The Pensions Committee of Hertfordshire Council is scheduled to convene on Friday 18 September 2026. The meeting's agenda includes a review of the Pension Fund's risk register, an update on employer risk, and a governance overview. Other key discussion points involve performance reports from the Local Pensions Partnership Administration (LPPA), proposed changes to the council's constitution, and the appointment of an independent person. The committee will also consider the draft investment strategy statement, focusing on rebalancing and local investment, and receive an update from Border to Coast Pensions Partnership. A report on the Fund's responsible investment progress, specifically its decarbonisation efforts, is also scheduled.

Pension Fund Risk Register Report

The committee is set to review the Hertfordshire Local Government Pension Scheme (LGPS) Risk Register and the Hertfordshire Fire Pension Scheme Risk Register for the period of April to June 2026. The report outlines the Pension Fund's approach to managing identified risks. It details a risk management policy approved in July 2025, updated to align with The Pensions Regulator's (TPR) General Code of Practice, which came into effect on 28 March 2024. This policy emphasises risk ownership and integrates risk management into the Fund's governance. The register is divided into two sections: one for the LGPS and one for the Fire Pension Schemes, with risks categorised under five overarching themes defined by TPR: The Governing Body, Risk Management, Funding & Investment, Additional Investment Matters, and Administration & Payment of Benefits. Risks are assessed using a matrix that considers likelihood and impact to determine an overall severity score, with recommended actions aligned to these severity levels. The report highlights two risks exceeding the tolerated threshold for the LGPS: Ineffective investment decision-making (Risk C5), related to the transition to Border to Coast, and Poor Administration, including failure/delays in implementing regulatory changes (Risk E1), due to significant regulatory changes impacting the LGPS, the Fund, Border to Coast, and LPPA. For the Fire Pension Scheme, Poor administration, including failures/delays in implementing regulatory changes (Risk E1) also remains above the tolerated threshold due to ongoing regulatory changes and administrative activity.

Employer Risk

This report provides a quarterly update on Employer Risk and Performance for the Pension Fund for the period of April to June 2026. It details the current status of risk monitoring for Scheme Employers and the performance of the Administering Authority against indicators set out in the Administration Strategy. The report categorises employers into 'RED' (high risk), 'AMBER' (medium risk), and 'GREEN' (low risk) based on their potential impact on the Pension Fund. Since the last quarter, the number of employers in the 'red' risk category has increased from nine to fourteen. This increase is attributed to several factors, including a ceased employer with an outstanding deficit signing a Debt Spreading Agreement (now monitored as amber risk), a Tier 3 ceased employer with an outstanding deficit entering administration, one employer being late with LG221 forms for two consecutive months, three employers being moved to red risk following a recent covenant analysis, and one employer being classified as red due to an amalgamation of amber risks. The report details the breakdown of these fourteen employers by risk category, noting that nine are considered true red risks and five are rated red due to an amalgamation of lower-risk criteria. A specific case of a ceased Tier 3 employer entering administration is detailed, where the outstanding debt is classified as a non-preferential unsecured claim, meaning no distribution is expected from the administration. The report concludes that this outstanding debt is immaterial to the Pension Fund's overall surplus position.

Governance Overview

This report provides an overview of the Fund's governance, compliance, and oversight arrangements, ensuring that statutory and regulatory responsibilities are being met. It highlights an increased focus on governance within the Local Government Pension Scheme (LGPS) and presents updates on regulatory changes, including the Fit for the Future reforms, which introduce new requirements for preparing and maintaining an Investment Strategy Statement (ISS) by 31 March 2027, and strengthened fund governance, training, oversight, and independent reviews. New statutory guidance mandates the appointment of a dedicated LGPS Senior Officer and an Independent Person, with annual assessments of knowledge and skills. The report also covers updates on asset pooling, Access & Fairness reforms, and Access & Protections for elected members. A Governance Yearly Planner (Appendix C) outlines proposed governance activity through to 2029, and a Timetable for LGPS Policies details the schedule for reviewing and developing key policies. The committee is asked to approve a revised Governance Compliance Statement (Appendix D), which has been updated to reflect new requirements, including details on the Border to Coast Pensions Partnership and the forthcoming appointment of an Independent Person. A new Training Strategy is also in development, in line with the Fit for the Future governance requirements.

Hertfordshire LGPS and FPS Q1 2026/27 LPPA Performance Report

This report, prepared by Hertfordshire's pensions administrator, LPPA, provides an update on performance during the first quarter of 2026/27 and recent activity. It includes detailed performance reports for both the Hertfordshire Fire Pension Schemes (FPS) and the Hertfordshire Local Government Pension Scheme (LGPS), covering areas such as membership numbers, performance against targets, customer satisfaction, and data quality scores from The Pensions Regulator (TPR). The report also details complaints, appeals, and breaches for both schemes, with an overview of LPPA's Complaints Board's work. An action from the previous committee meeting regarding contact centre insights and customer satisfaction is addressed, with a training session planned for September. The report also presents data on employer monthly returns, noting a 99% return rate for small employers, with ongoing engagement to address outstanding submissions. The Employer Focus Group, established to foster dialogue between LPPA, employers, and Hertfordshire Pension Fund (HPF), met in June, discussing various administrative and regulatory updates.

