The Pensions Committee of Hertfordshire Council met on Wednesday 3 December 2025 to discuss the draft audit report for the 2024-2025 financial year, review the fund's risk register, and consider updates on employer risk, governance, and investment performance. Key decisions included noting the draft audit report and the fund's response to it, reviewing the risk register for both the Local Government Pension Scheme (LGPS) and the Fire Pension Scheme, and noting the employer risk and governance report. The committee also received updates on LPPA performance, LGPS consultations, the investment strategy statement, and responsible investment review, and the investment performance report.

Pension Fund 2024-2025 Draft Audit Report

The committee received the draft audit report for the Hertfordshire Pension Fund for the year ending March 2025 from KPMG. Sudhanshu Shudhadeech, Audit Manager at KPMG, presented the findings, noting that an unmodified audit opinion was expected, subject to the resolution of a few outstanding matters. The report highlighted one corrected misstatement of £7.7 million relating to the valuation of Level 3 pooled investment vehicles. Two control deficiencies were identified: one concerning the segregation of duties in posting and authorising journals, and another regarding the process for identifying related parties. KPMG confirmed their independence throughout the engagement. Councillor John Graham raised concerns about the audit timetable, and Stephen Pillsworth explained that the pension fund accounts are integrated with the wider County Council accounts, with a target sign-off date before the end of February. Rob Winterton, Director of Finance, presented the fund's response to the draft audit report, outlining actions taken to address the control deficiencies, including implementing a new process for journal authorisation from April 2025 and reviewing the related party declaration process. Councillor Ian Abbott questioned the sufficiency of the response regarding declarations of interest, to which KPMG responded that formal documentation and evidence of review would be necessary to remove this as a control deficiency. The committee noted and commented on the fund's response to the draft audit report.

Pension Fund Risk Register Report

Taryn Ahlberg, Pensions Governance Manager, presented the risk register report for the period July to September 2025. For the Hertfordshire LGPS, two risks remained above the tolerated risk level: A2 (Skills or knowledge gaps at the administering authority), exacerbated by the impending departure of the Head of Pensions, and C5 (Ineffective investment decision making), due to the requirement to move to a new asset pool by March 2026. Risk B3 (Conflict of interest) had decreased to its tolerated risk level. For the Fire Pension Scheme, risk E1 (Poor administration, including failure or delays in implementing regulatory changes) remained above the tolerated risk level due to ongoing delays in retrospective service statement payments. Risk B3 also decreased to its tolerated level for the Fire Pension Scheme. Councillor John Hale inquired about the business continuity plan, and it was confirmed that work on a wider cyber policy, including the business continuity plan, was underway with assistance from Barnet Waddingham. Councillor John Graham requested improved readability of the risk register on screen. The committee noted the contents of the report.

Employer Risk and Governance

Alyson Sharpe, Lead Pensions Governance Officer, presented the employer risk and governance report for July to September 2025. The number of risks in the 'red' category decreased from nine to seven. Six of these were identified as 'true red risks', relating to ceased employers with outstanding deficits and employers with no indemnity arrangements. The report detailed ongoing work with Barnet Waddingham to analyse admitted body risks and to contact employers to minimise these. There were 20 admissions in progress, with four new admissions received and four completed during the quarter. All employers seeking admission were engaging positively with fund officers and the legal team. The committee noted and commented on the report.

Hertfordshire LGPS and FPS Q2 2025-26 LPPA Performance Report

Chris from LPPA provided an update on performance for the Local Government Pension Scheme (LGPS) and Fire Pension Scheme (FPS). Casework performance for the LGPS was 98.4% against service levels, and for the Fire Pension Scheme, it was 98.1%. Contact centre wait times showed improvement, with average wait times of 3 minutes 31 seconds for LGPS and 2 minutes 7 seconds for FPS. Retirement notification improvements were noted, with a significant increase in timely notifications. The aspirational target to pay retirees within 30 days was met by 78% of cases. Challenges with AVC providers regarding the disinvestment process were mentioned. Customer satisfaction for active retirements was positive, with a 37.8% survey return rate and 87% satisfied or neutral responses. The member panel had grown to 4,500 members, with Hertfordshire having good representation. PensionPoint usage was increasing, with 53,000 members registered. The online retirement form showed a significant improvement in return times compared to paper forms. Automation was being further developed, with a high percentage of deferred quotes processed automatically. An online leaver form was in the final stages of testing. Updates were provided on the McCloud remedy, with approximately 70% of assessments completed for local government cases and payments beginning. For the Fire Pension Scheme, progress on remedial service statements had been slower due to manual calculations. The Pensions Dashboard connection was back on track for completion before Christmas. Councillor John Hale asked about tracking data for payments not made within 30 days, and it was confirmed this data was available. Councillor Ian Abbott inquired about staff numbers and the impact of automation, and it was explained that staff numbers had increased to support remedy work, and automation was freeing up administrators for more complex cases. Councillor John Hale also raised concerns about call wait times in August, which were attributed to seasonal spikes due to benefit statement issues, and the complexity of queries. Potential solutions like web chat were being considered. John Crowhurst provided further detail on call centre operations, including a callback function and rerouting calls to casework teams during peak times. Councillor Ian Abbott also asked about staff numbers and the impact of automation, with John Crowhurst explaining the increase in FTEs for the fire service scheme due to remedy work and the strategy to use automation for transactional tasks. Rachel Carter inquired about unclaimed pensions, and it was confirmed that tracing specialists were being used. The committee noted and commented on the report.

