The Local Government Pension Scheme Local Pension Board of Hertfordshire Council convened a virtual meeting on 12 December 2025, to discuss the pension fund's audit report, risk management, investment performance, and upcoming consultations. The board was also scheduled to review the fund's investment strategy and responsible investment policy.

Pension Fund 2024/25 Draft Audit Report

The board was scheduled to discuss the draft audit report of the Hertfordshire Pension Fund for the year ending 31 March 2025, prepared by KPMG. The report, included as Appendix A to the report pack, summarised the key issues identified during the audit, but did not repeat matters previously communicated.

The draft audit report noted one audit difference relating to a £7.8 million increase in the fund due to updated financial statements from investment managers Pantheon and Macquarie.

There was one audit difference in 2024/25 which related to a £7.8m increase in the Fund that was due to the receipt of updated financial statement from Investment Managers Pantheon and Macquarie, which showed an increase in value of £4.6m and £3.2m respectively.

The audit also identified two control deficiencies relating to related party identification and journals below £500,000.

KPMG's audit plan for the fund's 2024/25 accounts, presented to the Audit Committee on 5 June 2025, was included as Appendix B.

Pension Fund Response to the 2024/25 Draft Audit Report

The Director of Finance provided a report outlining the fund's response to the KPMG draft audit report for the year ended 31 March 2025. The report addressed the two control deficiencies identified by KPMG, which related to related party identification and journals below £500,000.

Regarding related party identification, the report stated that fund officers do not produce a working paper that records any interests because this information can be found on the council's website under the Councillors and Council meeting section. It also noted that members are asked by the Chair of the Pension Committee to declare any interests during the start of each Pensions Committee meeting, which is minuted.

In response to the finding regarding journals below £500,000, the report stated that effective from 1 April 2025, the fund has enforced a rule that all journals created by fund officers must be parked and posted, no matter the value.

Pension Fund Risk Register Report

The board was scheduled to receive an update on the Hertfordshire Local Government Pension Scheme Risk Register for the period 1 July to 30 September 2025. The report outlined the pension fund's approach to managing identified risks.

The risk management policy, approved by the Pensions Committee on 7 July 2025, sets out a structured approach to risk management and reflects the requirements of The Pensions Regulator's General Code of Practice. Risks are grouped under five categories: the governing body, risk management, funding and investment, additional investment matters, and administration and payment of benefits.

The Risk Dashboard indicated that at the end of the quarter, two risks exceeded the tolerated risk threshold.

Employer Risk and Governance

The board was scheduled to receive a quarterly update on employer risk and performance for the pension fund, covering the period from 1 July to 30 September 2025. The report detailed the current status of risk monitoring of scheme employers and the performance of the administering authority 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 provided an update on outstanding admission agreements. As of the end of the quarter, there were 20 outstanding admission agreements, with 12 relating to service providers contracting with academies within multi-academy trusts.

Hertfordshire LGPS Q2 2025/26 LPPA Performance Report

The board was scheduled to discuss the performance of the Hertfordshire Local Government Pension Scheme's administrator, Local Pensions Partnership Administration (LPPA), for the second quarter of 2025/26. The report included an executive summary, updates on projects such as the McCloud Remedy¹, the Data Project, and the Pensions Dashboard², as well as data on membership numbers, casework performance, customer satisfaction, and data quality.

LPPA reported that it had produced annual benefit statements with the McCloud underpin included for over 98.7% of the fund membership. The report also noted a short delay regarding connection to the Pensions Dashboard, but stated that this did not present a material risk and would not impact members.

LGPS Consultations: Access and Fairness/Access and Protections

The board was scheduled to receive information and background regarding the recent Access and Fairness consultation and the current Access and Protections consultation. Alison Murray, Principal and Head of LGPS Governance for Barnett Waddingham, was scheduled to deliver a presentation on the consultations.

The Access and Fairness consultation, launched on 15 May 2025, aimed to improve fairness and outcomes for LGPS members and their dependants, with 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, aimed to improve access to the LGPS and strengthen protections for members, with key proposals focused on normal minimum pension age changes, LGPS access for mayors and councillors, academies in the LGPS, and new Fair Deal protections.

Hertfordshire Pension Fund Investment Strategy Statement and Responsible Investment Review

The board was scheduled to discuss a report setting out the process for the review of the fund's Investment Strategy Statement (ISS) and Responsible Investment (RI) policy. The ISS sets out the Hertfordshire Pension Fund's investment objectives and must be reviewed at least every three years.

The aim of the investment strategy review is to agree on the fund's asset allocation policy, risk management policy, and policy on ESG factors and responsible investing.

The board was also scheduled to discuss a motion requesting the Pensions Committee to review the Responsible Investment Policy at its earliest opportunity, following a petition presented to the County Council on 21 October 2025 on behalf of Divest Herts.

Investment Performance Report as at 30 September 2025

The board was scheduled to receive a report from Mercer on the investment performance of the pension fund and its investment managers for the quarter ended 30 September 2025.

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.

Ten of the fund's investment manager mandates outperformed their benchmark during the quarter, while five underperformed.