The Pensions Committee of Hertfordshire Council met on Friday 26 September 2025, discussing employer risk and governance, the performance of the Local Pensions Partnership Administration (LPPA), the pension fund's risk register, and investment performance. The committee noted the contents of these reports.

Employer Risk and Governance

The committee received an update on employer risk and governance for the period April to June 2025. The number of employers categorised as 'red risk' increased from seven to nine. Of these, six were identified as genuine high-risk employers: two ceased employers with outstanding deficits and four employers who lack indemnity arrangements, a requirement for admitted bodies under current regulations. Fund officers are working with Barnett Waddingham to analyse admitted bodies and minimise risks. The report also detailed the status of outstanding admission agreements, with 23 in progress and all employers engaging positively with the Fund Officers and Legal Team. Performance indicators for the administering authority showed that audit reviews were unchanged, treasury management was slightly below benchmark, and there were nine incidents of late payment of contributions, resulting in two penalty charges.

Hertfordshire LGPS and FPS Q1 2025/26 LPPA Performance Report

This report provided an update on the performance of the Local Pensions Partnership Administration (LPPA) for the first quarter of 2025/26, covering April to June 2025, with further updates on more recent activity. Overall operational casework performance was 98.0% against Service Level Agreements (SLAs). The contact centre wait times were consistently under the targeted four-minute wait time, averaging two minutes and 57 seconds. However, customer satisfaction scores for retirements were low due to a low response rate to surveys. The report also highlighted that the McCloud remedy for blue light members was generally well-managed, with most members paid on time, although there were a small number of delays due to information from other administrators or fire authorities. A significant issue was raised by the Chief Fire Officer regarding delays to McCloud Immediate Choice – Retrospective Service Statement (IC-RSS) payments, which LPPA attributed to a system issue identified during testing. A fix was expected to be deployed in September, with payments anticipated between September and November 2025. Annual Benefit Statements (ABS) for both LGPS and Fire Pension Schemes exceeded targets, with 98.4% and 98.2% respectively issued to active members.

Pension Fund Risk Register Report

The committee reviewed the updated risk register for both the Hertfordshire Local Government Pension Scheme (LGPS) and the Hertfordshire Fire Pension Scheme. The report detailed a revised format aligned with The Pensions Regulator's General Code of Practice, including risk tolerance scores, internal controls, and designated risk owners. For the LGPS, four risks were identified as exceeding the tolerated risk threshold: skills and knowledge gaps at the administering authority, conflicts of interest, ineffective investment decision-making, and poor administration including delays in implementing regulatory changes. The Fire Pension Scheme identified two risks exceeding the tolerated threshold: conflicts of interest and poor administration. The report noted that the increase in risk scores for some of these was due to changes in committee and board membership following local elections and the approaching McCloud remedy deadlines.

Investment Performance Report as at 30 June 2025

The Pension Fund's investments underperformed against its benchmark during the quarter to 30 June 2025, with an overall performance of 3.2% compared to a benchmark of 3.9%. This underperformance was also noted over the one-year and three-year periods, though the Fund outperformed over the five-year and ten-year periods. Five investment manager mandates outperformed their benchmarks during the quarter, including Baillie Gifford (Global Equity), Robeco (Emerging Markets Equity), UBS (Global Climate Aware Equity), BlueBay (Multi-Asset Credit), and LGT (Alternatives). Ten mandates underperformed, including Dodge & Cox (Global Equity), Robeco (Quality Equity), UBS (Overseas Equity), Osmosis (Core Equity), UBS (Index-Linked Gilts), RLAM (Core Plus Bonds), CBRE (Property), and M&G (Private Rental Property). The report also detailed market conditions, noting that global equities rose in sterling terms, while bond yields were mostly down across developed markets. Sterling strengthened against the US dollar and Japanese yen but weakened against the Euro. UK property, as measured by the MSCI Index, increased by 1.7% over the quarter.

The committee noted the contents of these reports.