The Pension Committee of Croydon Council met on Tuesday 19 March 2024 to discuss a range of important matters concerning the management and governance of the Croydon Council Pension Fund. Key decisions included the approval of the 2024/25 training plan for committee and board members, the adoption of updated data retention policies in line with UK GDPR, and the noting of the fund's improved financial position.

Training Plan Approved for 2024/25

The Committee agreed to the proposed joint Pension Committee and Pension Board Training Plan for 2024/25. This plan, developed with input from Aon, aims to address knowledge gaps identified in the 2022 National Knowledge Assessment¹ and align with new regulatory requirements, such as The Pensions Regulator's (TPR) new General Code of Practice². The plan includes mandatory training on key topics and optional external events, with a focus on ensuring members have the necessary expertise to discharge their duties effectively.

Training Update and Online Platform Engagement

A review of training undertaken by Pension Committee members in the 2023/24 year was presented. Members were urged to check the accuracy of the training log and advise officers of any unrecorded sessions. The report highlighted a low uptake of the Hymans Robertson online training portal (LOLA), with only one committee member having completed modules. Officers are planning sessions to encourage engagement and address knowledge gaps identified in the National Knowledge Assessment.

Pension Fund Communications Policy Statement Adopted

The Committee considered and agreed to adopt the Fund's updated Communications Policy Statement. This policy, prepared in accordance with regulations and best practice, outlines the approach to communicating with members, prospective members, representatives, and employers. It includes updated details on legislative background, guidance from TPR and the Scheme Advisory Board (SAB), and expands on objectives, assessment, risks, and stakeholder communication.

Updated Data Retention and GDPR Documentation Approved

Croydon Council, as the administering authority for the Local Government Pension Scheme (LGPS), reviewed and updated its documentation relating to the UK General Data Protection Regulations (UK GDPR) and the Data Protection Act 2018 (DPA) to ensure compliance. The Committee approved the updated Full Privacy Notice, Summary Privacy Notice, Personal Data Retention Policy, Personal Data Retention Policy Expectations, and a Memorandum of Understanding for Employers. These documents aim to ensure the secure and compliant handling of personal data.

Key Performance Indicators for Pensions Administration Noted

The report on the Croydon Pensions Administration Team's Key Performance Indicators (KPIs) for November 2023 to January 2024 was presented. While most indicators met targets, leaver calculations continue to require improvement. The team is implementing measures to streamline processes, including automation and improved information gathering from employers and payroll providers. The use of the National Fraud Initiative (NFI) Hub for monthly mortality screening has also been highlighted as a success in preventing potential overpayments.

Review of Breaches of the Law Log

The Pension Fund's Breaches of the Law log was reviewed, with no new entries since the last meeting. One entry, concerning the failure to publish audited fund accounts for 2019/20, was amended to reflect that the accounts are now expected to be signed off in March 2024. The report noted that the delay in signing accounts is due to issues with the Council's overall accounts, not a failure in the Pension Fund's administration.

Audit Findings Report for 2019/20 Noted

The Committee noted The Audit Findings Report for the London Borough of Croydon Pension Fund for the year ended 31 March 2020, prepared by Grant Thornton UK LLP. The report indicated that the audit work was substantially complete, with an anticipated unqualified audit opinion, including an Emphasis of Matter paragraph regarding the material uncertainty in the valuation of Direct Property investments due to the inherent uncertainty over asset valuations at 31 March 2020.

Updates from LGPS Advisory Board and The Pensions Regulator

The Committee received an update on matters being considered by the Local Government Pension Scheme Advisory Board (SAB) and The Pensions Regulator (TPR). Key points included the SAB's report on the Sharia compliance of the LGPS, the upcoming TPR General Code of Practice, and updates on investment consultations, including pooling and levelling up investments. The SAB also published a report on the 2022 Scheme Valuation, showing an improved average funding level across LGPS funds.

Inter-valuation Funding Update Shows Significant Improvement

The fund's actuary, Hymans Robertson, provided an update on the funding position as of 31 December 2023. The funding level has significantly improved to 122% from 97% at the 2022 valuation, with the likelihood of achieving required investment returns rising to 86%. This improvement is largely attributed to changes in the economic environment, particularly the rise in global interest rates, which has increased expected future investment returns. The report highlighted that while this is positive news, future planning for the 2025 valuation is crucial to manage potential risks and opportunities, including options for reducing employer contributions, changing investment strategy, increasing prudence, or retaining the surplus.

Part A Progress Report for Quarter Ended 31 December 2023

The Committee received an update on the Fund's investments for the quarter ending 31 December 2023. The market value of the Fund increased to £1.78 billion, with a return of 4.2% over the quarter. Global equities performed well, while fixed interest investments also saw positive returns. Infrastructure investments continued to perform well, though Private Equity valuations saw a slight decrease due to currency effects. Property investments experienced a slight negative return. The report noted that the Fund's actual allocation to global equities (47.2%) is slightly above the target (42%), and officers will look to rebalance this over the next year.