The Local Pension Committee is scheduled to meet on Friday, 30 January 2026, to discuss a range of important financial and strategic matters concerning the Leicestershire Pension Fund. Key topics include proposed changes to how employers leaving the scheme are assessed, a review of the current and future asset strategy, and updates on the ongoing LGPS Central pooling initiative and government reforms. The Committee will also consider the draft Investment Strategy Statement and the Responsible Investment Plan for 2026.

Cessation Corridor Approach - Draft Funding Strategy Statement

The Committee is expected to consider a proposed change to the Fund's approach when an employer leaves the scheme. This involves introducing a cessation corridor for employers valued on a low-risk exit basis who do not have a guarantor. This corridor aims to provide more certainty for employers by establishing upper and lower bounds for assessing deficits or surpluses. The report outlines that the proposed lower bound would be an 85% likelihood of achieving investment returns, and the upper bound would be 95%. This approach is intended to reduce the volatility of cessation valuations and protect the Fund and remaining employers. The final Funding Strategy Statement, incorporating these changes, is scheduled for approval in March 2026.

Overview of the Current Asset Strategy and Proposed 2026 Asset Strategy

This item will focus on the annual review of the Fund's strategic investment allocation and structure, with a report from the Fund's investment advisor, Hymans Robertson. The review considers the effectiveness of the current strategy in meeting the Fund's objectives, using Asset Liability Modelling (ALM) to test alternative strategies. Key recommendations include maintaining the current allocation to listed equities, increasing protection assets from 8% to 10% funded by a reduction in Multi-Asset Credit (MAC), and reviewing the income portfolio to ensure cashflow needs are met. The report also proposes incorporating local investment targets within the existing private market allocations, aiming for 1% across private equity, infrastructure, property, and private credit. Furthermore, reviews of listed equity and investment-grade credit asset classes are recommended for 2026. The report also addresses the Fund's approach to engagement and divestment, noting alignment with LGPS Central's framework but suggesting areas for clarification on escalation expectations and thematic priorities beyond climate.

Update on Fit for the Future and LGPS Central Pooling

This report provides an update on regulatory developments concerning pension pooling and the LGPS Central initiative. It highlights the government's Fit for the Future proposals, including draft regulations that mandate participation in a single asset pool company, transfer of all assets to the Pool, and the Pool's responsibility for investment strategy implementation. The Fund's Pension Committee will retain responsibility for setting high-level objectives, including the strategic asset allocation. The report also details proposed changes to governance requirements, such as the appointment of a Senior LGPS Officer and independent persons to the pension committee. The Fund has submitted its response to the technical consultation and is preparing for these changes by reviewing its governance arrangements, updating terms of reference, and continuing to work with LGPS Central on asset transition plans. Updates on LGPS Central's client and shareholder activities are also included, noting the potential expansion of the Pool with new partner funds.

Draft Investment Strategy Statement

The Committee will consider the draft Investment Strategy Statement (ISS) for 2026, which has been updated to reflect the Fit for the Future proposals and the evolving role of LGPS Central. Key changes include expanded investment beliefs with preferences to guide the Pool, the introduction of a target and framework for local investment, and a streamlined responsible investment section. The draft ISS aims to comply with current draft regulations and guidance, with further refinements expected once the Pensions Bill is enacted. Following the meeting, a consultation with scheme employers on the draft ISS is proposed.

Pension Fund Training Needs Self Assessment

This report provides an update on the training needs assessments undertaken by Committee and Board members, aligning with CIPFA's eight core knowledge areas for pension schemes. The results of these self-assessments, along with the Fund's current priorities, will inform the development of the 2026/27 training plan. The report also details progress against the 2025 Training Plan, noting that most members have completed their required modules. A draft training plan for 2026/27 will be presented to the Local Pension Board in February before consideration by the Committee in March.

Draft Responsible Investment Plan 2026

The Committee is asked to provide comments on the draft Responsible Investment (RI) Plan for 2026. This plan builds on previous iterations and incorporates recommendations from the Fund's latest Climate Risk Report and the outcomes of a recent responsible investment survey. Key highlights include a revised Net Zero Climate Strategy for consideration in June 2026, continued quarterly manager presentations on ESG factors, and progress on climate risk reporting. The plan also addresses the ongoing work with LGPS Central and partner funds to ensure alignment and advance the Fund's RI priorities. The report notes that the Fund's approach is broadly compatible with LGPS Central's framework, with a focus on engagement and escalation rather than broad exclusions. The Committee is encouraged to provide feedback on specific areas of interest for more in-depth reporting.