The Local Government Pension Scheme Local Pension Board is scheduled to meet on 12 December 2025 to discuss the pension fund's draft audit report for 2024/25, the fund's risk register, employer risk and governance, investment performance, and LGPS consultations. The board will also note the dates of future meetings.

Here are the topics that are expected to be discussed:

Pension Fund Audit

The board will be provided with KPMG's draft audit report on the financial statements of the Hertfordshire Pension Fund for the year ending 31 March 2025. The report includes a summary of corrected audit differences, including a £7.8m increase in the fund due to updated financial statements from investment managers Pantheon and Macquarie. The audit identified two control deficiencies related to related party identification and journals below £500,000. The report states that Tim Cutler, Partner for KPMG LLP, expects to issue an unmodified Auditor's Report, subject to approval of the statement of accounts and auditor's representation letter, provided that the outstanding matters are satisfactorily resolved.

The report pack also includes KPMG's draft audit plan and strategy for the year ended 31 March 2025. The plan identifies management override of controls as a significant risk, and also notes other audit risks relating to the valuation of investments, and the actuarial position of the pension fund.

The board will also discuss a report from the Director of Finance responding to KPMG's draft audit report. The response addresses the two control deficiencies identified by KPMG, regarding related party identification and journals below £500,000. The report states that effective from 1 April 2025, a rule has been enforced requiring all journals created by Fund Officers to be parked and posted, regardless of value, to provide KPMG assurance over this control deficiency.

Risk Management

The board will receive an update on the Hertfordshire Local Government Pension Scheme (LGPS) Risk Register for the period 1 July to 30 September 2025. The report will outline the Pension Fund's approach to managing identified risks, and refers to the Risk Management Policy approved by the Pensions Committee on 7 July 2025. The policy sets out a structured approach to risk management, and has been updated to reflect the requirements of The Pensions Regulator's (TPR) General Code of Practice.

The report pack states that risks are grouped under five overarching categories, as defined by TPR's General Code of Practice:

• A. The Governing Body
• B. Risk Management
• C. Funding & Investment
• D. Additional Investment Matters (not applicable to LGPS)
• E. Administration & Payment of Benefits.

The Risk Dashboard indicates that, at the end of the quarter, two risks had a risk score exceeding the tolerated risk threshold: skills or knowledge gaps at the Administering Authority, and ineffective investment decision-making.

Employer Risk and Governance

The board will be presented with the quarterly update on Employer Risk and Performance for the Pension Fund, covering the period from 1 July to 30 September 2025. This report details the current status of risk monitoring of Scheme Employers, and the performance of the Administering Authority measured against performance indicators set out in the Administration Strategy.

Scheme employers are monitored on a monthly basis and rated as red (high risk), amber (medium risk), or green (low risk). As of 30 September 2025, 7 employers were in the 'red' risk category, 72 in 'amber', and 520 in 'green'.

The report also notes that following agreement from the Pensions Committee, outstanding admissions are now categorised as amber risks.

Investment Performance

The board will receive a report on the investment performance of the Pension Fund for the quarter ended 30 September 2025. According to the report prepared by Mercer, the overall investment performance of the Pension Fund for the quarter was 4.9%, outperforming the Fund's benchmark of 4.5%. However, the Fund's investments underperformed their benchmark over the one-year and three-year periods, but outperformed over the five-year and ten-year periods.

During the quarter, ten of the Fund's Investment manager mandates outperformed against their benchmark, these were Equity managers, Baillie Gifford (Global), Robeco (Emerging Markets), UBS (Overseas) and UBS (Global Climate Aware); Bond managers, UBS (Index-Linked Gilts), RLAM (Core Plus) and Bluebay (Multi-Asset Credit); Property Manager, CBRE; Alternatives manager LGT and Real Assets manager, M&G private rental property.

Five of the Fund's Investment manager mandates underperformed against their benchmark during the quarter, these were Equity managers, Dodge & Cox (Global), Robeco (Quality), and Osmosis (Core) along with Real Assets manager, LGIM (both High Lease Value and Private Rental property). The Fund's Equity Protection mandate through Insight and the Fund's Private Equity managers also underperformed against their benchmarks.

LGPS Consultations

The board will be provided with information and background on the recent Access and Fairness consultation, and the current Access and Protections consultation. Alison Murray, Principal and Head of LGPS Governance for Barnett Waddingham, is scheduled to deliver a short presentation on the topic.

The Access and Fairness consultation, launched on 15 May 2025, aimed to improve fairness and outcomes for LGPS members and their dependants. The key proposals focused on survivor benefits, the gender pension gap, and opt-out and re-enrolment rules.

The Access and Protections consultation, launched on 13 October 2025, aims to improve access to the LGPS and strengthen protections for members. The key proposals focus on normal minimum pension age changes, LGPS access for mayors and councillors, academies in the LGPS, and new Fair Deal protections.

Future Meeting Dates

The board is invited to note the dates of future meetings: 5 February 2026 (Pensions Committee), 13 March 2026 (virtual meeting), 24/25 March 2026 (virtual meeting - date to be agreed), and 16 July 2026 (virtual meeting). The board will also consider which of the meetings could be in person.