LGPS Consultations: Access and Fairness/Access and Protections

Alison Murray from Barnett Waddingham presented an update on two LGPS consultations: Access and Fairness, and Access and Protections. The Access and Fairness consultation, which closed on 7 August 2025, aimed to address discrimination in survivor benefits and remove the upper age limit on death grants. It also proposed extending gender pensions gap reporting to individual funds and making changes related to family or caring leave. The Access and Protections consultation, closing on 22 December 2025, includes proposals to increase the normal minimum pension age from 55 to 57 from April 2028, with protections for those with an earlier entitlement. It also proposes enabling councillors and mayors in England to access the LGPS, streamlining the process for academies to change administering authorities, and introducing a new fair deal for future outsourcings, which would remove the broadly comparable scheme option and introduce the concept of a fair deal employer. Councillor Ian Abbott asked about the Hertfordshire response to the consultations and the gender pension gap, and it was confirmed that responses were being prepared and gender pension gap reporting would be available at the whole fund level. Councillor John Graham questioned the transfer of pension obligations to contractors under the new fair deal proposals, and it was clarified that while the contractor would still be responsible for contributions, the fair deal employer concept would streamline the process. The committee noted and commented on the report.

Hertfordshire Pension Fund Investment Strategy Statement and Responsible Investment Review

Phil Prasad, Investment & Pooling Analyst, and Jonathan Crowther presented the process for reviewing the Fund's Investment Strategy Statement (ISS) and Responsible Investment (RI) Policy. The ISS, required every three years, was last reviewed in March 2023 and needs to be reviewed by March 2026. The review will consider the strategic asset allocation, risk management policy, and ESG factors. The government's Fit for the Future consultation is expected to bring changes to how the ISS is published. A survey is being developed to gather views from fund members on the RI policy, with results to be discussed in March 2026. Councillor Duncan Jones questioned the reduction in hedge funds, and it was explained that this was due to the likely direction of travel with pooling, as few LGPS funds hold hedge funds. Councillor John Graham asked about the relevance of the collar and cap situation on equities given the reduction in equity allocation and the move to pooling, and it was agreed that a review of its relevance would be conducted. Stuart Roberts expressed concern about the reduced influence of the committee on investment decisions due to pooling, and Stephen Pillsworth acknowledged this but highlighted the increased collective influence of the 18 partner funds in Border to Coast. Councillor Ian Abbott expressed disappointment that the Border to Coast RI policy was already agreed and would not be influenced by the current survey for some time, and proposed adding a free text box to the survey for members to provide additional comments. Adrian England seconded the call for a free text box and discussed the focus on company-level engagement versus government foreign policy. Stephen Pillsworth noted Hertfordshire's good track record on carbon emission reductions and the increased leverage through collective investment pools. Patrick Towey provided clarification on the Border to Coast RI policy, stating that there is ongoing dialogue with partner funds and that the policy reflects commonalities and majority views. The committee agreed to include a free text box in the survey. The committee noted and commented on the report, including the request for a free text box in the survey.

Investment Performance Report as at 30 September 2025

Sandy Dickson and Jonathan Crowther presented the investment performance report. The total fund assets had grown to £6.9 billion. The net return for the quarter to 30 September 2025 was 4.9%, outperforming the benchmark of 4.5%. Longer-term performance also showed outperformance against the discount rate. Global equities were up around 4% in sterling terms over the last two months, and bond markets were up 1-2%, suggesting a potential increase in total assets beyond £7 billion. Positive returns were attributed to strong US growth, sustained company revenues, enthusiasm for AI, and supportive monetary policy. Councillor John Hale sought clarification on the asset allocation pie chart, which was explained as representing global equities including the UK. Councillor John Graham questioned the reduction in the global climate-aware equity allocation, and it was clarified that these equities had been notionally moved to a real asset warehouse as a proxy for real assets, rather than being sold. The committee noted the investment performance report.

The meeting then moved into Part II, where the press and public were excluded to discuss exempt information.