Changes to the Constitution

This report informs the Pensions Committee about the necessity of updating the Hertfordshire County Council Constitution following the introduction of the Pension Schemes Act 2026 and the Local Government Pension Scheme (Amendment) (Governance) Regulations 2026, which came into effect on 30 June 2026. These changes introduce new governance requirements for LGPS administering authorities. The proposed amendments aim to clarify the role and responsibilities of the Pensions Committee, reflect the statutory roles of the LGPS Senior Officer and Independent Person, and strengthen governance and accountability. A new Appendix 31, detailing the Terms of Reference for the Pensions Committee, is proposed to improve accessibility and transparency. These amendments are undergoing legal review and will be presented to the Standards Committee in October 2026 for approval and recommendation to Full Council.

Independent Person Appointment Process

This report updates the Pensions Committee on the proposed process for appointing an Independent Person for the Administering Authority, a new statutory requirement under the LGPS governance reforms. Officers, with support from Marsh, have developed the role specification and recruitment framework. The skills assessment highlighted investment expertise as the Fund's greatest capability gap, given the new pooling arrangements and the cessation of Marsh's advisory services in 2027. The role specification therefore emphasises investment knowledge and experience, alongside strong understanding of governance and administration. The appointment process is outlined in five phases, with the first two phases complete. The appointment will be made through a closed procurement process, with a final appointment expected by the end of November 2026. The committee is asked to note the statutory requirement, the work undertaken, the proposed timetable, and to approve the delegation of the appointment to the LGPS Senior Officer, subject to consultation.

Draft Investment Strategy Statement – Rebalancing and Local Investment

This report provides an update on the development of the revised Investment Strategy Statement (ISS), required by 31 March 2027 under new regulations from the Pension Schemes Act 2026. Officers, with input from Border to Coast and Marsh, have largely completed the ISS. Key remaining policy decisions concern rebalancing ranges for strategic asset allocation and the Fund's approach to local investment. Proposed rebalancing ranges for nine asset classes are detailed, aiming for operational flexibility while managing risk and transaction costs. Regarding local investment, a range of 0% to 5% across the Border to Coast pool region is recommended, with a preference for opportunities benefiting Hertfordshire. This flexible approach acknowledges Border to Coast's developing local investment capability and the need for further work to define local investment priorities and measurement. The draft ISS will be presented for consultation in October 2026, with final approval anticipated in February 2027.

Border to Coast Update

This report provides an update on the implementation of the transition of assets into the Border to Coast Pension Partnership. It details progress with transition planning, including the proposed consolidation of the Fund's Sterling Investment Grade Credit (SIGC) mandate into the Border to Coast SIGC Fund. This consolidation is expected to generate material fee savings and is supported by Border to Coast's diversified multi-manager structure, which has shown outperformance. The report notes that the Fund's existing Royal London Asset Management (RLAM) mandate would transition into the pooled fund, retaining RLAM's expertise while benefiting from enhanced scale and lower costs. The report also provides an update on other recent investment activity, including further investments into the SIGC Fund and drawdown requests for Private Equity, Private Credit, and Infrastructure funds. Appendix A tracks transition movements, showing assets held within ACCESS, outside of pooling (legacy), or transitioned to Border to Coast.

Pension Fund Responsible Investment Report

This report presents an analysis of the Hertfordshire Pension Fund's decarbonisation progress as of 31 March 2026, provided by the Fund's Investment Consultants, Marsh. It details the Fund's responsible investment workplan, including its Responsible Investment (RI) policy, approved in July 2026, and a transition plan for measuring progress towards carbon net zero by 2050. The report highlights that the listed equity portfolio has achieved a 32% decarbonisation (Scope 1 & 2) from the 2020 baseline, placing it ahead of the agreed decarbonisation pathway. This progress is attributed to changes in equity managers and a move towards more climate-aware funds. However, the corporate bond portfolio is currently behind its decarbonisation pathway, requiring a further 35% reduction by 2030. The report also discusses engagement strategies and the concept of Climate Solutions, noting a c.2% increase in green revenues in listed equities over the past year. Limitations of the analysis, including data coverage and the focus on Scope 1 & 2 emissions, are acknowledged.

Other Part I Business

This agenda item allows for the discussion of any other public business that the Chair deems urgent enough to warrant consideration before the next meeting.

Part II ('closed') Agenda

This section of the agenda is for items where the press and public will be excluded. The reason for exclusion is stated as involving the likely disclosure of exempt information relating to financial or business affairs, where the public interest in maintaining the exemption outweighs the public interest in disclosure. The specific items for discussion in Part II are the minutes of the previous meeting, a responsible investment report, and updates on equity protection wind-down, strategic asset allocation implementation, middle east market impact, pooling, and cyber policy and business continuity plans.