The Pensions Committee of the City of London Council met on Wednesday 23 September 2026 to discuss the pension scheme administrators' update, changes to inheritance tax legislation, and the risk register. The committee also received information on the City Fund and Pension Fund Statement of Accounts and Audit Report Findings for 2025-26.

Pension Scheme Administrators Update

Graham Newman, Pensions Manager for the Chamberlain's Department, provided an update on the administration of the City of London Local Government Pension Scheme. He highlighted that user acceptance testing for the new SAP payroll system was due to restart, and that a self-service platform for pensioner members would be available, allowing them to view payslips and P60s. Mr. Newman also noted a typographical error in the schedule of events, which stated December 2025 instead of December 2026 for the publication of the 2024-25 pension fund accounts. He confirmed that additional resources had been agreed for the SAP payroll system testing to maintain business as usual.

Changes to Inheritance Tax and Effects on the Local Government Pension Scheme

Graham Newman also presented a report on upcoming changes to inheritance tax (IHT) legislation, effective from April 2027. The changes will bring most unused pension funds and death benefits into the scope of IHT, which is a significant departure from the current rules. While the impact is expected to be greater for defined contribution schemes, it may affect certain Local Government Pension Scheme (LGPS) death benefits for deferred and pensioner members. This will increase administrative complexity and potentially raise IHT liabilities for some beneficiaries. The report noted that death-in-service benefits, transfers to spouses or charities, and certain dependant pensions are expected to remain exempt. Personal representatives will become responsible for identifying pension death benefits, reporting them to HMRC, and ensuring any IHT is paid. A new Pensions Direct Payment Scheme will allow administrators to pay IHT directly to HMRC from death benefits. The LGPS administration is expected to experience increased complexity, including more member and beneficiary enquiries, additional liaison with executors and HMRC, and potential delays in death grant payments. The Pensions Office plans to publish information on the changes on the Pension Fund website and issue targeted member communications.

Risk Register for the Pensions Committee

Amanda Luk, Senior Accountant – Pensions for the Chamberlain's Department, presented the committee's risk register. The register had been updated to reflect the requirements of the Pension Schemes Act 2026 and associated guidance, including enhanced requirements for asset pooling, investment strategy, and governance. The risk approach for identified risks would be to tolerate, transfer, terminate, or treat. Several risks were discussed in detail, including:

• CHB Pensions 001 Insufficient assets: This risk relates to the asset allocation of the pension fund portfolio being unable to fund long-term liabilities due to market movements and pool dependencies. The committee noted that the fund was outperforming its absolute return target over most time horizons. The Investment Strategy Statement (ISS) is to be reviewed and revised by 31 March 2027.
• CHB Pensions 007 Cyber Security: This risk concerns IT system failures due to ineffective procedures or inadequately trained staff, potentially leading to inaccurate benefit payments, financial penalties, and reputational damage. The committee was assured that corporate online training regarding data security was being implemented, and software was being updated. Business continuity plans were also being reviewed.
• CHB Pensions 009 McCloud Remedy: This risk relates to the implementation of the remedy following new pension legislation to remove age discrimination from the LGPS, stemming from the McCloud judgement. The finalised LGPS (Amendment) (No.3) Regulations 2023 came into force from 1 October 2023, and all new retirements have been calculated with reference to the remedy. Annual Benefit Statements issued in August 2026 included information on the McCloud Remedy.
• CHB Pensions 010 Targeted returns: This risk concerns the failure of the investment strategy, including asset allocation and manager selection, to achieve targeted investment returns. The committee noted that the London CIV is now the principal source of investment strategy advice. The performance of fund managers and their aggregate performance is reported against targets.
• CHB Pensions 003 Short term Cash flow: This risk arises from inadequate cash flow planning and monitoring, potentially leading to delayed benefit settlements or disinvestments at inopportune times. The committee was informed that the pension fund asset allocation remains within tolerance ranges, and a cash flow forecast has been created to ensure the fund can meet its obligations.
• CHB Pensions 004 Breach of GDPR/Data Protection regulations: This risk relates to the potential release of scheme members' personal data to unauthorised third parties. The committee was assured that staff were aware of corporate policies on data security and GDPR legislation, and that robust identity verification processes were in place.
• CHB Pensions 006 Employer Insolvency: This risk concerns employers becoming insolvent with insufficient funding to meet liabilities, potentially leading to increased contribution rates for other employers. The committee noted that LGPS regulations generally require admitted bodies to have an indemnity or bond to cover such eventualities.
• CHB Pensions 008 Pension Scheme Administration: This risk relates to the failure of administrators to accurately calculate and pay the correct level of benefits, potentially leading to financial penalties and reputational damage. The committee was informed that job descriptions were being reviewed to attract skilled candidates, and staff were receiving ongoing training.
• CHB Pensions 011 Service provider failure: This risk arises from the withdrawal of service provision or liquidation of partner organisations, such as fund managers or the London CIV. The committee was assured that detailed due diligence was carried out when appointing service providers, and that internal control reports were reviewed.
• CHB Pensions 012 Governance/Legislative Compliance: This risk stems from a lack of understanding of statutory requirements and inadequate oversight of the London CIV. The committee noted that training plans were in place for members and staff, and that external professional advice was sought where required.
• CHB Pensions 013 Responsible investment duties: This risk concerns insufficient attention being paid to environmental, social, and governance (ESG) dimensions of financial investments. The committee was informed that the Pension Fund's Responsible Investment Policy had been reviewed and published, and that the fund was part of the City's PRI submission.
• CHB Pensions 005 Fraud: This risk relates to fraudulent claims for pension benefits or pension transfer scams. The committee was assured that robust fraud protection and detection processes were in place, including the use of a Mortality Screening Service and communications warning members about transfer scams.
• CHB Pensions 002 Actuarial valuation: This risk concerns the use of inappropriate assumptions by the actuary or inaccurate data supplied for the triennial valuation. The committee was informed that the latest actuarial valuation as at 31 March 2025 had been completed, and the results would be presented in March 2026.

The committee agreed to the recommendation that there were no further risks relating to the services overseen by the Pensions Committee.

City Fund and Pension Fund Statement of Accounts and Audit Report Findings 2025-26

Sarah Port, representing the Chamberlain's Department, presented the City Fund and Pension Fund Statement of Accounts and Audit Findings Report for 2025-26. The report had previously been presented to the Audit and Risk Management Committee and the Finance Committee. Two audit recommendations were noted concerning pension number reconciliations and an immaterial balance on the bank reconciliation. Officers would provide an update on these at the February meeting. The accounts had been signed the previous night, following the Finance Committee meeting, and were expected to be uploaded to the website later that day. The committee recorded its thanks to the officers for their work in preparing the accounts.

The meeting also included the welcome of James Graham as the new Director of Investment and Strategy, and the farewell to Steve Turner, who was attending his last Pensions Committee meeting after providing valued support as the fund's investment consultant since 2015. Apologies were received from Stephen Hodgson.