The Pension Committee of Croydon Council met on Tuesday 19 March 2024 to discuss a range of important matters concerning the management and governance of the Croydon Council Pension Fund. Key decisions included the approval of the 2024/25 training plan for committee and board members, and the adoption of updated policies on data retention and communications.

Pension Committee and Board Training Plan 2024/25

The Committee agreed to the proposed joint Pension Committee and Pension Board Training Plan for 2024/25. This plan, developed with advice from Aon, aims to address identified knowledge gaps, particularly in areas such as Pensions Accounting and Audit Standards, and to ensure members maintain the necessary expertise to meet regulatory requirements, including those from The Pensions Regulator's new General Code of Practice. The plan includes mandatory internal training sessions on key topics and optional external events, with a focus on utilising the Fund's online training platform, LOLA. Feedback from members indicated a desire for more tailored training, and the plan incorporates suggestions for a more personalised approach.

Training Update

The Committee reviewed a log of training undertaken by Pension Committee members during the 2023/24 year up to 20 February 2024. The report highlighted that while many training events were attended, there was a low uptake of the Hymans Robertson online training portal modules, with only one committee member and no reserve committee members having completed or started any modules. Officers are planning sessions to encourage completion and address knowledge gaps identified in the National Knowledge Assessment.

Pension Fund Communications Policy Statement

The Committee considered and agreed the Fund's updated Communications Policy Statement. This policy, prepared in accordance with regulations and best practice, outlines the approach to communicating with various stakeholders, including scheme members, prospective members, employers, and elected members. The updated statement includes further details on legislative background, guidance from The Pensions Regulator and the Scheme Advisory Board, expanded objectives, and an updated list of stakeholders. It also incorporates statements on Data Protection and the National Fraud Initiative, and details the availability of fund publications.

Croydon Council Pension Fund Data Retention and GDPR

The Committee approved updated documentation relating to the UK General Data Protection Regulations (UKGDPR) and the Data Protection Act 2018 (DPA). These documents include a Full Privacy Notice, a Summary Privacy Notice, a Personal Data Retention Policy, Personal Data Retention Policy Expectations for employers, and a Memorandum of Understanding for Employers. These updates are necessary to ensure ongoing compliance with data protection regulations, which require organisations to provide individuals with information on how their personal data is collected and used.

Croydon Pensions Administration Team Key Performance Indicators (November 2023 - January 2024)

The Committee noted the Key Performance Indicators for the Croydon Pensions Administration Team for the period November 2023 to January 2024. The report indicated that most targets were met, with the exception of leaver calculations, which continue to require improvement despite efforts to address delays caused by auto-aggregation and interfund transfers. The team is implementing measures to streamline processes, improve information flow from employers and payroll providers, and has begun utilising the National Fraud Initiative Hub for mortality screening, which has helped prevent potential overpayments.

Review of Breaches of the Law

The Committee reviewed the Pension Fund's Breaches of the Law log, noting that no new entries had been added since the last meeting. One entry, concerning the failure to publish audited fund accounts for 2019/20, was amended to reflect that the accounts are now expected to be signed off in March 2024. The report highlighted the ongoing challenges with publishing audited accounts due to wider council accounting issues, but confirmed that the Pension Regulator has been informed and a timetable for completion has been provided.

Audit Findings Report for the Year Ended 31 March 2020

The Committee noted The Audit Findings Report for the London Borough of Croydon Pension Fund for the year ended 31 March 2020, prepared by Grant Thornton UK LLP. The report indicated that the audit work was substantially complete, with no material adjustments impacting the Fund's net assets. However, an Emphasis of Matter paragraph will be included in the audit opinion due to a material uncertainty regarding the valuation of investments in Direct Property, stemming from the inherent uncertainty over asset valuations at 31 March 2020, exacerbated by the Covid-19 pandemic. The report also noted that a proposed transfer of properties from the Council to the Pension Fund had been withdrawn and therefore had no impact on the 2019/20 accounts.

Local Government Pension Scheme Advisory Board / The Pensions Regulator Update

The Committee received an update on matters being considered by the Local Government Pension Scheme Advisory Board (SAB) and The Pensions Regulator (TPR). Key points included advice on Sharia compliance for LGPS membership, the upcoming TPR General Code of Practice, and updates on LGPS investment strategies, including pooling, levelling up investments, and private equity allocations. The SAB also published a statement on fund surpluses and provided a detailed report on the 2022 Scheme Valuation. Discussions also covered the 'McCloud' remedy, audit issues within the LGPS, and climate risk reporting.

Inter-valuation Funding Update (31 December 2023)

The Committee was updated on the Fund's funding position as of 31 December 2023 by the Fund's Actuary, Hymans Robertson. The report showed a significant improvement in the funding level to 122% (from 97% at the 2022 valuation), largely driven by increased expectations of future investment returns due to rising global interest rates. While this is positive news, the report cautioned that the headline figures should be viewed with some circumspection due to market volatility and the reliance on future returns. The update also highlighted the improved funding positions for individual employers and discussed potential funding strategy options for the 2025 valuation, including reducing employer contributions, changing investment strategy, increasing prudence levels, or retaining the surplus.

Part A Progress Report for the Quarter Ended 31 December 2023

The Committee received an update on the Fund's investments for the quarter ending 31 December 2023. The market value of the Fund's investments increased to £1,781.8m, with a quarterly return of 4.2%. The report detailed performance across various asset classes, noting strong returns from Global Equities and Fixed Interest, while Property investments saw a slight decrease. The actual asset allocation was reviewed against the new target allocation, with Global Equities slightly above target and Fixed Interest below target. Officers will work to rebalance the Fund's investments over the next year to align with the target asset allocation. The report also touched upon risk management, noting the Fund's diversified investment portfolio as a key strategy to mitigate global economic risks.

The following items were discussed in private session:

• Part B Progress Report for the Quarter Ended 31 December 2023
• Investment in the LCIV MAC Fund
• Further Commitments to Existing Funds