Here is a summary of the agenda for the Pensions and Investments Committee meeting on 23 April 2025. The meeting included a review of the Derbyshire Pension Fund's risk register, and a report on pension administration performance. Some items, relating to sustainable investment, investment pooling and ombudsman escalations, were scheduled to be discussed in private session.

Derbyshire Pension Fund Risk Register

The committee was scheduled to consider the Derbyshire Pension Fund Risk Register. The register identifies a number of factors:

• Risk item
• Description of risk and potential impact
• Impact, probability and overall risk score
• Risk mitigation controls and procedures
• Proposed further controls and procedures
• Risk owner
• Target risk score
• Trend risk scores

The risk register is reviewed quarterly by the Director of Finance, and annually by the Derbyshire Pension Board.

The report pack included the summary and main risk registers, with changes highlighted in blue.

The current risk score reflects a combination of the risk occurring (probability) and the likely severity (impact) after mitigation controls and procedures currently in place are taken into account. Probability scores range from 1 (rare) to 5 (almost certain) and impact scores range from 1 (negligible) to 5 (very high). A low risk classification is based on an overall risk score of 4 or less; a medium risk score ranges between 5 and 11; and a high risk score is anything with a score of 12 and above.

The Risk Register includes a target score which shows the expected risk score once the proposed additional risk mitigation controls and procedures have been implemented.

The five high risk items listed in the risk register are:

1. Systems failure/Lack of disaster recovery plan/Cybercrime attack (Risk No.12)
2. Fund assets insufficient to meet liabilities (Risk No.19)
3. LGPS Central Limited related underperformance of investment returns (Risk No.30)
4. Insufficient cyber-liability insurance relating to the pensions administration system (Risk No.40)
5. Impact of McCloud judgement on administration (Risk No.44)

The report pack noted that pension schemes hold large amounts of personal data and assets which can make them a target for cybercrime attacks, and that the trusted public profile of pension funds also makes them vulnerable to reputational damage.

The report pack also noted that the Fund is continuing to seek information and assurance with respect to the Council’s cyber security and ICT business continuity arrangements.

The report pack stated that there is a risk for any pension fund that assets may be insufficient to meet liabilities, and that funding levels fluctuate from one valuation to the next, principally reflecting external risks around both market returns, and the discount rate used to value the Fund’s liabilities.

The report pack stated that the Fund is expected to transition the management of a large proportion of its investment assets to LGPS Central Limited (LGPSC/the Company), the operating company of the LGPS Central Pool (the Pool), over the next few years.

The McCloud case relates to transitional protections given to scheme members in the judges’ and firefighters’ schemes which were found to be unlawful by the Court of Appeal on the grounds of age discrimination. The final regulations to implement the McCloud remedy in the LGPS, The Local Government Pension Scheme (Amendment) (No. 3) Regulations 2023, came into force on 1 October 2023.

Two risks have been removed from the Risk Register since it was last presented to Committee:

• Failure to identify and manage risk
• Administration issues with AVC provider

Half-Year Pension Administration Performance Report

The committee was scheduled to be notified of the pension administration activity undertaken by the pension administration team of Derbyshire Pension Fund, and the performance levels achieved, in the second half of 2024/2025.

The administration team’s core role is to ensure that pension benefits are paid to members accurately and in a timely manner, and to provide clear information on pension options to members to help their planning for retirement.

At 31 March 2025, the administration team included 47 individuals covering 43.532 full-time equivalent (fte) positions with 16.29 fte vacant administration positions.

The Fund’s key performance indicators have continued to evidence the administration team’s good performance in maintaining an effective operation during the second half of 2024-25.

Over the six-month period, results highlight that the team achieved 100% compliance in five of the seven key performance indicators.

The implementation of the McCloud remedy in the LGPS from 1 October 2023 introduced an increased level of complexity to the task of calculating pension benefits for qualifying members to determine whether they are affected by the underpin.

A brief summary of the operational challenges which the Fund is continuing to meet in order to fully apply the McCloud remedy into its LGPS administration identifies that:

• 28,000+ members within the Fund were in scope to investigate whether their pension may be affected by McCloud
• latest figures show that 22,943 cases have been fully checked
• the current total of the overall annual increase to pension values identified through revisiting original payments to pensioners and beneficiaries totals £9,621 pa in respect of 52 scheme members.

The i-Connect platform which enables employers to submit their employees’ data by secure transmission had been implemented by 339 employers as at 31 March 2025, accounting for 95.77% of the Fund’s total active membership.

Member engagement with the Fund’s My Pension Online system has continued to increase with 31,187 members now fully registered. The total includes over 40% of the Fund’s active and deferred membership.

During the second half of 2024/2025, the Fund issued the following newsletters to employers to highlight news items, information on important topics and reminders about upcoming deadlines:

• 31 October 2024 Newsletter 213
• 21 November 2024 Newsletter 214
• 19 December 2024 Newsletter 215
• 31 January 2025 Newsletter 216
• 28 February 2025 Newsletter 217
• 28 March 2025 Newsletter 218

The report pack also included updates on:

• Pensions Dashboards
• The Pensions Regulator – new General Code of Practice
• LGPS guarantee for Further Education (FE) Bodies
• Pension Administration Strategy

Exclusion of the Public

The agenda included a motion to exclude the public from the meeting for items 7, 8 and 9, relating to:

• Sustainable Investment Monitoring Service Report
• Local Government Pension Scheme Investment Pooling
• Summary of AADPs and Ombudsman Escalations During 2024/25

This was because these items were expected to involve the likely disclosure of exempt information as defined in Paragraph(s) 2 & 3 of Part 1 of Schedule 12A to the Local Government Act 1972.