The Pensions Panel of Staffordshire Council met on Tuesday 2 June 2026 to review the fund's investment performance, responsible investment strategies, and the objectives of its investment consultants and advisers. Key decisions included noting the fund's performance for the quarter ending 31 March 2026, noting the content of the Responsible Investment and Stewardship (RI&S) Report for the quarter ended 31 March 2026, noting the Local Authority Pension Fund Forum (LAPFF) Q1 2026 Quarterly Engagement Report, and concurring with the view that the desired outcomes from the Investment Consultant Objectives for 2025/26 and the Independent Investment Advisers Objectives for 2025/26 had been met in the short term.

Pension Fund Performance and Portfolio of Investments as at 31 March 2026

The Panel received a summary of the Staffordshire Pension Fund's performance for the quarter ending 31 March 2026. The fund returned -1.13% during the quarter, underperforming its strategic benchmark of +0.15% by -1.28%. For the financial year 2025/26, the fund achieved an 8.90% return, which was below the benchmark of 12.84%, representing an underperformance of -3.94%. The overall fund valuation stood at £8.401 billion, a decrease of approximately £108 million from the previous quarter.

The report attributed the quarterly underperformance to global economic and geopolitical factors, including the conflict in the Middle East, declining equity markets, rising bond yields, inflationary pressures, and increased interest rate expectations. Property was noted as the best-performing asset class in absolute terms, while equities were the lowest performing. Despite the short-term underperformance, the Panel was informed that the fund's long-term annualised return since inception remained at 7.85%, exceeding the actuary's assumed rate of 5.9%.

Councillor Colin Greatorex queried whether the transfer to LGPS Central would alter the benchmarks used for performance measurement, expressing concern over the fund's underperformance against its benchmark for two consecutive years. The Assistant Director for Treasury and Pensions clarified that there would be no immediate change to benchmarks due to the move to LGPS Central, and any future amendments would be gradual and made in consultation with LGPS Central. Carolan Dobson added that the overall asset allocation benchmark was set by the fund's strategy and was expected to remain stable, with the intention being to use appropriate market comparators to assess value-adding investment decisions.

Decision: The Pension Fund Investment Performance and the portfolio of investments for the quarter ended 31 March 2026 were noted.

Responsible Investment & Stewardship (RI&S) Report for the Quarter Ended 31 March 2026

The Panel received an update on the fund's Responsible Investment and Stewardship (RI&S) activities for the quarter ending 31 March 2026. Members were reminded that responsible investment is integral to the fund's fiduciary duty, aiming to protect long-term value, mitigate investment risk, and enhance financial performance. The fund's commitment to the UK Stewardship Code was highlighted, noting its continued signatory status.

The report detailed engagement activities undertaken through the Local Authority Pension Fund Forum (LAPFF) and LGPS Central. These engagements covered a range of areas including human rights, water sector regulation, sustainable aviation fuel, and reform of modern slavery legislation. Councillor Greatorex commended the work of LAPFF, particularly its efforts in addressing public concerns regarding investments in conflict zones and other sensitive sectors. He also praised the collaborative approach facilitated by LGPS Central, stating it strengthened stewardship and provided a clear policy framework.

Councillor Andrew Clissett raised concerns about the timeliness of engagement with water utility companies, questioning whether it was sufficient to mitigate reputational risks to the fund, especially in light of public concerns over pollution, storm overflows, and water shortages. The Assistant Director for Treasury and Pensions confirmed that while the fund itself had not directly engaged, such engagement was being conducted through LAPFF and LGPS Central, and further examples of their work would be circulated.

Decisions:

• The content of the Responsible Investment and Stewardship (RI&S) Report for the quarter ended 31 March 2026 (Q1 2026) was noted.
• The Local Authority Pension Fund Forum (LAPFF) Q1 2026 Quarterly Engagement Report was noted.

Investment Consultant and Independent Investment Adviser Objectives Review 2025/26

The Panel reviewed the objectives set for the fund's Investment Consultant, Hymans Robertson, and its Independent Investment Advisers for the 2025/26 financial year. Officers reported that the desired outcomes for these objectives, as detailed in Appendices 1 and 2 of the report, had been achieved.

It was noted that the Pensions Bill 2026 would lead to changes in these arrangements in the future, with LGPS Central becoming the fund's principal adviser. However, the Panel had previously agreed to maintain the current objectives for Hymans Robertson and the Independent Investment Advisers for one further year during this transitional period. Revised objectives and performance measures will be considered in due course.

Councillor Andrew Clissett inquired about the management of potential duplication between Hymans Robertson, the independent advisers, and LGPS Central. He also questioned the Panel's future role, suggesting it might shift from decision-making to scrutiny, and asked how the full costs of the transition to LGPS Central would be reflected in performance reporting. The Assistant Director for Treasury and Pensions explained that LGPS Central had become the principal adviser following the Pensions Schemes Act 2026, responsible for implementing the Strategic Asset Allocation set by the fund, supported by fiduciary management arrangements and legal agreements established in April 2026. The legacy advisers would remain in place for a transitional period while governance arrangements were reviewed, with the Panel's role likely focusing more on scrutiny and oversight. It was confirmed that transition and LGPS Central costs would be clearly presented in outturn and annual reporting to distinguish them from underlying investment performance.

Councillor Colin Greatorex and Councillor Craig Humphreyson supported the retention of some duplication of advice during the transition, viewing it as a useful safeguard. Councillor Greatorex highlighted the value provided by Hymans Robertson and the Independent Advisers in offering support, challenge, and assurance alongside LGPS Central. He suggested that this learning period would be beneficial for all parties, particularly given the ongoing uncertainty regarding government guidance. Members also noted the significant increase in LGPS Central's costs and requested clear visibility of these alongside performance information.

Decision: The Pensions Panel concurred with the view of the Director of Finance and Resources that the desired outcomes from the Investment Consultant Objectives for 2025/26 (detailed in Appendix 1) and the Independent Investment Advisers Objectives for 2025/26 (detailed in Appendix 2) had been met in the short term.

Exclusion of the Public

Decision: The public were excluded from the meeting for the following items of business, which involved the likely disclosure of exempt information as defined in Part 1 of Schedule 12A of the Local Government Act 1972. These items included exempt minutes, economic and market updates, pension fund performance and manager monitoring, strategic asset allocation updates, property updates, and an LGPS Central update.