The Pension Board of Lewisham Council met on Tuesday, 24 September 2024, to discuss various updates and reports concerning the management and performance of the Pension Fund. Key discussions included the General Update Part One, which covered the draft Pension Fund Annual Report and the procurement of actuarial services, and a report on The Pension Regulator's General Code of Practice. The Board also reviewed the Action Log, Training Log, and the Work Programme.

General Update - Part One

The Board received an update on the Pension Fund accounts and the draft Pension Fund Annual Report for the year ended 31 March 2024. The auditors, KPMG, are expected to complete their audit work by the end of October 2024, with the final sign-off anticipated in November or December. The Pension Fund Annual Report, which details the fund's activities and performance, has a statutory deadline for publication of 1 December 2024. Despite previous years' values falling due to the COVID-19 pandemic and the war in Ukraine, the fund's value had increased to £1.8bn for the year ending 31 March 2024.

The Board noted that the procurement process for pension actuarial, governance, and advisory services had commenced, with tenders due by 4 October 2024 and the new contract expected to start on 1 December 2024.

The Risk Register was presented, highlighting that most risks were rated as Amber/Green or Green, indicating they are managed by routine procedures or specific monitoring. A notable change was the increase in the ESG risk rating (AI07) due to the potential for lower investment returns when following higher ESG criteria. Conversely, the risk rating for employers not meeting their obligations (EM01) was reduced, partly due to the transfer of Lewisham Homes staff to the Council, which has reduced the risk of pension payment failures. The fraud risk rating (AG09) was also reduced, as recent audits indicated current working practices were satisfactory.

The draft Business Plan 2024/25 was presented, outlining the Pension Investment Committee's intended focus for the year, including the General Code of Practice. The Board agreed to a proposal to set a more realistic target for the issue of actions within one week and minutes within two weeks of a meeting.

The Pension Regulator's Code of Practice Report

The Board was updated on The Pension Regulator's (TPR) General Code of Practice, which came into force on 28 March 2024. This code introduces new governance requirements, including the establishment of an Effective System of Governance (ESOG) and, for schemes with 100 or more members, an Own Risk Assessment (ORA). The Council has purchased a GCOP tool checker from Hymans Robertson to assess compliance, which has indicated that the council is 95% compliant. Further work is planned to address the remaining areas, with an action plan to be presented to the Pension Investment Committee in November 2024 and subsequently to the Pension Board in December 2024. The Board welcomed the steps taken by the Council and looks forward to a comprehensive report on compliance.

Action Log

The Board noted the updates to the Action Log. Key actions included updates on the Administration Strategy and Data Improvement Plan, which would be provided under agenda item 11 (General Update - Part Two). The Risk Register update was provided under agenda item 6 (General Update - Part One). Responses to questions raised at the March 2024 meeting were reported to the Chair, with an action for the Head of Payroll and Pensions to share the relevant email with other Board members. An update on new regulations was provided under agenda item 7 (The Pension Regulator's Code of Practice). The audit of accounts is ongoing.

Training Log and Forthcoming Training and Events

The Treasury and Investment Manager provided an update on the Training Log, reminding members to advise of any external training or reading completed, as this is a requirement for the Annual Report. Training for Pension Investment Committee members is being reviewed and will also be offered to Pension Board members. The Chair noted that Mark Booker's progress against the Pension Regulator's Toolkit had not been recorded, and an action was assigned for the Treasury and Investment Manager to update the table to reflect that he had completed the core modules. Members were encouraged to inform the Treasury and Investment Manager of any CIPFA events they wished to attend.

Work Programme

The Board noted the Work Programme report for the period up to Quarter 2, June 2025.

Future Meeting Dates

The Board noted the scheduled future meeting dates: 10 December 2024, 10 March 2025, and 16 June 2025. Members were asked to inform the Treasury and Investment Manager or Governance Officer if they were unable to attend.

Exclusion of Press and Public

It was resolved that the press and public be excluded from the meeting for Item 11, General Update - Part Two, due to the likely disclosure of exempt information.

General Update - Part Two

This section of the meeting, held in private, included updates on Pension Administration, including the impact of the transfer of Lewisham Homes staff on the Pension Team's workload, the production of Annual Benefit Statements, the ongoing audit with KPMG, and the implementation of the Insights reporting tool and the Heywood ISP service. The Board requested to see information on the use of the Insights tool alongside the Data Improvement Plan in the December report. The Head of Payroll and Pensions advised that a potential risk related to resources. The Board also requested information on the implications of new legislation and the update of the risk register.

The Quarter 2 Investment Performance Report was presented.

Discussions also covered Pooling Considerations, including the potential for increased investment in Harbourvest and the government's proposal for authorities to pool investments through the London Collective Investment Vehicle (LCIV). Concerns were raised about potential losses from selling equity investments and additional transition costs if forced to pool. A decision on the Harbourvest investment was delayed due to anticipated rule changes.

The Climate Risk and Net Zero Action Plan was discussed, noting the agreement of a Transition to Net Zero Policy and the progress made towards reducing carbon emissions. An action plan will be produced linking with the engagement plan and fund manager meetings.

The draft Engagement Policy was presented, and the government's expectation for an explanation by March 2025 regarding why councils have not pooled investments was noted. The Board discussed how the council would respond to government policy statements that are not actual legislation and whether the Annual Report contained sufficient information on the direction of travel and implementation challenges. It was noted that the Annual Report could be amended to provide more information.