The Pension Committee of Gloucestershire Council met on Tuesday 29 September 2026 to discuss and approve key documents relating to the Gloucestershire Pension Fund's investment strategy and financial reporting. The committee approved the draft Investment Strategy Statement and Investment Policy Statement for consultation, and also approved the Pension Fund's Taskforce on Climate-Related Financial Disclosures Report for 2025-26.

DRAFT INVESTMENT STRATEGY STATEMENT AND INVESTMENT POLICY STATEMENT

The committee considered the draft Investment Strategy Statement (ISS) and Investment Policy Statement (IPS), which are crucial documents for the Gloucestershire Pension Fund's governance framework. The ISS, as the principal statutory investment document, outlines high-level objectives, strategic asset allocation, and the approach to responsible and local investment. The IPS supports the ISS by providing further detail on implementation preferences and responsible investment priorities, incorporating the Fund's net-zero and decarbonisation objectives.

Both documents were developed with support from Mercer and pre-consulted with LGPS Central, the Fund's asset pool, and Hymans Robertson, the Fund Actuary. The committee approved these draft documents for wider stakeholder consultation, including with Fund members, employers, the Fund Actuary, and LGPS Central. Following this consultation, updated versions will be presented for final approval in December 2026.

Cllr Vernon Gray asked for an abstention to be recorded regarding the approval of the draft Investment Strategy Statement and Investment Policy Statement, stating his disagreement with the Fund's net-zero 2045 objective.

TASKFORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES REPORT 2025-26

The committee reviewed the Fund's third annual report on climate-related financial disclosures (TCFD). This report details the Fund's progress in managing climate risks and supporting the transition to a low-carbon economy. Key achievements highlighted include maintaining a commitment to net zero by 2045, exceeding the target for sustainable and low-carbon investments (at 31%), and making significant progress on decarbonising listed equities and corporate bonds.

The report acknowledged ongoing challenges with data quality, particularly in private markets and for Scope 3 emissions. The committee discussed the methodology for carbon footprinting and the metrics used, with officers agreeing to provide further clarification on the approach that would be adopted under LGPS Central. The committee approved the TCFD report for 2025-26 and delegated authority to the Chair to approve any final amendments before publication.

PENSION FUND AUDIT & FINANCIAL STATEMENTS 2025-26

The committee received the draft audit findings report from KPMG for the 2025-26 financial year. KPMG indicated that the audit was progressing well, with no material misstatements or significant investment issues identified. An unmodified audit opinion was expected, subject to the completion of remaining procedures.

One control observation was noted regarding a late deficit contribution payment from Gloucester City Council, attributed to a staffing change. Officers confirmed that contributions had since been brought up to date. Historic recommendations related to the previous SAP system were also noted, with the new system implemented post-year-end and to be tested in the next audit. A potential unadjusted audit difference concerning level three investments was identified but was expected to be below the materiality threshold.

The committee discussed the SAP observations, with officers assuring members that the new system's automated controls addressed previous concerns. Members requested an update on the new controls in a future meeting. The committee recommended the Pension Fund Financial Statements 2025-26 to the Audit & Governance Committee for approval.

PENSION FUND ANNUAL REPORT 2025-26

The committee considered the draft Pension Fund Annual Report for 2025-26, which consolidates information on the Fund's management, financial position, investments, and administration performance. The report is required to be published by 1 December 2026 and will incorporate the final audited financial statements. If the audit is not concluded by the deadline, the report will be published with draft financial statements and updated later. The committee approved the draft report and delegated authority to the Chair to approve any final amendments before publication. The Pension Board's Annual Report for 2025-26 was also noted as being included within the main report.

LGPS GOVERNANCE REGULATORY REFORMS

The committee reviewed the governance changes stemming from the revised LGPS regulatory framework. This included proposals for appointing an LGPS Senior Officer, aligning this role with the existing Head of Pensions, subject to a formal job profile review. The committee also approved the recruitment process for an independent person to support the committee and LGPS Senior Officer, with an appointments panel to be established. Revised Pension Committee terms of reference were endorsed, and a draft Governance Strategy was approved for consultation. A wider implementation programme for reviewing other governance documents was also approved.

GLOUCESTERSHIRE PENSION FUND BUSINESS UPDATE - GOVERNANCE & OPERATIONS

Updates were provided on governance and operational matters. The committee noted the draft Pension Board minutes, the outcome of a risk register review, and approved the revised risk registers. Governance and operational updates were also noted, including information on Local Government Reorganisation, the 2026/27 budget forecast, the Business Plan, and Key Performance Indicators. Members discussed the potential inclusion of artificial intelligence as a risk on the register and agreed that officers would explore this further. Concerns were raised regarding the timely payment of death grants, with officers explaining the complexities involved and confirming that staffing and process issues were being addressed.

GLOUCESTERSHIRE PENSION FUND BUSINESS UPDATE - FUNDING & INVESTMENTS

The committee received an update on the Fund's funding position, which remained strong at an estimated 156% at the end of June 2026, with the Fund value increasing to approximately £4.251 billion. The final transition costs for liquid asset transfers to LGPS Central were reported as being within the anticipated range. Brunel Pension Partnership's orderly wind-down was noted, with liquidation anticipated in late 2026.

The Independent Adviser reported a strong quarter for investment performance, with the Fund returning 7.4% and outperforming its benchmark. However, longer-term underperformance against the benchmark was attributed to active equity performance, particularly within the Brunel portfolios. The committee discussed market concentration, the impact of AI, inflation, interest rates, and geopolitics on investment returns. The adviser suggested increasing exposure to inflation-linked assets, such as UK index-linked gilts, and reducing exposure to US equities, particularly mega-cap tech stocks. The committee also discussed the appropriateness of benchmarks and the reporting of investment by geography. Updates on social and affordable housing investments and the local investment sleeve were also provided.

The committee noted the Fund's funding position, investment performance, strategic asset allocation, transition activity, and responsible investment updates as at 30 June 2026.