The Pensions Committee of Hertfordshire Council met on Monday 07 July 2025 to discuss the Pension Fund Audit Plan for 2024-25, review the risk register, and receive updates on LPPA quarterly performance, employer risk and governance, and training. The committee also reviewed the investment performance report as at 31 March 2025.

Pension Fund Audit Plan 2024-25

The committee noted and commented on the external auditors' plan for the audit of the Hertfordshire Pension Fund's financial statements for the year ending 31 March 2025. KPMG LLP outlined their risk assessment and planned audit approach, identifying one significant risk concerning management override of controls and three other audit risks related to investment completeness, valuation, and the actuarial position of the scheme. The materiality level for the audit was set at £62.6 million. Discussions also touched upon the audit process for the Firefighters' Pension Scheme (FHIR), which is incorporated into the County Council's accounts, and the committee agreed to receive extracts of the FHIR pension accounts in future meetings.

Risk Register

The Pensions Committee approved the updated Risk Management Policy and the new look risk register. The risk register for January to March 2025 showed no movement in risk ratings. The updated policy, developed with Barnett Waddingham, includes a simplified scoring matrix, an accepted risk tolerance level, and designated risk owners. The new risk register format will also automatically produce a risk register dashboard. A discussion was held regarding potential updates to risk F9, LGPS Fit for the Future, depending on the outcome of a Part II item discussed later in the meeting.

LPPA Quarterly Performance

The committee received a comprehensive update on the performance of the Local Pensions Partnership Administration (LPPA) for the fourth quarter of 2024-25, covering both the Local Government Pension Scheme (LGPS) and the Firefighters' Pension Scheme (FPS). For the LGPS, overall Service Level Agreement (SLA) performance was 98.9%, with individual processes exceeding the 95% target. Contact centre wait times remained below four minutes, although a 9% increase in calls in April due to P60s and McCloud remedy statements temporarily pushed wait times above the target. Employer performance in notifying retirements still requires improvement, with 70-75% of retirees receiving payment within 30 days when timely notification is received. Data quality scores for both common and scheme-specific data have improved. For the Fire and Rescue Service, SLA performance was 100%, with wait times well below four minutes. Significant progress was reported on the McCloud remedy, with 494 out of 575 required statements issued by the deadline, and work ongoing to issue the remaining complex cases by October. The committee also heard about statutory projects including the upcoming annual benefit statements for LGPS members, the triennial valuation, and the Pensions Dashboard project, all of which are progressing. The Efficiency and Service Improvement Programme (ESIP) continues to focus on enhancing member and employer experience, with automation of retirement processes being a key achievement.

Employer Risk and Governance Quarterly Update

The report for January to March 2025 indicated a decrease in the number of risks in the 'red' category from seven to seven, with three risks being mitigated. Seven risks remained in the red category, including two related to ceased employers with outstanding deficits and four to employers with no indemnity arrangements. Fund officers are working with Barnett Waddingham to address these risks. The committee noted the content of the report and approved the updated Risk Management Policy and subsequent changes to the risk register.

Training Update

The committee received an update on training delivered to Pensions Committee and Local Pension Board members between April 2024 and March 2025. The report highlighted the increasing regulatory emphasis on knowledge and understanding for pension committee members, referencing requirements from The Pensions Regulator (TPR) and the Good Governance Project. The government's intention to mandate training for committee members was noted, with further guidance expected. The report detailed training delivered through quarterly newsletters, MS Teams sessions, e-learning via Barnett Waddingham's Enlighten platform, and informal committee meetings. The committee members were asked to commit to undertaking training to maintain their knowledge and understanding of the Local Government Pension Scheme.

Investment Performance Report as at 31 March 2025

The committee noted the investment performance report prepared by Mercer. The overall Pension Fund performance for the quarter to 31 March 2025 was -1.1%, underperforming the benchmark of -0.7%. However, the fund's performance was in line with the benchmark over three years and had outperformed over five and ten-year periods. Several investment manager mandates, including those for Dodge & Cox (Global Equity), Robeco (Emerging Markets Equity), and UBS (Overseas Equity), outperformed their benchmarks during the quarter. The committee was invited to discuss any amendments to the report's presentation and readability.