The Pensions Committee of Hillingdon Council is scheduled to convene on Tuesday 24 March 2026. The meeting's agenda includes a review of the triennial valuation results, the responsible investment policy, and the investment strategy statement.

Triennial Valuation Results

The committee is set to consider the results of the triennial valuation of the Hillingdon Pension Fund, which assesses the fund's financial health and contribution rates. The valuation report, prepared by Hymans Robertson LLP, indicates a significant improvement in the fund's funding level since the last valuation in March 2022. As of 31 March 2025, the fund reported a surplus of £211 million, with a funding level of 118%, up from a deficit of £167 million and a funding level of 88% in 2022. This improvement is primarily attributed to higher assumed future investment returns and strong investment performance over the period.

The report also details the recommended employer contribution rates for the period 1 April 2026 to 31 March 2029. The average primary rate has decreased slightly to 19.5% of pay, with a negative secondary rate of -0.5%. The Funding Strategy Statement (FSS) for the Hillingdon Pension Fund, which outlines how employers' pension liabilities will be met, is also presented for approval. This statement details the processes the council uses to establish a clear funding strategy, maintain stable contribution rates, ensure solvency, and balance the interests of different employers.

An update on pensions administration performance is also scheduled, highlighting strong performance with 100% of cases completed within service level agreements. Membership has grown by over 18%, and the member portal registration rate stands at 55%. The report notes progress on the McCloud remedy implementation and the completion of Civica onboarding for the Pensions Dashboard.

Responsible Investment Policy

The committee will consider the updated Responsible Investment (RI) Policy for the London Borough of Hillingdon Pension Fund, effective March 2026. This revised policy reflects the fund's transition to full investment pooling via the London Collective Investment Vehicle (LCIV) and strengthens commitments to climate action and stewardship. Key developments include the adoption of four priority UN Sustainable Development Goals (SDGs) – Climate Action (SDG 13), Decent Work and Economic Growth (SDG 8), Good Health and Wellbeing (SDG 3), and Reduced Inequalities (SDG 10).

A new target of 5% of fund assets for impact investments has been introduced, alongside a commitment to exclude investments in companies deriving revenue from the development of components used solely in controversial weapons. The policy also details an updated approach to stewardship and engagement, including a four-stage milestone system for company engagement and clear escalation processes. The LCIV will be responsible for implementing the fund's RI policy, including manager selection and stewardship activities.

Investment Strategy Statement

The committee will review and approve the draft Investment Strategy Statement (ISS), which has been updated following the triennial valuation results and in response to the Fit for the Future legislation. The revised ISS reflects the transition to full asset pooling with the London CIV from 1 April 2026. Key changes include the introduction of UK Residential Housing exposure for ESG impact and inflation linkage, an increase in allocations to private equity and private credit, and adjustments to the equity mix to favour active mandates. The forecast indicates a potential increase in the modelled investment return from 9.1% to 9.4%, with a slight increase in the Value at Risk (VAR).

The ISS outlines the fund's investment objectives, including a long-term return target of at least 6.7% per annum, managing risk within acceptable levels, and maintaining liquidity. It details the strategic asset allocation, with a target of 49% in Listed Equity, 8% in Private Equity, 8% in Private Credit, and 5% in Local Investment. The statement also addresses the authority's approach to risk management, responsible investment considerations, and the policy on exercising voting rights, which will be delivered through the London CIV.

Governance and Other Updates

The committee will also receive updates on governance matters, including the committee's work plan, continuous professional development log, and the General Code of Practice (GCoP) update. The draft Pension Fund Annual Report, including the audited accounts for 2024/25, will be presented for approval. The report aims to provide transparent and comparable information on the fund's management, financial performance, and governance arrangements.

The agenda also includes a review of the Risk Register, identifying key risks to the pension fund and the measures in place to mitigate them. Seven risks remain open and are actively managed, including cyber security, liquidity risks, failure of the investment pool, governance compliance, key officer risk, and employer administration information failures. The report notes that the Fit for Future legislation has not yet been approved, which could become a significant risk if not resolved soon.

Finally, the committee will review the fund managers' ESG activities and compliance efforts, noting voting statistics from LGIM and the London CIV's managers (Ruffer, Baillie Gifford, and Wellington). Engagement activities undertaken by LGIM and the Local Authority Pension Fund Forum (LAPFF) are also detailed, covering environmental, social, and governance issues.