The Dyfed Pension Fund Pension Board met on Thursday 15 May 2025 to review the fund's financial performance, policies, and future plans. The Board noted the 2025-2026 budget and noted several new and updated policies designed to align with updated regulatory guidance. The Board also received updates on the Wales Pension Partnership's activities and its submission to the government regarding the future of LGPS investments.

Dyfed Pension Fund Committee Meeting 26 March 2025

The Pension Board noted the minutes from the Dyfed Pension Fund Committee meeting held on 26 March 2025. This meeting covered a range of financial and administrative matters, including budget monitoring, the 2025-2026 budget, pensions administration, and the noting of several key fund policies. The Committee also discussed updates from the Wales Pension Partnership (WPP) and considered the WPP's submission to the government regarding the Fit for the Future consultation.

Budget Monitoring and Cash Position as at 31 December 2024

The Board reviewed the Dyfed Pension Fund's budget monitoring report for the period ending 31 December 2024. A projected overspend of £2 million against the budget was noted. Expenditure was forecast to be £6.9 million over budget, primarily due to higher-than-anticipated lump sum retirement benefits and payments to leavers. Conversely, income was forecast to be £2.4 million over budget from contributions and £5 million over budget from transfers in, while investment income was forecast to be £2.5 million below budget. The report detailed that total expenditure was estimated at £140.5 million and total income at £138.5 million. Queries were raised regarding the increase in staff departures and the lower-than-anticipated fees from Blackrock. The Board requested clarification on how interest earned on cash balances is reported, and it was noted that this would be included in future comments.

Dyfed Pension Fund Budget 2025-2026

The Board considered the proposed budget for the Dyfed Pension Fund for the 2025-2026 financial year. The budget was set with a net zero balance, allowing flexibility in utilising investment income. Expenditure was estimated at £147.3 million, including £127.5 million for benefits payable, with provisions for a 1.7% pensions increase and a 1.65% increase for pensioner and deferred members. Management expenses were budgeted at £12 million, with £9.2 million allocated for investment manager fees. Income was estimated at £112.2 million from contributions and £26.6 million from investment income. It was noted that income from the WPP Global Credit Fund would be distributed as cash from April 2025, rather than being reinvested. The 3% provision for pay awards and increments was considered a prudent estimate.

Pensions Administration Report

An update on the Pensions Administration service was presented, covering regulatory matters, new employers, the breaches register, i-Connect, Guaranteed Minimum Pension (GMP) reconciliation, and workflows. Regarding the Pension Dashboards project, it was confirmed that while work was on schedule, the software provider still had outstanding tasks. The Board suggested including next steps in future reports to provide clearer guidance on the project's progression.

Dyfed Pension Fund Policies

The Board considered and noted a suite of new and updated policies designed to ensure compliance with The Pensions Regulator's (TPR) new General Code of Practice. These policies include:

• Knowledge and Skills Policy
• Administration Strategy
• Communications Policy
• Personal Data Retention Policy
• Voluntary Scheme Pays Policy
• Compliments and Complaints Policy
• Breaches Policy

The Voluntary Scheme Pays Policy was clarified as an existing mechanism to be used when a tax liability arises.

Business Plan 2025-2028

The Dyfed Pension Fund's Business Plan for 2025-2028 was presented, outlining the fund's operational framework, governance structure, responsibilities, investment strategy, key statistics, financial budget, and priorities. In response to a query about the Fit for the Future consultation, it was clarified that this initiative specifically relates to the investments of the eight Welsh pension funds, including Dyfed, while strategic asset allocation, administration, and policies remain under the purview of Carmarthenshire County Council. The majority of the Business Plan's priorities were specific to the Dyfed Pension Fund.

Breaches Report

The Breaches Report detailed instances of breaches of the law related to the Dyfed Pension Fund, prepared in accordance with Section 70 of the Pension Act 2004 and TPR guidance. The report highlighted one instance of late contribution receipt, with no long-term implications. It also noted updates regarding the automatic payment of refunds due between November 2024 and March 2025.

