The London Borough of Hillingdon Pensions Committee met to receive a number of reports on the operation and performance of the Hillingdon Pension Fund scheme. This included a report from Hampshire County Council on its performance as the administrator of the scheme, a report on the investment strategy and performance of the fund, a report on responsible investments, the Risk Register Report, and a Governance Report.

Pension Scheme Administration

The Pensions Committee was scheduled to consider the Pensions Administration & Performance report.

This report provides an update from Hampshire County Council on their performance as the third-party administrator of the scheme.

The report highlights a number of key performance indicators including:

• Member portal registration, which has increased to 46.46%.
• Backlog cases, which have been reduced from 4,158 to 378.
• McCloud¹ remediation. The report notes an error by the Teachers' Pension Scheme affecting members who wish to transfer out of the scheme.
• Pension dashboards.
• Cybersecurity, with testing scheduled for the week commencing 2 December.
• Year-end processes, with all active and deferred benefit statements having been produced.
• Employer engagement. 115 returns were due from employers, 97 of which were received on time.

Investment Strategy and Fund Manager Performance

The Pensions Committee was scheduled to note the Investment Strategy and Fund Manager Performance Update Part 1 report.

This report provides an update on the Investment Strategy of the Hillingdon Pension Fund, including the performance of the fund in the quarter to 30 September 2024.

The report highlights a number of key points, including:

• The headline funding level was 120%.
• The fund’s assets had increased to £1.38 billion.
• The performance of the fund in the last quarter was 2%, which was 0.2% behind the benchmark.
• The one-year performance was 12.5%, which was 0.5% ahead of the benchmark.
• The three- and five-year returns were 3.6% and 4.0% annualised respectively, against a 4.1% return target.
• The LCIV Global offer growth fund, managed by Baillie Gifford, had underperformed.
• The status and future plans for infrastructure investments.

Responsible Investments

The Pensions Committee was scheduled to consider the Responsible Investments Update.

The report provides information on how the fund managers entrusted with investing the Pension Fund’s assets are implementing their Environmental, Social and Governance (ESG) policies.

The report highlights a number of voting and engagement activities by the fund’s managers:

• LGIM voted against a resolution to re-elect Kumar Mangalam Birla as a director of Hindalco Industries Ltd. at its AGM on 22 August 2024 because they believed the company was not doing enough to manage the risks associated with climate change. The report says, “Disclosure of a forward-looking, coherent and quantified transition plan is still absent from the report, therefore falling short of LGIM expectations.”
• LGIM also began a campaign to ask high-risk companies to complete a survey regarding their approach to managing human rights risk.
• The London CIV, through Federated Hermes EOS, exercised voting rights at 66 meetings.
• The Local Authority Pension Fund Forum (LAPFF), of which Hillingdon is a member, undertook collaborative engagements with a number of companies including BP, Shell, Drax, SSAB and ThyssenKrupp.
• LAPFF also issued voting alerts to LGIM and the London CIV.

Risk Register

The Pensions Committee was scheduled to consider the Pension Fund Risk Register. This included consideration of risks that had been retired, and the addition of risks PEN 9 and 10 as active risks.

Governance

The Pensions Committee was scheduled to consider the Governance report which covered the work plan, training and assessment updates, and compliance with the new General Code of Practice by the Pensions Regulator. It was also scheduled to agree the updated Communications Policy and the updated Reporting Breaches Policy.

Pension Fund Annual Report and Draft Accounts

The Pensions Committee was scheduled to consider the Pension Fund Annual Report and Audit Plan which included the draft Pension Fund Annual Report and a report from the scheme’s auditors, EY.