund, and the Transition Pathway Initiative (TPI) methodology updates. The report also covered stewardship activities, including shareholder voting and engagement, with case studies on director-related and compensation votes. LPPI's commitment to responsible investment was further demonstrated through policy reviews and the publication of new annexes on human rights.

Training Plan 2024/25

The committee considered and approved the draft Training Plan for the first six months of 2024/25. The plan was developed based on regulatory requirements, best practice, and feedback from committee and pension board members. The plan outlined various training opportunities, including internal workshops and external events, designed to ensure members have the necessary knowledge and skills to govern the Fund effectively. A revised plan covering the remainder of the year would be presented at a future meeting.

Lancashire Local Pension Board Workplan 2024/25

The committee approved the 2024/25 Work Plan for the Lancashire Local Pension Board. The work plan was developed in consultation with Fund Officers and the Chair of the Pension Board, incorporating regular activities within the Board's remit and specific activities related to the 2024/25 Lancashire County Pension Fund Strategic Plan.

Pension related training for members of the Committee

The committee noted the report on pension-related training undertaken by members since the last meeting. This included participation in internal workshops on topics such as the General Code of Practice, Local Pensions Partnership Administration Communications, and the Local Pensions Partnership Budget. Members also attended the PLSA Investment Conference. The training record for the committee would be updated accordingly.

Overpayments

The committee noted the update on overpayments for the period 1 April 2022 to 31 March 2023. The report detailed the recovery of Pension Fund debts and the writing off of irrecoverable amounts. Despite disruptions caused by the implementation of new pension administration and finance systems, debt recovery processes were now embedded, with a significant portion of manually raised invoices resolved. The report also outlined the policy for writing off amounts deemed uneconomical to recover, in line with best practice.

Lancashire County Pension Fund - External Audit Findings Report 2022-23

The committee noted the findings and other issues raised by the external auditor in relation to the Lancashire County Pension Fund accounts for 2022/23. The auditors' final opinion was expected to be presented to the Audit Risk and Governance Committee on 22 April 2024. The committee resolved to be informed of this opinion following that meeting.

Local Pensions Partnership Administration Update

The committee noted the performance of the pension administration service during the period 1 October to 31 December 2023. Discussions highlighted the need for greater employer engagement to ensure timely and accurate information for processing retirements. A further report on improved engagement and communications between Lancashire County Council and LPPA regarding monthly return data and retirement processing was requested for the next meeting.

Local Pensions Partnership - Shareholder Update

The committee noted the Local Pensions Partnership (LPP) Shareholder update to 31 December 2023, along with updates on Shareholder activity related to the Fund's 2024/25 Strategic Plan and the LPP Governance Review project.

Local Pensions Partnership Limited - Budget 2024/25

The committee approved the Local Pensions Partnership Limited Group budget for 2024/25 and noted the business plan for Local Pensions Partnership Investments Limited.

Investment Context Report

The committee noted the report on the performance of global markets and economies, and other factors influencing investment markets.

Investment Performance Report

The committee noted the performance of the Fund for the quarter ending 31 December 2023, which included an overview of total portfolio performance, individual asset class allocations, and the current total Fund level.

Investment Panel Report

The committee noted the minutes of the Investment Panel held on 30 November 2023 and received an update from discussions at the Panel on 7 March 2024.

Appointment of Independent Investment Adviser to the Pension Fund

The committee approved the process for the recruitment and appointment of an Independent Investment Adviser to the Fund. They also approved the establishment of an Appointments Sub-Committee to conduct interviews and make the appointment.