Risk Register

The Board reviewed the Dyfed Pension Fund's Risk Register, focusing on operational risks. Seventeen risks were identified, with a new risk concerning Cyber Security (O17) added since the previous meeting. Discussion ensued regarding risk O5 (Inability to keep service going due to loss of main office, computer system, or staff), with clarification that this risk encompasses factors beyond physical building loss, including remote working and reliance on software providers. Audit Wales is conducting an assessment of the Council's cyber risk, and the Board requested to review the outcome report.

Training Plan

The Board received updates on the Training Plans for 2024-2025 and the proposed plan for 2025-2026. These plans detail the schedule of committee meetings and training events for both members and officers of the Dyfed Pension Fund. The 2025-2026 plan was noted.

Wales Pension Partnership Responsible Investment Update

The Board received updates on the Wales Pension Partnership's (WPP) Responsible Investment (RI) activities for the quarters ending 30 September 2024 and 31 December 2024. These reports provided information on the Global Growth, Sustainable Active Equity, and Global Credit sub-funds, along with a Stewardship Summary. It was noted that progress on some initiatives had been slow during the September quarter, but improvements were evident in the December report.

Wales Pension Partnership (WPP) Joint Governance Committee (JGC) Update and Business Plan 2025-2028

The Board received an update from the WPP JGC meeting held on 12 March 2025, which included a review of the WPP Business Plan 2024-2025 (Q3), the WPP Training Plan 2025-26, the WPP Business Plan 2025-2028, an operator update, a performance summary for Q4 2024, and an update on WPP Global Private Credit – Vintage I & II. The WPP Business Plan 2025-2028 was noted.

LGPS: Fit for the Future - WPP Submission to Government

The Board reviewed the WPP's submission to the government concerning the LGPS: Fit for the Future consultation. This submission outlines a business case for WPP to remain a standalone investment pool for Wales, proposing the establishment of a Financial Conduct Authority (FCA)-authorised investment management company (IM Co) to meet new government requirements. A project group, Project Snowdon, comprising officers from all eight Welsh authorities and WPP's service providers, developed the proposal. The submission evaluates WPP's plans against government criteria for scale, resilience, value for money, and viability against the timeline. The Director of Corporate Services indicated that the location of the new company had not yet been decided but suggested Cardiff city centre as a potential location to attract skilled personnel.

Minutes of the Pension Committee Meeting Held on 26 March 2025

The Board noted the minutes from the Dyfed Pension Fund Committee meeting held on 26 March 2025.

Pension Board Budget Monitoring 1 April 2024 - 31 March 2025

The Board received the Pension Board Budget Monitoring report for the period 1 April 2024 to 31 March 2025. Total actual expenditure incurred was £20.8k, which was £3.4k below the budgeted amount.

Pension Board Work Plan 2025

The Board noted the Pension Board Work Plan for 2025, which outlines the Board's activities and the items to be presented at each meeting throughout the year.

Pension Board Action Log

The Board noted the Pension Board Action Log, which details actions and updates from previous meetings.

Exclusion of the Public

The public was excluded from the meeting for the following agenda items due to the presence of exempt information.

Robeco Engagement Report 1 July 2024 - 30 September 2024

The Board noted the Robeco Engagement report for the period 1 July 2024 to 30 September 2024, which provided statistics and case studies on engagement activities within the WPP portfolio.

Robeco Engagement Report 1 October 2024 - 31 December 2024

The Board noted the Robeco Engagement report for the period 1 October 2024 to 31 December 2024, detailing engagement activities and case studies related to the Acceleration to Paris theme.

Independent Advisory Performance & Risk Report to 31 December 2024

The Board noted the Independent Investment Adviser Performance and Risk Report as at 31 December 2024. This report provided details on investment manager performance, the global market background, and issues for consideration, including five recommendations that were noted.

Northern Trust Performance Report to 31 December 2024

The Board noted the Northern Trust Performance report for the Dyfed Pension Fund as at 31 December 2024, which included performance analysis at both a total fund level and by investment manager.

Russell Investments Update

The Board noted the update from Russell Investments concerning the Sustainable Active Equity Fund, Global Growth Fund (Equities), and Global Credit Fund (Fixed Income Bonds).