The Pension Board of Dumfries and Galloway Council met on 05 December 2024 and chose not to approve the Governance Policy Statement as written. The Board noted reports on an internal audit into governance and risk management, an update on the Pension Fund, the performance of Investment Managers, and several other matters.

Governance Policy Statement

A Governance Policy Statement for the Pension Fund was presented to the Board having been already approved by the Pension Sub Committee, but the Board ultimately voted not to approve the policy. The Board was concerned about changes to the Scheme of Administration, which governs the delegation of powers to council committees. It was noted that if the Scheme of Administration is changed, the Pension Board's Constitution would need to be updated to reflect that change.

Pension Fund Update

The Board noted a report that provided an update on the Investment strategy, confirmed the Investment Advisor Objectives for 2024, and identified emerging issues in the Pension Fund. The report noted the outcome of the UK Government consultation on the McCloud Remedy¹, that a review of the Fund's Investment Strategy in light of the UK's commitment to become Net Zero by 2050 will need to be undertaken, and that work is ongoing to improve data security in light of the increasing threat from cyber attacks.

Internal Audit Report on Governance and Risk Management

The Board noted a report from Richard Fox, Interim Internal Audit Manager for Dumfries and Galloway Council. The report provided an update on an audit of Governance and Risk Management arrangements for the Pension Fund.

An audit of the Governance arrangements for the Pension Fund was carried out during quarter 1 2024/25. This was a planned audit included in the councils’ internal audit plan.

The purpose of the audit was to:

• Review the adequacy and effectiveness of the Pension Fund’s governance, risk management and internal control framework to provide assurance that it is fit for purpose and operating effectively.

Overall Conclusion

We found that the Pension Fund has in place a good standard of governance, risk management and internal control arrangements that are generally operating effectively. A limited number of areas for improvement were identified and are detailed within the main body of the report

The Board also noted the Pension Sub Committee's response to the report, which was that the one 'High' rated issue identified in the report - that the Pension Fund does not have a dedicated Risk Manager - is being addressed and is expected to be resolved shortly.

Investment Manager Performance

The Board noted a report on the performance of the Fund's Investment Managers in the third quarter of 2024. The report was produced by Hymans Robertson.² The Board also heard a presentation from Fund Managers Columbia Threadneedle.³

LGPS - Administration Update Report

The Board noted an update on work being carried out on the administration of the Local Government Pension Scheme. The report explained that since the previous meeting of the Pension Sub Committee on 19 September 2024, a working group had met to discuss the recruitment of additional staff to administer the scheme, and had agreed that the Council would seek to fill one of the two current vacancies.

Annual Training Plan and Record of Training Update

The Board noted the Record of Training for members of the Pension Sub Committee and Pension Board.