The Pensions Board of Lambeth Council met on Wednesday 15 April 2026 to discuss the actuarial valuation results, a governance review, and investment performance. The meeting noted a significant improvement in the pension fund's funding level, a comprehensive review of the fund's governance in preparation for upcoming regulatory changes, and reviewed investment performance for the last quarter of 2025.

Actuarial Valuation Results and Funding Strategy Statement

The meeting received an update on the actuarial valuation results for the Lambeth Pension Fund as of 31 March 2025, which showed a substantial increase in the funding level to 120%, up from 96% at the previous valuation in 2022. This positive development means the fund now has a surplus, leading to a reduction in employer contribution rates. Stephen, an actuary from Hyman's, presented the findings, explaining that the increase was due to strong asset growth and a revised expectation of future investment returns, which have risen from below 4% to the mid-5% range.

Despite the healthy surplus, the strategy is to maintain stable contribution rates rather than reducing them too rapidly, ensuring long-term predictability and stability for the pension fund and employers. The valuation report also incorporated climate change modelling, assessing the potential impact of various scenarios, including a green revolution, delayed transition, and inaction on climate change. The analysis indicated that while the fund's healthy position offered some resilience, extreme scenarios like a head in the sand approach to climate change could significantly worsen negative outcomes. The report also included a gender pensions gap report, which showed relatively low pension gaps compared to other Local Government Pension Scheme (LGPS) funds.

The Funding Strategy Statement, a statutory document, was also reviewed. While largely compliant with new guidance, minor adjustments were made. The statement outlines how the fund will meet its long-term obligations, considering factors like employer needs and investment strategies.

Governance Review Outcome

A significant portion of the meeting was dedicated to the outcome of an independent governance review commissioned by Hyman's Robertson. This review was conducted to assess compliance with regulatory standards and best practices, particularly in anticipation of upcoming government reforms for LGPS funds, referred to as Fit for the Future.

Key proposed reforms discussed include:

• Senior LGPS Officer: Each LGPS fund will be required to appoint a Senior LGPS Officer, a role akin to a Head of Pensions, with overall responsibility for finance, governance, and administration. This officer cannot be the Section 151 Officer (the council's chief finance officer) and is expected to be a director or assistant director level. Lambeth's current structure, with separate finance and administration teams, will likely need restructuring to align with this requirement. The timeline for this appointment is now within six months of the regulations coming into force, which is anticipated to be around late 2026 or early 2027.
• Knowledge and Understanding Requirements: Formal knowledge and understanding requirements will be extended to committee members, aligning them with existing requirements for pension board members. This will cover scheme rules and pension law, and will be an individual requirement. A fund training strategy will be developed to support these requirements, with increased scrutiny on training completion.
• Independent Person: A new requirement for an independent person to assist each fund's committee is being introduced. While initially thought to be a committee member, recent government guidance suggests this person may attend meetings rather than sit on the committee, potentially avoiding the need to update the council's constitution. This role is seen as similar to a non-executive director or professional trustee, providing challenge and support. The expectation is that this role will be paid, though the remuneration is a local decision. There is concern about the availability of suitable candidates given the number of funds requiring such an appointment.
• Triennial Governance Review: LGPS funds will be required to undergo an independent governance review every three years. This review will assess various aspects of the fund's operations, including business planning, performance, and internal controls. The government has indicated powers to intervene, including compulsory merging of funds, if reviews are unsatisfactory.

The board noted that while many of these reforms are not entirely new and stem from previous recommendations, the exact implementation dates are still subject to the progress of the Pension Schemes Bill through Parliament.

Risk Register Update

The risk register was updated to reflect a qualified audit opinion for the 2024-25 financial statements. Jackie Moylan, Interim Director of Finance, explained that this was linked to historic balances on current assets and liabilities stemming from a previous system migration. While progress has been made, auditors required more time to complete their work before the sign-off deadline. Discussions are ongoing with auditors to rectify these issues for the 2025-26 accounts.

An additional risk highlighted was insufficient resources to support the demands on the pension committee and board. To address this, additional resources have been secured from the London Pensions Fund Authority (LPFA) for investment administration and accounts preparation.

Concerns were raised about potential market volatility due to the Middle East war and the implications of private credit bubbles. These were noted for consideration in future risk register updates and investment monitoring.

Investment Performance Report - Quarter 4 2025

The Investment Performance Report for the fourth quarter of 2025 indicated that the fund's investment performance was slightly below benchmark. This was attributed to the performance of active fund managers compared to passive managers, a trend observed across other LGPS funds. Progress has been made on investments in private equity funds, with some nearing completion ahead of the pooling of assets with the LPFA. The property portfolio, including Invesco, has also underperformed, though divestment from Invesco is expected to improve future performance. The report reiterated that the LPFA will be directly accountable to the Pensions Committee for investment strategy implementation and performance once asset pooling is complete.

Investment Strategy Statement 2026

The board was presented with a cover report for the updated Investment Strategy Statement for 2026. Further details on the investment strategy were to be discussed in the exempt part of the meeting.

Annual Accounts and Audit Plan

An outline of the timeframe for producing the 2025-26 annual accounts and audit plan was presented. The aim is to complete and publish draft statements by the statutory deadline of the end of June, with the audit committee sign-off expected in January 2027.

General Update

The general update report touched upon the Fit for the Future outcomes, noting that the deadline for pooling all assets has been extended due to delays in the Pension Schemes Bill. Significant progress has been made on developing investment management agreements with the LPFA. The report also confirmed that investments in private equity funds are progressing well. The disclaimer of opinion on the 2024-25 pension fund accounts was reiterated, along with ongoing efforts to rectify the position. The importance of training was highlighted, with updates on upcoming training events. The report also confirmed efforts to bolster the team's resources, including securing support from the LPFA and interviewing for additional staff.

The meeting concluded with the exclusion of the press and public for the remainder of the session to discuss exempt information.