The Pension Fund Committee of Westminster Council met on Thursday 05 March 2026 to discuss the triennial actuarial valuation, investment strategy, and updates on pooling arrangements. Key decisions included approving the 2025 actuarial valuation, which showed a healthy funding level of 140%, and agreeing to reinvest funds from underperforming equity mandates into passive funds managed by BlackRock. The committee also discussed the implications of the Pensions Schemes Bill, which mandates asset pooling by March 2026, and reviewed the proposed Investment Management Agreement with the London Collective Investment Vehicle (LCIV).

Final Triennial Actuarial Valuation 2025

The committee received the final results of the 2025 triennial actuarial valuation for the Westminster City Council Pension Fund. The overall funding level has risen to 140%, an improvement from 128% in 2022, largely attributed to strong investment returns. The valuation also noted changes to actuarial assumptions, including an increased discount rate and slightly lower CPI inflation and salary increase rates. The funding level for Westminster City Council as a single employer improved to 121% from 111%. The committee approved the 2025 valuation and the draft Funding Strategy Statement, delegating final revisions to the Chair and the Tri-Borough Director of Treasury and Pensions.

Investment Strategy Review

A significant portion of the meeting was dedicated to reviewing the Fund's investment strategy. The committee was presented with the current asset allocation, which shows an overweight position in equities (61.9% compared to a target of 55.0%). Key strategic themes for consideration were discussed, including the overall risk/return profile, cashflow requirements due to reduced employer contributions, diversifying growth drivers beyond public equities, enhancing inflation protection, and further developing ESG integration. The committee was asked to provide input on these themes to inform the next stage of the investment strategy review.

The committee also discussed the implications of the Fit for the Future legislation, which will see the London Collective Investment Vehicle (LCIV) taking over the implementation of investment strategies from March 2026. The current asset allocation was reviewed, with a particular focus on the equity exposure, which is considered a key risk but also a primary driver of growth. The committee noted the need to rebalance the equity allocation towards the target and discussed opportunities to diversify growth drivers, potentially through illiquid assets. Cashflow requirements were highlighted as a growing concern due to anticipated reductions in employer contributions, suggesting a need to increase income generation from the investment portfolio.

The discussion also touched upon the importance of inflation protection, with a portion of the portfolio allocated to assets like UK real assets, property, and infrastructure, which are expected to be linked to inflation over the long term. ESG considerations were acknowledged as an area where the Fund has already made progress, with investments in ESG-tilted equity portfolios and renewable infrastructure.

London Collective Investment Vehicle (LCIV) Investment Manager Agreement

The committee reviewed the Investment Management Agreement (IMA) with the London Collective Investment Vehicle (LCIV). This agreement is a crucial legal contract that will govern the management of the Fund's assets within the pooled structure, effective from 1 April 2026, in line with the Pensions Schemes Bill. The IMA outlines the terms and conditions for asset management, responsibilities of each party, fees, and the delegation of buy/sell/hold decisions to the LCIV. The committee was asked to approve the core IMA and delegate agreement of final revisions to the Chair in consultation with the Tri-Borough Director of Treasury and Pensions.

Pensions Schemes Bill Update

An update was provided on the Pensions Schemes Bill and draft LGPS regulations, which are set to formalise asset pooling for LGPS funds. The legislation mandates that all LGPS assets must be invested through designated pools by 31 March 2026. The committee was informed about the implications for governance structures, with a greater emphasis on contract management and oversight of the pool, and the need for member and officer training to reflect a more strategic role. Key issues and risks identified include alignment between pool offerings and fund needs, maintaining clear lines of accountability, managing transition risks, and balancing statutory pooling requirements with local democratic input. The committee was asked to note the report and consider the next steps Westminster Pension Fund needs to take to comply with these new regulations.

Other Discussions

Temporary Accommodation Investment: The committee had previously approved a £50 million investment in an inflation-linked loan for temporary accommodation properties. The due diligence and legal documentation for this investment were reported to be well underway, with papers due to be signed before the end of March.

Morgan Stanley Investment: An update was given on the planned disinvestment from the LCIV Global Equity Quality Fund, managed by Morgan Stanley. A slight delay was encountered due to the need for all three London boroughs invested in the sub-fund (Westminster, Hammersmith and Fulham, and the City of London) to divest simultaneously to ensure fairness and equality. The City of London has now approved its divestment, allowing the sub-fund to be liquidated. The transition is being managed by Blackrock.

Pension Administration Update: Sarah Hay, Strategic Pension Lead, provided an update on pension administration services. Hampshire Pension Services (HPS) reported 100% compliance with Key Performance Indicators (KPIs) for November 2025 to January 2026. Member portal access had increased to 55.07%. The committee also agreed to revise the Pension Administration Strategy penalty charge for employers with poor data quality, increasing it from £100 to £150 per member.

Pension Projects & Governance Update: Diana McDonnell-Pascoe, Pension Project and Governance Lead, updated the committee on various projects, including the McCloud remedy and the Pensions Dashboard Programme. The committee agreed in principle to contribute up to £10,000 to help fund the Local Government Association's Gender Pension Gap research project, subject to reviewing the final proposal.

Fund Financial Management: Phil Triggs, Tri-Borough Director of Treasury and Pensions, presented the top five risks for the Pension Fund, including regulatory and compliance risks related to pooling reforms, global market volatility, and potential under-resourcing at the London CIV. The cashflow position and forecasts were also reviewed, indicating a stable bank and cashflow position.

Quarterly Performance Report: The committee noted the Fund's investment performance to 31 December 2025, which showed a positive absolute return of 1.6% over the quarter but underperformed its benchmark. The underperformance was primarily attributed to the LCIV Global Equity Quality Fund. The committee also noted the updated funding level as at 31 December 2025 and approved that certain parts of the report be exempt from publication.

Responsible Investment Policy – Conflict Zones Discussion: The committee discussed a draft addendum to the Pension Fund's Responsible Investment Statement concerning conflict zones and human rights. The policy aims to set out the Fund's approach to conflict-linked investments, clarify expectations for the London CIV and investment managers, and establish a transparent framework for decision-making. The committee was asked to comment on and approve the proposed addition to the policy.

London Collective Investment Vehicle Investment Manager Agreement (LCIV IMA): The committee was asked to approve the core IMA with the LCIV, which sets out the terms for the pooled management of the Fund's assets from 1 April 2026. Final revisions were delegated to the Chair in consultation with the Tri-Borough Director of Treasury and Pensions.

Pensions Schemes Bill Update: The committee received an update on the Pensions Schemes Bill and draft LGPS regulations, highlighting the mandatory pooling of assets by March 2026 and the strengthening of governance frameworks. The committee was asked to note the report and consider the next steps for compliance.