The Pension Board of Kensington and Chelsea Council was scheduled to discuss updates on pension administration, quarterly investment performance, cashflow, and risk management. The meeting's agenda also included a review of the previous meeting's minutes and an exempt item concerning direct property investment.

Pension Administration Update

The report on pension administration was scheduled to provide an update on the current state of pension administration within the Royal Borough of Kensington and Chelsea (RBKC). Key issues and achievements since the previous meeting were to be discussed, including a letter from the Ministry of Housing, Communities and Local Government (MHCLG) regarding employer contribution rates and changes to Regulation 64A. The confirmed annual pension increase of 1.7% from 7 April 2025 was also to be noted. Progress on ongoing projects such as the implementation of the i-Connect system for electronic contribution uploads, the McCloud judgement calculations, and the development of Pensions Dashboards was to be detailed. The report also included Key Performance Indicators for the RBKC Pension Team.

Quarterly Investment Update

This report was intended to present the Northern Trust quarterly performance review for the Pension Fund as of 31 December 2024. It was scheduled to provide a breakdown of investment assets and their valuations, comparing them to the previous quarter. The report was to highlight the overall fund value increase and detail the performance of individual fund managers, including Baillie Gifford, BlackRock, and Adams Street. Specific attention was to be given to pooled property funds managed by CBRE Global Investors and Active Value UK, noting their performance against benchmarks and winding-down status. The report was also to cover the performance of index-linked gilts and cash holdings, as well as the Fund's funding position, which was reported to be 224% as at 31 December 2024.

Cashflow Update

The cashflow update report was scheduled to present the cashflow of the Pension Fund's main bank account, NatWest, which handles daily transactions including contributions and pension payments. The report was to detail how rental income and pooled property capital repayments contribute to maintaining a positive cash balance. It was also to outline payments made for pension benefits and management expenses. The report was to compare actual cashflow figures against projected forecasts for the 2024/25 financial year, noting that contributions and rental income were higher than expected. The reduction in the cash balance was attributed to property purchases, with further opportunities in the pipeline. The transition to the new Oracle finance system and its potential impact on payments was also to be discussed.

Risk Management

This report was to accompany the Royal Borough of Kensington and Chelsea Pension Fund's risk register, providing an overview of identified risks and the actions taken to manage them. Risks were to be grouped according to CIPFA's framework, with a focus on significant risks scoring medium-high. A new risk concerning the purchase of temporary accommodation for the Council was to be added, detailing potential financial, operational, and legal challenges. Updates were also to be provided on the risk associated with the Council's decision to lower its contribution rate to nil, following a response from the Ministry of Housing, Communities and Local Government (MHCLG). Other risks to be discussed included inflation risk, investment pooling risks, longevity risk, environmental, social, and governance (ESG) risks, salary increase risk, manager underperformance risk, and corporate governance risk related to climate-related disclosures. The report also included a risk related to the potential for unfavourable financial terms or unforeseen costs associated with purchasing temporary accommodation.