The Wandsworth Council Joint Pensions Committee met to discuss the pension fund's audit plan, the roadmap to the 2025 valuation, general matters, and the quarterly investment performance report. The committee noted the proposed timelines for the triennial valuation and the updates on pooling, funding strategy statements, and pension dashboards. They also reviewed the investment performance and considered a potential review of active equity managers.

Pension Fund Audit Plan 2024/25

The Joint Pensions Committee reviewed and discussed the audit plan for 2024/25, prepared by Ernst & Young LLP (EY), the fund's external auditor. The audit plan details the work EY will undertake to form an opinion on the 2024/25 accounts.

Key aspects of the audit plan include:

• Materiality: Planning materiality was set at £30.8 million, with performance materiality at £23.1 million. The audit difference threshold was set at £1.5 million.
• Risks: The plan identifies key risks, including misstatements due to fraud or error and the valuation of hard-to-value investments.
• Fees: The audit fees include a scale fee adjustment of £19,600 in both 2023/24 and 2024/25 due to increased requirements of IAS 315¹ and other estimation and fraud risk procedures. There is an additional cost in 2024/25 for testing membership data to support the triennial valuation.

Councillor Norman Marshall, Chair of the Joint Pensions Committee, asked the committee to consider and comment on the Audit Plan for 2024/25, in particular the materiality and reporting levels.

Roadmap to Valuation 2025

The committee noted the proposed timelines for the 2025 actuarial valuation, which is required every three years to determine the fund's current funding level and set contribution rates for the next three years. The previous valuation, as of 31 March 2022, showed a funding position of 116%. The valuation report is also used by the fund's investment consultant to assist with their asset allocation review.

The indicative timeline includes data cleansing, agreement of initial assumptions, discussions with employers, and finalisation of the valuation and rates.

General Matters

The committee received updates on several general pension matters:

• Pooling: The government has confirmed that all investments must be transferred to pools by 31 March 2026. They are supportive of London CIV's proposals for managing assets and providing wider services.
• Funding Strategy Statements: Updated guidance on Local Government Pension Scheme (LGPS) Funding Strategy Statements (FSS) aims to improve consistency, transparency, and risk management across LGPS funds.
• London CIV Shares: Shareholders were required to provide an additional £2,249,984 due to the growth in Assets under Management (AUM), with Richmond and Wandsworth's share being £70,312.
• Local Pension Board Chairman's Report: The committee received the Wandsworth Local Pension Board Chair's report, which reviewed the board's work.
• Pension Dashboards: The council has chosen Heywood as its software supplier to connect to the pensions dashboards, with implementation continuing over the next few months.
• LGPS Consultation: The government launched a consultation on changes to the LGPS to improve fairness and access, covering survivor benefits, the gender pensions gap, opting out of the scheme, forfeiture and the McCloud remedy.

Quarterly Investment Performance Report - 2024/25 Q4

The committee reviewed the pension fund's investment performance to 31 March 2025. The fund's performance was compared to the LGPS peer group and the fund benchmark.

Key points from the report:

• The fund's absolute performance for the quarter was -2.4%, compared to the customised benchmark of -2.2% and the local authority average of +1.1%.
• Equity investments make up 57% of the fund, so equity performance has a significant impact on the fund's overall performance.
• Most managers had negative absolute returns this quarter, with bond, multi-asset credit and property managers being positive.
• The London CIV Global Focus Fund was above 15% of the fund.
• Cash was above the higher benchmark threshold.

The committee also considered a potential review of the use of active equity managers, given their recent underperformance. Councillor Ian Craigie, Deputy Chair of the Joint Pensions Committee, asked if the committee wished to bring forward the review of the use of active managers.

The committee noted that Schroders SCREF fund is below the benchmark for the 10th consecutive quarter, and are showing underperformance in their 1 and 3 year returns, and agreed to invite Schroders to present at the next committee meeting.

Exclusion of the Press and Public

The committee resolved to exclude the press and public during consideration of the LCIV presentation, due to the likely disclosure of exempt information.

LCIV Presentation

The committee received a presentation from the London Collective Investment Vehicle (LCIV).