The Pension Fund Committee met to discuss the performance and management of the fund, including updates on administration, investment strategy, and risk management. The committee noted reports on administration performance, external audit, risk management, knowledge and understanding, and investment performance. Members also discussed and approved a draft funding strategy statement and an academies funding policy.

Triennial Valuation

The committee discussed the 2025 triennial valuation, a process that occurs every three years to assess the funding position of the pension fund and determine employer contribution rates for the following three years.

Stephen Scott from Hymans Robertson, the fund actuary, presented the initial results of the 2025 valuation, alongside the draft funding strategy statement (FSS) and a new draft academies funding policy.

The key points arising from the valuation were:

• Funding Level: The fund's funding level had increased from 95% in 2022 to 129% at the 2025 valuation. This was primarily due to a decrease in the value of liabilities, driven by an increase in asset return expectations.
• Asset Value: The value of assets had increased from £1.5 billion to £1.7 billion.
• Liability Value: The value of liabilities had decreased from £1.57 billion to £1.32 billion.
• Discount Rate: The discount rate used to value liabilities had increased from 4.6% to 6.8%.
• Required Return: Despite the improved funding level, the required return had increased from 4.9% to 5.2%, indicating that the fund needed to earn a higher return to ensure full funding in the future.

Stephen Scott explained the factors driving the change in the funding position using a waterfall chart, highlighting the impact of asset returns, benefit increases, and changes in assumptions. He noted that while asset returns were slightly lower than expected, the changes in inflation and investment outlook had significantly reduced the value of liabilities.

The committee discussed the actuarial assumptions used in the valuation, including the prudence level for the discount rate. Stephen Scott advised that he was comfortable with the current level of prudence and did not recommend increasing it.

The committee approved the draft funding strategy statement and the draft academies funding policy, allowing officers to consult with employers and academies on the proposed contribution rates and funding arrangements.

Asset Pooling

Tim Mpofo, Head of Profan Solutions at the London Save, provided an update on asset pooling, outlining the plan to transfer 100% of the fund's assets to the pool by 31 March 2026, in line with government requirements following the LGPS: Fit for the Future consultation.

As of 30 June 2025, approximately 78% of the fund's strategic asset allocation was under pooled arrangements, with the remaining 22% in offpool assets.

Tim Mpofo explained that the transition plan involved:

• Transferring investments to existing, broadly comparable London CIV managed funds.
• Engaging with London CIV to develop appropriate pooling solutions for assets where no existing solution exists.

He noted that an Investment Management Agreement (IMA) may be required to achieve the transfer of assets by the government's deadline.

Tim Mpofo also highlighted key governance arrangements that must be implemented by 31 March 2026, including the appointment of a senior LGPS officer and an independent advisor, and the preparation of a governance and training strategy.

Councillor Anne Hutton asked if the council had liaised with other councils to see how they were progressing with the changes. Denise Nadal, the Chief Finance Officer for the council, responded that they were in contact with other London councils, but that the changes were coming at a busy time for all councils, with other significant changes also underway.

Investment Performance

Nick Jellema from Hymans Robertson presented the Investment Performance Report for the quarter ended 30 June 2025. The fund's investment portfolio was valued at £1.75 billion on 30 June 2025, representing a 3.2% net positive return over the quarter.

Key points from the report included:

• Equity investments performed strongly, with returns between 5% and 8%.
• Lower risk investments, such as corporate and government bonds, also delivered good returns.
• The overall investment performance was very good, with a return of 3.2% for the quarter.

Nick Jellema noted that some mandates had underperformed relative to their benchmarks, but that overall, the fund's assets had performed well.

Councillor Nick Mearing-Smith asked about the fund's geographical exposure, particularly to China. Nick Jellema responded that the fund had limited exposure to China, primarily through emerging market equity investments.

Tim Mpofo provided an update on recent strategic asset allocation decisions, including the transition of the Barings High Yield investment to the LCIV MAC Fund, the commitment to the LCIV Private Debt II Fund, and the LCIV fee negotiation service.

Risk Management

Mark Fox, Pensions Manager for the council, presented a report on the risk management review, detailing the risks associated with the management of the scheme and the actions in place to mitigate them. He noted that the risk registers are reviewed quarterly by fund officers and at every meeting of the Local Pensions Board.

Following feedback from the committee at the last meeting, a thorough review of the risk register had been undertaken, resulting in the removal of a number of previously identified risks.

Updates to the administration risks included:

• ADM05: The risk score had been reduced from 6 to 4, as the number of employers that do not pay contributions to the fund is minimal.
• ADM07: The risk had been retitled to Failure to adhere to pensions knowledge / training requirements .
• ADM21: The risk score had been reduced from 6 to 3, as there are now tighter controls in place for fund officers when making payments from the fund.

Updates to the non-administration risks included:

• INV01: The risk score had changed from 6 to 2, as the signatory list had been updated.
• INV02: The LBB Pensions Team had decided that this risk should be deleted as the Redemption Protocols would be determined by the Investment Managers rather than the Fund.
• INV06: The name of this risk had been changed to Education to Training .

Councillor Anne Hutton asked about line item ADM 16, about signing up to the pensions pledge¹. Mark Fox responded that it was something that officers were considering.

Administration Performance

Mark Fox also presented the administration performance report, providing an update on the current administration performance by West Yorkshire Pension Fund (WYPF).

Key points from the report included:

• WYPF processed 1,670 cases in July, with 90% completed within agreed Key Performance Indicators (KPIs).
• The number of complaints received by WYPF remained very low.
• As of 15 August, 98.6% of members had received their 2025 Annual Benefit Statements (ABSs).
• WYPF continued to make progress on the data improvement plan, reducing the number of data items needing to be reviewed and updated to approximately 6,000.
• The common data score for August 2025 was 96.5%, above the TPR target.
• Between April 2025 and June 2025, the fund received £18.00m of contribution payments.

Mark Fox noted that monthly checking of contributions paid continued to take place by both WYPF and officers, and that a process note had been drafted to be agreed with WYPF.

Local Pension Board Annual Report

The committee considered the Local Pension Board’s Annual Report, which provided a summary of the board's work, work plan, training, and conflicts of interest. The report noted that the Local Pension Board had requested that the fee for attendance and training should be reviewed and the Member's allowance scheme be amended accordingly.

Knowledge and Understanding

Mark Fox presented a report on knowledge and understanding, outlining the actions being taken to ensure that the Pension Fund Board and Committee have appropriate training opportunities. He noted that the government's response to the Fit for the Future consultation would introduce statutory alignment of knowledge and understanding requirements between Pension Committee members and Local Pension Board members.

Responsible Investment

Tim Mpofo provided an update on responsible investment, highlighting the progress made over recent years and considering the next steps for the fund. As of 30 June 2025, approximately £0.45bn (25% of fund assets) was invested in sustainability-focused investments.

External Audit and Accounts

Hassan Shirwani, the interim pensions finance manager, presented the External Audit and Accounts report. Grant Thornton are the Pension Fund's appointed external auditors for the 2024/25 financial year. Grant Thornton are currently undertaking the audit of the pension fund account for 2024/25 and have submitted an audit progress report which is included as an appendix to this paper.

Work Programme

The committee noted the work programme for the upcoming months.