The Pensions Committee of Hillingdon Council met on 25 September 2024 to review the administration and investment performance of the Pension Fund. Key decisions included noting the administration update, approving the 2024/25 budget and business plan, and agreeing updated Communications and Reporting Breaches policies.

Administration Report

The Pensions Committee noted the administration update, which highlighted significant improvements in key performance indicators (KPIs). Portal sign-ups increased by 4.5% to 44.5%, and backlog cases were reduced from 4,158 to 524. Cyber security penetration testing identified one high vulnerability, which Hampshire County Council (HCC) planned to address by December. User experience improvements included email acknowledgements for portal logins and form processing. The committee was informed that the McCloud financial liability figure had not yet been finalised by the actuary, but an assumed liability of £3,000,000 on a £1.3 billion fund had previously been noted. Further discussions on cyber security measures would take place at the next Pensions Board meeting.

Investment Strategy and Fund Manager Performance - Part I

The committee noted the funding and performance update for the Pension Fund. The headline funding level had risen to 120%, with assets reaching £1.38 billion. In the quarter under review, the fund's performance was 2%, slightly behind its benchmark by 0.2%. However, the one-year performance was 12.5%, exceeding its benchmark by 0.5%. The three and five-year annualised returns were 3.6% and 4.0% respectively, against a target of 4.1% outlined in the funding strategy statement. Members discussed the underperformance of the LCIV Global offer growth fund, managed by Baillie Gifford, attributing it to market concentration in US information technology stocks. Risk management and continued monitoring were emphasised. The committee also considered the status and future plans for infrastructure investments, including the LCIV Infrastructure Fund, and the distribution and reinvestment of funds from Macquarie infrastructure funds.

Responsible Investment

The Pensions Committee noted the fund managers' Environmental, Social, and Governance (ESG) activities and compliance efforts, as well as the activities of LCIV and LAPFF¹. The report detailed how managers were implementing ESG policies as part of their investment process.

Risk Register Report

The Pensions Committee considered and agreed the Pension Fund Risk Register. The council's risks have been transferred to a new risk management system, JCAD, which allows for better record-keeping and the removal of inactive risks. Eleven risks were retired, and three remain actively monitored. The committee agreed to add risks PEN 9 and PEN 10 as active risks, which would be reviewed in December. The report highlighted that the key risk was ensuring sufficient funds to pay pensions and managing cash flow.

Governance

The committee noted the dates for future Pensions Committee meetings and made suggestions for future agenda items, working practices, and reviews. They also noted the Committee's Continuous Professional Development update and agreed updated Communications and Reporting Breaches policies. A note was made regarding the General Code of Practice (GCoP) update. Discussions included the need for officer workload management to achieve full compliance with new requirements and a suggestion for a joint training session on equality, diversity, and inclusion, with plans for separate sessions due to scheduling conflicts.

Investment Part II - Strategy Review and Manager Updates

This item was discussed in private session. The Pensions Committee agreed recommendations 1-5 as listed in the confidential report concerning the investment strategy review and manager updates.

Actuary Contract Extension

This item was discussed in private session. The committee agreed the recommendation detailed in the report regarding the actuary contract extension.

Guaranteed Minimum Pension (GMP)

This item was discussed in private session. The Pensions Committee agreed the recommendation listed in the Part II minutes concerning Guaranteed Minimum Pension (GMP).