This meeting was primarily concerned with reviewing the Hampshire Pension Fund's statutory statements for 2024, reviewing the performance of the scheme, considering its cash outturn, and approving its Business Plan for 2024/25 to 2027/28. In addition, the Panel and Board considered a report from the Deputy Chief Executive and Director of Corporate Operations on MHCLG’s ‘Local Government Pension Scheme (England and Wales): Fit for the future’ consultation.

MHCLG’s Fit for the Future Consultation

The report pack contains a paper that proposes that the Panel and Board respond to the Fit for the Future consultation, and that they delegate the authority to do so to the Deputy Chief Executive and Director of Corporate Operations. The proposals in the Fit for the Future consultation relate to:

• Reforming the LGPS asset pools¹
• Boosting LGPS investment in their localities and regions in the UK, and
• Strengthening the governance of both LGPS AAs² and LGPS pools. Asset pools are collections of investments made by local government pension schemes. The benefits of asset pooling are reduced cost, improved access to a wider range of investment opportunities and improved governance. AA is the acronym for 'Administering Authorities'. Administering Authorities are the bodies (usually the local authorities) that have statutory responsibility for running the Local Government Pension Scheme (LGPS).

Specifically, the consultation asks for the opinions of administering authorities on proposals that:

AAs [Administering Authorities] would be required to fully delegate the implementation of investment strategy to the pool, and to take their principal advice on their investment strategy from the pool

Business Plan

The report pack proposes for approval the Hampshire Pension Fund’s Business Plan for 2024/25 to 2027/28. The Plan outlines the key activities that the Fund plans to undertake in the three main areas of governance, funding and investment, and administration. It includes the following proposals for the next 3 years:

• Implement the outcomes of the SAB Good Governance Review.³
• Demonstrate the Fund's compliance against the TPR's new Code of Practice.⁴
• Respond to the MHCLG consultation on LGPS pooling.
• Advertise for volunteers and manage a process to select Panel and Board representatives.
• Re-let the contract for the Fund's Independent Advisor following procurement regulations.
• Respond to any relevant consultations that are published.
• Commission a review of the Pension Fund’s allocation to listed investments⁵ (active equities and multi-asset credit), with consideration of the options in the ACCESS pool.⁶
• Repeat the review of Responsible Investment (RI) with the Pension Fund's current investment managers and portfolios.
• Maintain scenario analysis on the risk of the impact of Climate Change on the Fund’s investments to be developed in future years.
• Consider the options available for transferring Hampshire’s uncommitted allocations to alternative investments⁷ to the ACCESS pool.
• Further develop the Fund's approach to stewardship, including taking into account the views of scheme members and employers as appropriate.
• Complete the rectification stage of the GMP⁸ reconciliation project.
• Receive and upload the required information from employers to produce required information on 2025 benefit statements.
• Implement planned enhancements to the Member Portal and Employer Hub and continue working to promote these to scheme members and employers.
• Deliver the planned improvements to the pension administration system (UPM) and roll these out to scheme members, employers and staff.
• Complete twice yearly assessment of external facing portals (Member and Employer) and resolve any identified issues. Review and issue the cyber statement and annual performance report.
• Test the ISP⁹ with the dashboard. Start assessment of data to ensure compliance can be achieved by the staging date (TBC but latest October 2026). The Scheme Advisory Board (SAB) provides advice to the Secretary of State on all aspects of the Local Government Pension Scheme. They have published a Good Governance Review which provides best practice guidelines to administering authorities on the governance of their pension schemes. The Pensions Regulator (TPR) is the regulator of work based pension schemes in the UK. They publish a Code of Practice that covers the regulatory requirements of all pension schemes and trustees in the UK. Listed investments are also known as 'quoted' investments. This means the companies are listed on a public stock exchange and the shares are traded openly. The ACCESS pool is one of eight Local Government Pension Scheme (LGPS) pools created as a result of the Government's 2015 reforms. The ACCESS pool covers pension funds in the south east and east of England. Alternative Investments are investments in asset classes outside of traditional stocks and shares or bonds. These can include property, private equity, infrastructure, hedge funds and commodities. GMP stands for Guaranteed Minimum Pension. A GMP is a legal requirement that was added to the rules of some private-sector defined-benefit pension schemes that contracted out of the State Earnings-Related Pension Scheme (SERPS) between 6 April 1978 and 5 April 1997. The GMP is a guarantee from the Government that contracted-out pension schemes would pay a minimum level of pension to members who reached State Pension Age before 6 April 2016. ISP stands for Integrated Service Provider. The Pensions Dashboard Programme (PDP) will allow pension scheme members to view information about all of their pensions in one place. Schemes must be connected to the dashboards using an ISP.

Investment Strategy Statement

The report pack proposed for approval an updated version of the Investment Strategy Statement (ISS), including the Responsible Investment (RI) policy within it. This has been updated to reflect the fact that Hampshire has aligned its RI priorities to those of the ACCESS pool. The report notes that

Having RI priorities does not diminish the importance of issues that are not mentioned or does not mean that these will not receive attention, but Hampshire is following best practice in setting priorities to give focus to its ESG work.

Communications Policy Statement

The report pack contains a proposal to update the Fund’s Communications Policy Statement to include the following changes:

• Removing references to the Pension Fund sending paper documents to scheme members living in countries where our website and Member Portal are unavailable. This is because a change has been made to allow scheme members living abroad to access the Member Portal.

Employer Policy

The report pack proposes an update to the Employer Policy to clarify that

With effect from 1 November 2023, new contractors (whether on a standard or pass-through basis) who become scheme employers as a result of a maintained school outsourcing will be pooled with the relevant local authority.

Administration Strategy

The report pack contains an updated version of the Administration Strategy that clarifies existing practice and policy.

2025/26 Cash Outturn

The report pack proposes for approval the Annual Cash Investment Strategy for 2025/26. The Strategy notes that the Pension Fund does not include a strategic allocation to cash as an asset class and highlights that the Fund receives cash each month from contributions by employees and employers, as well as income and returns of capital from its property and alternative investments. The strategy proposes the following changes to the cash investment limits:

• The maximum that will be lent to any one organisation (other than the UK Government) will be £25m.
• A group of entities under the same ownership will be treated as a single organisation for limit purposes. The report notes that > the Pension Fund’s cash flow will be managed on the basis that the need for borrowing for the Fund is avoided and therefore all of the Pension Fund’s cash investments are either overnight or for a very short duration. and proposes that the priority for cash investments remains security and liquidity.

Administration Performance

The report pack contains a paper that asks the Panel and Board to note the Administration performance update. This update contains a proposal to approve additional spend to complete a bulk address trace on over 5,000 preserved refund records.