The Pension Board of Gloucestershire Council met on Wednesday 21 October 2026 to discuss the audit of the Pension Fund's financial statements for 2025-26, the Pension Fund Annual Report, and significant LGPS regulatory reforms. Key actions included noting the progress of the audit with an expectation of an unmodified opinion, noting the draft Pension Fund Annual Report and the Taskforce on Climate-Related Financial Disclosures Report, and noting the commencement of consultations on new investment and governance strategies.

Pension Fund Audit and Financial Statements 2025-26

The Board received an update on the audit of the Gloucestershire Pension Fund's financial statements for the year ending 31 March 2026. KPMG, the external auditor, reported that the audit was well progressed and that no material misstatements or significant investment issues had been identified. An unmodified audit opinion is expected, subject to the satisfactory completion of outstanding procedures.

One control recommendation was raised concerning the late receipt of a deficit contribution payment from Gloucester City Council, which arose due to staffing changes. This issue has since been rectified, and contributions are now up to date. Two historic recommendations relating to the former SAP system, concerning system access, segregation of duties, and journal controls, remain open. These will be reviewed following the implementation of the new cloud-based SAP system on 1 April 2026.

Minor amendments to the disclosure statements were noted, primarily relating to the BlackRock Currency Hedge Fund and the inclusion of the BlackRock Liquidity Fund in risk disclosures.

The Board noted the progress and findings of the Pension Fund audit for 2025-26 and the Draft Audit Findings Report.

Pension Fund Annual Report and Taskforce on Climate-Related Financial Disclosures Report 2025-26

The Board considered the draft Pension Fund Annual Report for 2025-26, which includes the Pension Board Annual Report approved on 29 July 2026. The report details the Fund's financial performance, investment policy, funding position, administration arrangements, and progress on investment pooling. The report is required to be published by 1 December 2026 and will be updated if the Council's Statement of Accounts has not been approved by that date.

The Board also noted the publication of the Fund's third annual Task Force on Climate-Related Financial Disclosures (TCFD) report. This report, which covers the period from 1 April 2025 to 31 March 2026, details the Fund's progress towards its climate objectives, including a commitment to achieve net-zero greenhouse gas emissions by 2045. Key achievements include exceeding the target for sustainable and low-carbon asset allocation and significant reductions in the carbon footprint of listed equity and corporate bond portfolios. Challenges remain regarding data availability for Scope 3 emissions and private markets, which the Fund is working to address.

The Board noted the Pension Fund Annual Report 2025-26 and that it incorporated the Pension Board Annual Report 2025-26, which was approved by the Board on 29 July 2026. The Board also noted that the Fund's Taskforce on Climate-Related Financial Disclosures Report 2025-26 had been published on the Fund's website in accordance with the recommendations approved by the Pension Committee.

LGPS Regulatory Reforms

The Board received a comprehensive update on the implementation of the 2026 LGPS governance reforms. These reforms introduce new statutory requirements, including the appointment of an LGPS Senior Officer, an Independent Person, and the preparation of a Governance Strategy.

The proposed model aligns the LGPS Senior Officer role with the existing Head of Pensions role, subject to formal review and appointment processes. This arrangement clarifies the respective responsibilities of the LGPS Senior Officer and the Section 151 Officer, ensuring distinct financial oversight and challenge.

The recruitment process for the Independent Person is underway, with applications due by 31 October 2026. A panel will shortlist and interview candidates, with a recommendation to be presented to the Pension Committee in December to meet the 31 December 2026 statutory deadline.

Revised Pension Committee Terms of Reference were also considered, proposing an increase to eleven voting members, including seven county councillors, two employer representatives, and two scheme member representatives, all with equal voting rights. These constitutional changes will be considered by Full Council on 11 November 2026.

The Board noted progress in implementing these reforms, including the proposed constitutional changes, the recruitment of the Independent Person, and the development of the Governance Strategy. Consultation has commenced on the draft Investment Strategy Statement and Investment Policy Statement, with final approval anticipated in December 2026.

Gloucestershire Pension Fund Business Update - Governance & Operations

The Board received an update on governance and operational matters. This included noting the draft Pension Committee minutes, an update on employer admissions, and the Fund's approach to Local Government Reorganisation, which remains in a fact-finding stage.

A fundamental redesign of the Fund's risk-management framework has been completed, grouping risks into Governance, Funding and Investment, and Operational categories. Several risks were identified as being above the Fund's target position, including ineffective Pension Committee and Local Pension Board governance, insufficient officer capacity, and key person dependency. Mitigation strategies are being implemented, such as completing knowledge and skills assessments and developing a Workforce Strategy. The Committee also requested that risks associated with Artificial Intelligence be considered and incorporated into the risk register.

The budget forecast for 2026/27 indicated an underspend of £0.208 million, primarily due to staffing vacancy savings. Progress on key business plan projects was noted, including the completion of asset transition to LGPS Central, ongoing implementation of Fit for the Future reforms, and onboarding of employers to the i-Connect system.

Updates on Annual Benefit Statements highlighted a successful transition to a digital-first approach, resulting in cost savings and environmental benefits. Key Performance Indicators showed a slight fall below target for transfer out and dependant benefits, and death grant payments, attributed to the SAP payroll system transition. Performance in the subsequent quarter had improved.

Gloucestershire Pension Fund Business Update - Funding & Investments

The Board received an update on the Fund's funding and investment position as at 30 June 2026. The estimated funding level remained strong at 156%, with the Fund's market value increasing to approximately £4.25 billion.

The transition of assets from Brunel Pension Partnership to LGPS Central has been completed, with transition costs reported at £2.74 million, which was below the anticipated level. Brunel Pension Partnership is progressing with its orderly wind-down and closure, with formal liquidation anticipated in late 2026.

Investment performance for the quarter to 30 June 2026 was positive, with the Fund returning 7.4% and outperforming its benchmark. However, longer-term performance over three years lagged the strategic benchmark, primarily due to active equity performance. The strategic asset allocation remained outside approved ranges, with equities above target and fixed interest below. Officers are working with LGPS Central to implement the Investment Strategy Statement and address these allocations.

Responsible Investment updates included a summary of LAPFF's engagement activities and LGPS Central's stewardship report, which detailed engagement, voting, and progress against its three-year stewardship strategy.

The meeting concluded at 11:20 am.