The Committee noted the minutes of the Pension Board and Pension Investment Sub-Committee, the Pension Fund Annual Report for the year ended 31 March 2024, the Business Plan as at October 2024, the Governance Update, the Risk Register as at October 2024, the Training Update and the Open Consultation: LGPS (England and Wales): Fit for the future update. The committee approved the Forward Plan and granted the Chief Financial Officer delegated authority to respond to the LGPS consultation, in consultation with the Chairman.

LGPS (England and Wales): Fit for the future

The committee discussed the consultation on Local Government Pension Scheme (England and Wales): Fit for the future, which proposes changes to the LGPS in three key areas:

1. LGPS Pooling: The government proposes that Administering Authorities be required to fully delegate the implementation of their investment strategy to their pool and to take their principal investment advice from the pool. It also proposes that AAs transfer legacy assets to the management of their pool by 31 March 2026.
2. Local Investment: The government proposes that funds set out their approach to local investment with regard to local growth plans and local economic priorities in setting their investment strategy, and work with local authorities. It proposes that AAs set a high-level objective on local investment within the Investment Strategy Statement, including a target range for local investment as a proportion of the fund. The government also proposes that pools develop the capability to carry out due diligence on local investment opportunities and decide whether to invest.
3. Governance of Funds and Pools: The government proposes bringing in recommendations from the Scheme Advisory Board (SAB) Good Governance Review¹. It proposes a requirement for AAs to participate in a biennial independent governance review and produce an improvement plan to address any issues identified. The government also proposes that pension committees include an independent person who is a pension professional, whether as a voting member or an adviser.

The committee agreed to delegate the response to the Chief Financial Officer in consultation with the Chairman.

The Business Plan

The Committee noted the Worcestershire Pension Fund Business Plan as at October 2024. The Business Plan sets out the aims and objectives of the Fund for 2024/2025 - 2026/2027 and outlines how the fund will deliver against its objectives and improve its services for members. The plan highlights a number of key areas of work including:

• McCloud Remedy: The project is all about applying a McCloud underpin to in-scope members. The Committee noted that the project is currently on schedule.
• The member portal: The project is all about implementing self-service functionality which enables members to view their benefits online through a secure portal and to carry out certain processes. The Committee noted that the member portal has been implemented and is live.
• Pensions Dashboard Programme: The government intends to deliver pensions dashboards through the Pensions Schemes Act 2021 and The Pensions Dashboards Regulations (Amendment) 2023. The Committee noted that the Fund is preparing for the Pensions Dashboard Programme and has started the implementation process of the ISP, which will be used to connect to the dashboard eco system.
• Implementation of I-Connect: I-Connect will allow employers to submit monthly data securely directly from their payroll system to the Pension Fund. The Committee noted that the Fund is continuing to test and onboard employers onto I-Connect.
• Review of existing AVC provision: The Fund is looking to complete a review of its current AVC provision and other options available using the National LGPS Framework.

Governance Update

The Committee noted the Worcestershire Pension Fund Governance Update and the Cyber Incident Response Plan and Data Retention Policy. The Governance Update reported that progress had been made in mitigating a number of risks, including:

• WPF 01 Failure of governance arrangements to match up to recommended best practice. The Fund has devised a Cyber Incident Response Plan and scheduled a session with Heywoods to discuss cyber security and incident response.
• WPF 04 Not having an established and meaningful Business Plan / Pension Administration Strategy. The Business Plan is a working document used to report on progress over the last quarter.
• WPF 15 Failure of the actuary to deliver the services contracted. No issues to report.
• WPF 17 Failure of custodian to deliver the services contracted. No issues to report.
• WPF 26 Fraud by staff. No issues to report.

The Committee also noted that the Fund is continuing to actively review its Governance Library and is prioritising policies highlighted in The Pensions Regulator’s General Code of Practice.

Risk Register

The Committee noted the Worcestershire Pension Fund Risk Register as at October 2024. The Risk Register is kept under regular review and the October 2024 review added no new risks and resulted in no changes to the risk scores.

Mitigating actions for a number of risks have been updated, including:

• WPF 35 Being an LGPSC partner fund. The Fund is closely monitoring the change in leadership within LGPS Central Limited².
• WPF 20 Having insufficient resources in pensions administration. Improvements have been made in respect of resourcing pensions administration with only 2 vacancies remaining and the implementation of apprenticeships into the structure to help build resilience.
• WPF 28 Cyber-attack leading to loss of personal data or ransom, or our hardware being disabled or from financial loss from our banking / custody arrangements being compromised. Additional assurances around cyber and system security were sought following June 2024 Board and Committee meetings.
• WPF 29 Failure to deliver member communications in line with regulatory requirements, for example the 31 August annual benefit statement deadline. Delivery of Active Annual Benefit Statements via the member online portal, alongside posted statements, has supported a more effective and efficient delivery to members.

Training Update

The Committee noted the Worcestershire Pension Fund Training Update. The Training Update reported that the training delivered since the last Training Update to members included:

• Introduction to Pensions training session
• Understanding your Annual Benefit Statement session
• Worcestershire Pension Fund Employer forum 2024

The Committee also noted that progress had been made in mitigating a number of risks, including:

• WPF 02 Insufficient knowledge amongst members of Pensions Committee / Pension Board / Pension Investment Sub Committee members. The Fund now holds the majority of Training needs analysis forms completed by members of the Board and Committee.
• WPF 03 Failure of officers to maintain a sufficient level of knowledge / competence or to act in accordance with our roles and responsibilities matrix. Senior Fund Officers have been completing the LOLA courses to help support and maintain their knowledge.
• WPF 21 Failure of business continuity planning. No issues to report.
• WPF 27 Incorrect calculation of benefits through human error or delayed notification of a death. Improvements have been made to the death processing workflow.

Pension Fund Annual Report for the year ended 31 March 2024

The Committee noted the Pension Fund Annual Report for the year ended 31 March 2024. Some of the key highlights of the report include:

• The value of the Fund’s net assets increased by £362.7 million from £3,608.6 million at 31 March 2023 to £3,971.3 million at 31 March 2024.
• Scheme membership has continued to grow.
• Despite cost-of-living pressures active employer numbers have increased from 67,739 to 69,595 during 2023/24, due to the continuation of enrolment initiatives and an increase in the number of designated employers.
• The Fund’s actuarial statement for the year ending 31 March 2024 supports improvement in the funding position to approximately 106%, an improvement on the 2022 valuation of 101%.

The report also includes a foreword from Councillor Elizabeth Eyre, Chair of the Pensions Committee, who thanked all of the active members of the Committee, the Chair and members of the Sub Investment Committee, the Independent Advisor, the Members of the Pension Board, all the staff at the Fund and the employers for all their continuing hard work for the Fund and its members.