The Kensington and Chelsea Pension Board met to discuss pension administration, review fund policies, and consider investment performance. The board was also scheduled to discuss its business plan and direct property investments.

Quarterly Investment Update

The board was scheduled to receive the quarterly performance review, which included a fund valuation as of 31 March 2025. According to the Quarterly Performance Report:

• The fund's value was £1,821,954,000 as of 31 March 2025, compared to £1,904,248,000 on 31 December 2024.
• Baillie Gifford underperformed its benchmark by 3.05% for the quarter and has underperformed for the past three and five years. They were invited to the November Investment Committee meeting to discuss performance.
• BlackRock MSCI Global Equities Portfolio performed in line with the index for the quarter, with a one-year return of -0.08%, below the target.
• Adams Street Private Equity underperformed its quarterly benchmark by 9.34% but outperformed public markets and private equity benchmarks since inception.
• CBRE Global pooled property underperformed by 1.47% as the fund winds down.
• Active Value UK Pooled Property Fund outperformed by 1.24% but is also winding down. The Executive Director of Resources approved an immediate exit at a discounted value to secure capital receipts for reinvestment, supporting cashflow stability.
• Direct Property Fund: The annual valuation was completed by external valuers, showing stable property values compared to last year/purchase price, with a slight overall value increase but a decrease when factoring in this year's capital costs.

The report also noted that the 2025 triennial valuation was underway to assess the fund's liabilities, set employer contribution rates and ensure long-term sustainability. Preliminary results were expected by late 2025, with final contribution rates effective from April 2026.

The report also covered the Labour Government's Pensions Investment Review, and the Fit for the Future consultation, which outlined reforms in asset pooling, UK and local investments and governance. By 31 March 2026, all investment assets must transition to management under six asset pools, reduced from eight, with Administering Authorities retaining responsibility for setting strategic objectives while pools execute investment decisions under FCA regulation. The latest actuarial report showed the Fund had a funding level of 210% as at 31 March 2025 (199% as at 31 March 2024).

Pension Fund Policies Review

The Pension Board was scheduled to review and comment on several pension fund policies. These included the Pension Communication Policy, the Overpayment and Underpayment of Pension Scheme Benefits and Contributions Policy, the RBKC Employer Discretionary Policy and the RBKC Administering Authority Discretionary Policy.

The Pension Fund Policy Review Report stated that each LGPS¹ Pension Fund is required to set out its policy on several matters related to administration and governance, which must be periodically reviewed. The report noted that the 'Pension Communication Policy' and both Discretionary Policies were last reviewed when the Pension Service came back in-house. The 'Overpayment and Underpayment of Pension Scheme Benefits and Contributions Policy' is a new policy for RBKC.

The draft Pension Communication Policy stated that under the Local Government Pension Scheme Regulations 2013, Regulation 61, administering authorities must prepare, publish and maintain a policy statement setting out its communication strategy for communicating with scheme members, members' representatives, prospective members and employers participating in the Fund. The policy sets out how information about the RBKC LGPS is communicated, primarily through the RBKC LGPS website, the RBKC pension portal, member-specific notifications, generic LGPS policies, and RBKC employer-specific guidance.

The draft Overpayment and Underpayment of Pension Scheme Benefits and Contributions Policy was formulated under the Local Government Pension Scheme Regulations 2013 (as amended) and related legislation. The policy aims to ensure that all overpayments and underpayments of benefits are treated fairly, that necessary steps are taken to rectify overpayments, and that the Fund receives the correct contributions from employers and members.

The draft RBKC Employer Discretionary Policy and RBKC Administering Authority Discretionary Policy detailed the discretionary policy decisions applicable to active scheme members from 1 April 2014 and members who ceased active membership from 1 April 2014; active scheme members from 1 April 2008 and members who ceased active membership on or after 1 April 2008 and before 1 April 2014; and active scheme members from 1 April 1998 and members who ceased active membership on or after 1 April 1998 and before 1 April 2008.

Pension Administration Update

The board was scheduled to receive an update on pension administration in RBKC. According to the Pension Administration Update Report, headline issues and achievements since the previous Pension Board included:

• Staff matters: Two pension officers left the team on 31 March 2025, one pension officer joined on 7 April 2025, and two further pension officers were due to commence employment in August and September.
• Pension Increases: The annual increase of 1.7%, from 7 April 2025, had been applied to pensioner and deferred member records.
• Website Resources: Documents had been updated/created on the RBKC Pension Fund website.

Ongoing projects included:

• i-Connect: Work continues on the project to implement i-Connect. Currently, there are 3 payroll providers, covering 17 employers onboarded.
• McCloud Judgement: Work ongoing in preparation to include McCloud information in 2025 Annual Benefit Statements.
• Valuation: Work ongoing in preparation for data submission for triennial valuation.
• 2024/25 Year End: Updating of member records to include end-of-year data.
• Audit: 2024/25 external audit with Grant Thornton is ongoing.
• Pensions Dashboards: Dashboards will show users their pensions information online, securely and all in one place. The LGPS connect by date is 31 October 2025.
• Engage: This will replace Member Self-Service (MSS) and is due to be implemented in November 2025.
• System Updates: New workflows are still being designed and rolled out.

The report also included key performance indicators for the RBKC Pension Team.

Business Plan

The board was scheduled to discuss the 2025/26 RBKC Pension Fund Business Plan. The Business Plan Report stated that established good practice requires that local authority pension funds should approve an annual business plan, outlining objectives for the next three to five years. The Business Plan outlined the strategic objectives of the Royal Borough of Kensington and Chelsea (RBKC) Pension Fund for 2025–2030, ensuring alignment with Myners Principles², LGPS regulations, The Pensions Regulator (TPR) good governance framework, and government reforms.

Key objectives included:

• Enhance governance and decision-making.
• Achieve full compliance with the 2016 LGPS (Management and Investment of Funds) Regulations and the upcoming Pension Schemes Bill (Royal Assent expected 2026).
• Transition to mandated asset pooling by March 2026, per the Fit for the Future government response (May 2025).
• Review and consider local and UK-focused investments to support economic growth, as outlined in the Fit for the Future response.
• Maintain sustainable returns for members while managing £1.8 billion in assets (as of March 2025).
• Deliver a sustainable, well-governed pension scheme that complies with statutory requirements.

Direct Property Update

The board was scheduled to receive an update on the current direct property mandate. According to the Investment Property Update:

• 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 a total valuation of £240,780,000.
• The valuations indicate stable property values compared to the previous year's valuations, with a slight overall increase. However, when accounting for the capital costs of properties acquired this year, the net value reflects a slight decrease.

CBRE was scheduled to provide an oral update at the meeting.