The Investment Committee for Kensington and Chelsea Council were scheduled to meet on 7 July 2025 to discuss a range of topics related to the council's pension fund, including investment performance, asset allocation, and compliance with new regulations. The meeting was also scheduled to cover the fund's business plan and specific investment updates.

LGPS Fit for the Future Consultation

The Investment Committee was scheduled to receive information on the outcomes of the government's consultation on the Local Government Pension Scheme (LGPS), titled Fit for the Future . The consultation covered:

• Asset pooling reforms, including the transfer of all investment assets to pool management by 31 March 2026, a reduction in the number of asset pools from eight to six, and the requirement for Administering Authorities (AAs) to delegate investment strategy implementation to their pools.
• UK and local investments, including the requirement for AAs to set local investment allocation targets in their Investment Strategy Statement (ISS) and work with local authorities and combined authorities to identify investment opportunities.
• Fund and pool governance, including the publication of governance and training strategies, appointment of a senior LGPS officer, and independent triennial governance reviews.

The report included Mercer's initial views on the consultation, noting that while many in the industry may be disappointed that the outcome dismisses many of the concerns raised with regard to pooling, with the consultation period over and legislation and guidance forthcoming, stakeholders are expected to focus on the future.

London CIV Additional Share Capital

The Investment Committee was scheduled to discuss a request from the London LGPS CIV Limited (LCIV) for a cash contribution of £70,312 from each shareholder, including the Royal Borough of Kensington and Chelsea, to meet regulatory capital requirements. The LCIV, as an FCA regulated firm, is required to maintain sufficient regulatory capital, and the additional capital was required due to recent growth in assets under management.

Rebalancing

The Investment Committee was scheduled to review the current asset allocation of the Royal Borough of Kensington and Chelsea's Pension Fund. The report included the most recent investment asset valuations, with a focus on whether the portfolio and asset classes were within the target allocation ranges. The report noted that all investment asset allocations were within their respective review ranges, and no immediate rebalancing was required.

Benchmarking

The Investment Committee was scheduled to discuss and review current benchmarks for investment assets, as well as proposed considerations for monitoring and overseeing the LCIV's benchmark performance. The report outlined the fund's current asset holdings and associated benchmarks, including:

• Active Equities: Managed by Baillie Gifford, benchmarked against MSCI World ACWI + 2% p.a.
• Passive Equities: Managed by BlackRock, benchmarked against MSCI World GD Index.
• Private Equity: Managed by Adams Street, benchmarked against MSCI World GD + 2% p.a.
• Index-Linked Gilts: Held with the expectation of retaining the instruments until maturity to provide stable, inflation-linked returns.
• Pooled Property: Currently being wound down, benchmarked against IPD All Balanced Fund + 0.5% p.a.
• Direct Commercial Property: Managed by CBRE, benchmarked against an absolute return of 5% p.a.
• Cash: Held for property purchase opportunities, with no formal allocation, benchmarked against seven-day SONIA.

The report also included Mercer's paper on current topics, covering areas such as transition management services, the Fit for the Future update, robust policies, employer risk management, divestment and exclusions, benchmarking, Net Zero initiatives, and AVC governance.

Quarterly Performance Review

The Investment Committee was scheduled to receive the Northern Trust quarterly performance review for the fund as at 31 March 2025. The report included a summary of the value of the fund and the performance of each fund manager, as well as any other relevant investment updates. Highlights from the report included:

• The fund value decreased by 4.3% to £1,822 million for the quarter ending 31 March 2025, compared to £1,904 million at the 31 December 2024 valuation.
• Baillie Gifford underperformed its quarterly benchmark by 3.05%.
• The BlackRock MSCI Global Equities Portfolio performed in line with the index for the quarter.
• Adams Street underperformed against its quarterly benchmark by 9.34%.
• The pooled property manager CBRE Global Investors slightly underperformed by 1.47% against the quarterly benchmark.
• The Active Value UK Pooled Property Fund outperformed its quarterly benchmark by 1.24%.
• The latest actuarial report shows the Fund has a funding level of 210% as at 31 March 2025 (199% as at 31 March 2024).

The report also included Mercer's paper on current topics, and an update on the potential impact of recent strikes in the Middle East.

Business Plan

The Investment Committee was scheduled to discuss the 2025/26 RBKC Pension Fund Business Plan, outlining three-to-five-year strategic objectives aligned with the Myners Principles¹, LGPS regulations, and government reforms. Key objectives of the plan included enhancing governance and decision-making, achieving full compliance with regulations, transitioning to mandated asset pooling, and reviewing local and UK-focused investments.

Pension Fund Policies Review

The Investment Committee was scheduled to review and approve the 'Pension Communication Policy' [https://rbkc.moderngov.co.uk/Committees/documents/s26913/13A1.%20Pension%20Fund%20Policy%20Review%20Appendix%201.%20Pension%20Communication%20Policy.pdf], and 'Overpayment and Underpayment of Pension Scheme Benefits and Contributions Policy' [https://rbkc.moderngov.co.uk/Committees/documents/s26914/13A2.%20Pension%20Fund%20Policy%20Review%20Appendix%202.%20RBKC%20Overpayment%20Policy.pdf] and to review the 'RBKC Employer Discretionary Policy' [https://rbkc.moderngov.co.uk/Committees/documents/s26915/A13A3.%20Pension%20Fund%20Policy%20Review%20Appendix%203.%20RBKC%20Employer%20Discretionary%20Policy%20April%202025.pdf] and the 'RBKC Administering Authority Discretionary Policy' [https://rbkc.moderngov.co.uk/Committees/documents/s26916/A13A4.%20Pension%20Fund%20Policy%20Review%20Appendix%204.%20RBKC%20Administering%20Authority%20Discretionary%20Policy%20Apri.pdf].

CBRE Direct Property Update

The Investment Committee was scheduled to receive an update on the current direct property mandate from CBRE. The report included a summary of performance during the last quarter and an update following recent and pending acquisitions of direct property. The direct property portfolio currently accounts for 15% of the Fund against a 20% target allocation. External valuers, Sanderson Weatherall, completed the annual valuations of the Fund's properties, with the final valuation totalling £240,780,000. CBRE were scheduled to provide an oral update at the meeting.