The Dyfed Pension Fund Committee met on Wednesday 26 March 2025 to discuss the fund's budget, policies, and investment strategies. Key decisions included the approval of the 2025-2026 budget, the adoption of several new fund policies, and the approval of the Wales Pension Partnership (WPP) Business Plan for 2025-2028. The committee also noted updates on pension administration, breaches, risk management, and responsible investment initiatives.

Dyfed Pension Fund Budget 2025-2026

The committee approved the Dyfed Pension Fund Budget for 2025-2026, which was set at £147.3 million for both expenditure and income, resulting in a balanced budget. This approach allows for flexibility in utilising investment income to meet budgetary requirements. The expenditure budget includes £127.5 million for benefits payable, factoring in a 1.7% pensions increase based on the September 2024 Consumer Price Index (CPI) and a 1.65% increase for pensioner and deferred members. An additional £8.1 million has been allocated for lump sum retirement benefits and payments to and from leavers, reflecting higher-than-anticipated payments in the current financial year. Management expenses are estimated at £12 million, with £9.2 million earmarked for investment manager fees. Income is projected at £112.2 million from contributions, with employer contributions at £82 million and employee contributions at £30.2 million, including a 3% provision for pay awards and increments. Investment income is estimated at £26.6 million, and from April 2025, income from the WPP Global Credit Fund will be distributed as cash rather than being reinvested.

Dyfed Pension Fund Policies

The committee approved a suite of new policies for the Dyfed Pension Fund, developed to ensure compliance with The Pensions Regulator's (TPR) new General Code of Practice. These policies aim to provide clear expectations on scheme governance and administration. The approved policies include:

• Knowledge and Skills Policy: Outlines the fund's approach to training and development for management, decision-makers, and administration staff to ensure they possess the necessary knowledge to fulfil their roles.
• Administration Strategy: Formulates the administrative arrangements between the fund and participating Employing Authorities to drive continuous improvement in scheme administration.
• Communications Policy: Details the fund's communication approach, focusing on clarity, accessibility, and responsiveness to all stakeholders.
• Personal Data Retention Policy: Sets out measures to comply with data minimisation and storage limitation principles for personal data held by the fund.
• Voluntary Scheme Pays Policy: Clarifies the circumstances under which the fund will accept elections for Voluntary Scheme Pays, providing consistency for fund members.
• Compliments and Complaints Policy: Establishes the fund's procedures for recording and responding to compliments and complaints from scheme members.
• Breaches Policy: Outlines the fund's approach and procedures for reporting breaches of the law, in accordance with the Pension Act 2004.

Business Plan 2025-2028

The Dyfed Pension Fund's Business Plan for 2025-2028 was approved. The plan provides an overview of the fund's operations, governance structure, responsibilities, key documents, investment strategy, financial budget, and outlines priorities and business objectives for the next three years. During the discussion on the core principle of Responsible Investment, a question was raised regarding divestment from companies with investments in Israel, in support of a petition received from For Solidarity with Palestine Pembrokeshire. The Treasury & Pension Investments Manager advised that discussions on this matter are ongoing and further information will be provided to the committee in due course. The Chair acknowledged receipt of the petition.

Wales Pension Partnership (WPP) Updates and Business Plan

The committee received an update on the Wales Pension Partnership (WPP) Joint Governance Committee (JGC) meeting held on 12 March 2025. This update included a review of the WPP Business Plan 2024-2025 Q3, the WPP Training Plan 2025-26, an operator update, WPP Performance Summary for Q4 2024, and an update on WPP Global Private Credit – Vintage I & II.

The committee approved the WPP Business Plan 2025-2028. This plan outlines the WPP's priorities and objectives for the next three years, its governance structure, policies, financial budget, and investment and performance objectives. The committee also noted the update from the WPP JGC meeting.

LGPS: Fit for the Future – WPP Submission to Government

The committee noted the WPP's submission to the government regarding the LGPS: Fit for the Future consultation. This submission outlines the WPP's proposal to retain its status as a standalone investment pool for Wales, establishing an FCA-authorised investment management company (IM Co). The proposal details how the WPP will meet the government's new pooling requirements, including the transfer of all assets to pool management by March 2026. The submission highlights the business case for a standalone Welsh pool, emphasizing benefits such as local investment, responsible investment goals, and the creation of a centre of excellence for LGPS investment in Wales. The Director of Corporate Services indicated that Cardiff city centre might be a suitable location for the new company to attract the necessary skilled workforce.

Other Matters

The committee also received and noted reports on:

• Pension Board Report: An update from the Dyfed Pension Fund Pension Board meeting held on 8 January 2025.
• Budget Monitoring and Cash Position as at 31 December 2024: This report indicated a projected overspend of £2 million for the financial year 2024/25.
• Pensions Administration Report: An update on activities within the Pensions Administration service, including regulatory matters, the breaches register, i-Connect, GMP reconciliation, and workflows.
• Breaches Report: Detailing one instance of late contribution payments, with no long-term implications noted.
• Risk Register: Highlighting operational risks, including the addition of a new risk concerning Cyber Security.
• Training Plan: The 2024-2025 training plan was noted, and the 2025-2026 training plan was approved.
• Wales Pension Partnership Responsible Investment Update: Updates for the quarters ending 30 September 2024 and 31 December 2024 were received.
• Robeco Engagement Reports: Reports for the periods 1 July 2024 - 30 September 2024 and 1 October 2024 - 31 December 2024 were noted. These reports detailed engagement activities undertaken on the WPP portfolio.
• Independent Advisor Performance & Risk Report to 31 December 2024: This report was noted, and its recommendations were approved.
• Northern Trust Performance Report as at 31 December 2024: This report was noted.
• Russell Investments Update: An update on the Sustainable Active Equity Fund, Global Growth Fund, and Global Credit Fund was noted.

The committee resolved to exclude the public from the meeting for the consideration of several items due to the presence of exempt information.