This meeting was scheduled to discuss the London Borough of Hounslow Pension Fund's administration, including performance, risks and regulatory matters. It was also scheduled to consider reports on investment, and receive a presentation from an unnamed fund manager.

Investment Consultancy Service Decision

A decision was pending on the appointment of an Investment Consultancy Service provider, with a report to follow.

Annual Business Plan 2024/25

The Panel was scheduled to consider the proposed work programme for 2024/25. This included the proposal to have the Pension Board monitor WYPF's compliance with KPIs in their contract, and report back to the Panel.

Quarterly Overview and General Matters

A quarterly overview report was scheduled to be presented to the panel.

Investment Performance

At the end of September 2024, the net assets of the fund were worth £1,364.7m, 12.1% higher than the value at the end of September 2023 (£1,217.2m).

Late Contributions

All late contributions had been received, and officers were scheduled to work with late payers to minimise future late payments.

LGPS Fit for the Future Consultation

On 14 November 2024, the Chancellor of the Exchequer delivered her Mansion House speech, outlining proposals for further reforms of the LGPS. The key proposals are that funds must transfer all assets into a pool or to the management of a pool by March 2026. The other key proposal was the transfer of the responsibility for agreeing the detailed asset allocation, from the Administering Authorities to the pools. The panel was scheduled to consider the consultation on this proposal, which is due to close on 16 January 2025.

Pension Fund Administration Performance Report and Update on Regulatory Matters.

The West Yorkshire Pension Fund (WYPF) provides administration services for the London Borough of Hounslow Pension Fund, under a shared service agreement with the London Borough of Barnet and Lincolnshire County Council. The meeting was scheduled to receive a performance report covering the administration of the Pension Fund from 1 July 2024 to 30 September 2024.

Performance

WYPF has a monthly target to complete a minimum of 85% of processes within the allotted number of days. Performance was below target in July (83.6%) and August (85.8%), but above target in September (87.6%).

The panel was scheduled to consider the trends, performance, and areas needing attention in the following priority areas of work:

• Retirement quotes and actuals
• Death processes
• Beneficiary to Update Non-Payroll

McCloud Remedy

The report explained that the McCloud remedy, workload volumes and staffing levels were impacting performance, particularly in the following areas:

• Interfund Linking
• Transfer processes
• Early Leavers

The need for additional manual calculations and the software’s inability to perform these calculations automatically were identified as major bottlenecks.

The report explains that WYPF were monitoring both the total number and the aging of outstanding processes.

Shared Service Cost

An underspend of £535k is being reported on shared service costs, including in the areas of staffing, computer and invest to save.

Administration and Funding Risk Register

The Panel was scheduled to be provided with a report containing the Pension Fund Risk Register.

Pooling Risk

The risk register has been updated to show recent proposals by the Chancellor to accelerate pooling and to transfer the decision making for detailed asset allocation and the choice of fund managers to the pool. It suggests that the risk has also been reviewed to reflect the likely impact the investment decisions being transferred to the pool will have, while the responsibility for the liabilities that the investments cover remain with the Fund.

General Code of Practice Update

The Pensions Regulator’s (TPR) General code of practice (GCOP) came into force in March 2024. It sets out the expectation of the conduct and practices that governing bodies of pension schemes should meet to comply with their duties under the pensions legislation.

The meeting was scheduled to receive a report on the outcome of the assessment carried out by officers and reviewed by the Pension Board.

Three additional areas were scheduled to be assessed, those being:

• Scheme Governance
• Scheme Administration
• Contributions

PIRC Analytics Report 2023/24

The Panel was scheduled to receive a report on the performance of the Hounslow Pension Fund’s investments during the 2023/24 financial year, as benchmarked against other LGPS funds using the PIRC-LAPPA analysis.

Annual Performance

The London Borough of Hounslow Pension Fund returned 10.5% in 2023/24, ranking in the 51st percentile among the 63 Local Government Pension Scheme (LGPS) funds analysed in the PIRC-LAPPA report. This was slightly above the LGPS average return of 9.2%.

Asset Class Contributions

The performance of different asset classes played a significant role in determining the Fund’s overall return:

• Global equities delivered 17.7% for Hounslow, outperforming the LGPS average of 16.3% and making the largest contribution to the fund's success.
• Bond investments returned -4.7%, significantly underperforming the LGPS average of 4.4%.
• Private Equity returns were 1.6%, in line with LGPS averages.
• Property returned -0.6%, outperforming the LGPS property average of -3.2%.

Long-Term Performance

Hounslow Pension Fund has delivered consistent but slightly below-average returns when compared to LGPS benchmarks.

Asset Allocation

Hounslow Pension Fund’s asset allocation strategy is broadly in line with LGPS averages:

• Equities – 40% (Hounslow) vs. 45% (LGPS average)
• Alternatives (e.g., private equity, infrastructure) – 10% (Hounslow) vs. 15% (LGPS average)
• Property – 8% (aligned with LGPS average)
• Bonds – 12% (Hounslow) vs. 18% (LGPS average)