Essex Pension Fund was named pension fund of the year (large) at the LGC Investment Awards 2024. This is the award submission that so impressed the judges.
View the shortlist for the LGC Investment Awards 2025, taking place on 28 November, here, and book your place here.
Essex Pension Fund administers the Local Government Pension Scheme for more than 184,000 scheme members and over 770 employers in Essex. Of the 86 regional pension funds that collectively form the LGPS in England and Wales, we are the 8th largest.
The fund continues to collaborate across the LGPS and is proud to be a member of the Access pool, working together with 10 other funds to share resources and amplify our investment priorities and ambitions.
We’re also part of the South Eastern Counties Superannuation Officer Group (SECSOG) and the national LGPS framework, working with other funds to develop solutions to issues which impact on the LGPS nationally. We’re involved with creating the integrated service provider framework, which is integral to the implementation of the National Pensions Dashboard.
We have continued to tackle the investment and regulatory challenges of recent years with innovation and energy, thriving in an uncertain environment and providing reassurance and outstanding service to our stakeholders.
The fund is dedicated to being a responsible investor and is committed to continually evolving to ensure we are agile enough to recognise and react to the changing economic environment and meet our core fiduciary responsibilities both now and in the future. The fund’s investment steering committee critically reviews our policies and performance and ensures our values are fully aligned with our goals.
Sustainable transition equity fund
In June 2023 this committee agreed the updated investment strategy statement, reflecting recent developments the fund had made regarding its investment strategy and responsible investment (RI) policy, which sets out the fund’s RI investment beliefs and priorities, and a clear roadmap to our ultimate goal of achieving net zero by 2050.
The investment steering committee has been clear, given our significant investment across diverse asset classes, that engagement alone was not enough, and a holistic approach should be adopted, addressing all RI priorities including climate.
To this end, the fund worked in partnership with UBS Asset Management to develop the fund’s sustainable transition equity fund, UBS’s first to take account of a range of environmental, social and governance metrics rather than focusing solely on climate. It is aligned with UN sustainability goals.
It has already been successful after one year; not only meeting the 7% decarbonisation year-on-year target, but it also reduced the fund’s carbon emissions by 79% by switching to this strategy from the regional market capitalisation indexes it was in previously.
De-risking pathway
As a result of the fund’s successful delivery on its 2023-24 business plan, there was year-on-year net added value in terms of cost/performance compared to our peers across the LGPS and global universe, within appropriate risk/return parameters.
The fund performed strongly in 2023-24, achieving absolute return of 12.8% for the year. This resulted in the fund reaching an all-time high value of £10.9bn as at the end of March 2024 – an increase of £1.2bn from the previous year.
We are undertaking a thorough review of risk management practices
We consistently exceed the actuarial return needed of 4.5% and investment strategic return of 8.2%. The returns against target are reviewed on a quarterly basis as part of the investment scorecard, where the indicators of risks and volatility are also considered as well.
The fund has continued on its de-risking pathway, moving to income generating alternative assets to match the maturing nature of the membership. After each valuation we also undertake an asset/liability modelling exercise – and that shows 92% success of the strategy in achieving its desired outcome.
We are undertaking a thorough review of risk management practices, collaborating with our pensions board and the independent governance and administration adviser to evaluate our business continuity policy and plan, cyber risk policy, risk strategy and register and incorporating key elements of the Pension Regulator’s general code of practice regarding continuity planning, cyber risk and internal controls.
The fund also conducted a self-assessment against the LGPS Advisory Board’s good governance review which highlighted the fund was in a good position, demonstrating good governance throughout.
Communicating with members
Essex Pension Fund has been proactive about preparing for and implementing regulatory changes during 2023-24, including the McCloud remedy to address unlawful age discrimination in public sector pension schemes, having reviewed and updated over 40,000 pensions in scope ahead of the publication of the regulations to ensure the changes could be enacted swiftly.
We continue to grow our digital content for scheme members, and regularly host a range of virtual pension surgeries, webinars and adding videos to our YouTube channel to reach as many members as possible to inform, educate and build confidence in the LGPS and their retirement plans.
We have tailored presentations highlighting the option for flexibility with pension contributions
We use a range of function specific surveys which gather focused feedback after these events. The responses are then evaluated to deliver improvements to processes and communications. The results are reported to the fund’s pension advisory board and pension strategy board via the scorecard, achieving over 90% positive responses continuously throughout 2023-24 on all our scheme member and employer surveys.
We also liaise with scheme employers and partner with them to promote the benefits of the LGPS as part of financial wellbeing and pension awareness initiatives across the county, addressing current issues including the cost-of-living crisis.
We have tailored presentations highlighting the option for flexibility with pension contributions, encouraging members to remain in the scheme via the 50/50 option and continue to retain important scheme protections and benefits, helping to make continued membership a more affordable prospect.
Proactive and innovative
We are working closely with the Pensions & Lifetime Savings Association [now known as Pensions UK] to assess and understand the research they have conducted with Loughborough University into retirement living standards, and how these findings could be used to improve retirement planning for members of defined benefit schemes.
The fund has ambitious goals for our employer and member self-service portals, relaunching the employer hub with greater functionality and new features which significantly improve the quality and punctuality of data provided to us, allowing key processes to be completed ahead of key performance indicators.
Essex Pension Fund is proactive and innovative, responding swiftly to address the rapidly changing regulatory, governance and investment frameworks to ensure we fulfil our primary fiduciary responsibilities as a public sector pension scheme, while maintaining the highest levels of service for our stakeholders.
View the shortlist for the LGC Investment Awards 2025, taking place on 28 November, here, and book your place here.
