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Summary
The Islington Pension Committee is scheduled to meet on 8 December 2025 to discuss fund performance, the funding strategy, and the London CIV. The committee will also review its forward work programme and training requirements.
Actuarial Valuation and Funding Strategy Statement
The committee will be asked to consider the 2025 actuarial valuation and a draft Funding Strategy Statement (FSS) for consultation. The report pack includes a presentation from the Fund Actuary on the initial whole fund result and parameter considerations for the funding strategy statement consultation.
The Funding Strategy Statement must be prepared and published alongside each actuarial valuation, according to the Local Government Pension Scheme (LGPS) Regulations. The Fund Actuary must consider the FSS as part of the actuarial valuation process. The FSS must also be revised and published whenever there is a material change in either the policy set out in the FSS or the Investment Strategy Statement.
The report pack states that the key assumptions used by the Actuary are discount rates (expected return), inflation, and life expectancy:
(i) Discount rate (expected return) the actuary has considered the technical derivation of the appropriate real past service and future service discount rate assumptions to allow for the material shift in interest rates and inflation outlook. The proposed discount rates of CPI+2.8% (past service) and CPI+2.25% (future service) allow for agreed levels of prudence taking account inherent risk factors including long-term sustainability and affordability. (ii) Inflation Whilst inflation experience over the 2022/25 inter-valuation period has been greater than expected, based on the actuary's analysis of current market implied inflation and BoE expectations, the long-term rate of inflation proposed is 2.6% p.a. Short-term inflation movements will be built into the liabilities. (iii) Life Expectancy Based on membership data provided by the Fund, and across the actuary's LGPS client base, and taking into account updates to national experience models, the proposed life expectancy assumptions serve to reduce both liabilities and the future service rate
The report pack also sets out a summary of funding strategy recommendations:
| Deficit Recovery Periods | For open, ongoing, employers in deficit, recovery periods will reduce by a maximum of 3 years, subject to a minimum of 12 years. |
|---|---|
| Contribution sustainability reserve | Only those employers above 110% funded can potentially benefit from surplus contribution offsets, spread over a 12 year period. |
| Ill-health captive premium | Maintain premium at 0.7% p.a. of pay. |
| Administrative expenses | Maintain allowance at 0.9% p.a. of pay |
| Council Outcomes | Based on the parameters adopted, the total required contribution rate for the Council is expected to reduce by c5-6% p.a. of pay. |
| Other employers | Based on the parameters adopted it is expected that funding positions for a number of employers will show a surplus position and thus no further deficit contributions payable. The extent to which employers will benefit from surplus offsets, will depend on whether their funding level exceeds 110%. |
| New academy conversions | Given the improvement in the Council's balance sheet position since the 2022 valuation, it is proposed that any LEA schools converting to academy status after 31 March 2025 will also be allocated a share of the Council's surplus. |
| Early retirement strain cost reserve | For the Council, a reserve of £20m has been proposed, which is reflected in the Whole Fund balance sheet position. |
The report pack states that, subject to the approval of the recommended actuarial valuation assumptions, the actuary has calculated the long-term average future employer contribution rate (the primary rate) for the whole fund level to be 16.0% of pensionable pay and the funding level to be 112%, equivalent to a surplus of assets over liabilities of £215m.
The committee will be asked to agree the proposed funding strategy assumptions and parameters on which the consultation with employers will take place between December and January 2026, and to agree that officers, with the Fund Actuary, update the draft FSS for consultation with the Employers who are admitted into the Islington Pension Fund. The report pack also indicates that the committee will be asked to agree to receive the consultation results and delegate powers to officers, where necessary, to update and finalise the draft FSS for committee sign-off at the next meeting in March 2026.
Pension Fund Performance
The committee will be asked to note the performance of the Islington Pension Fund from 1 July to 30 September 2025, according to the BNY Mellon interactive performance report. The committee will also receive a presentation by Apex, independent investment advisers, on fund managers' quarterly performance.
The report pack includes a summary of fund manager performance for 1 July to 30 September 2025:
| Fund Managers | Asset Allocation | Asset Value £m | Mandate | *Mercer ESG Rating | Latest Quarter Performance (July-Sept'25) Gross of fees | 12 Months to September 2025 Performance Gross of fees | ||
|---|---|---|---|---|---|---|---|---|
| Portfolio | Benchmark | Portfolio | Benchmark | |||||
| LCIV Sustainable EQ- RBC Exclu | 10.3% | 224.3 | Global equities | 1 | 8.1% | 9.2% | 10.5% | 16.2% |
| LCIV -Newton | 16.0% | 348.6 | Global equities | 2 | 5.6% | 9.6% | 13.7% | 17.4% |
| Legal & General-Paris Aligned | 19.7% | 428.9 | Global equities | 1 | 9.4% | 9.3% | 14.5% | 14.5% |
| Amundi | 5.3% | 115.1 | Emerging equities | 6.7% | 7.6% | 16.2% | 19.3% | |
| Quinbrook | 4.7% | 103.2 | Renewable Infrastructure | 4.9% | 2.9% | 12.8% | 12.0% | |
| Pantheon | 5.3% | 115.6 | Infrastructure | 1 | 3.3% | 2.4% | 5.0% | 10.0% |
| Aviva (1) | 8.5% | 185.9 | UK property | 2 | 0.5% | -1.4% 1.8% | 2.7% | -4.7% 8.6% |
| Columbia Threadneedle Investments (TPEN) | 6.1% | 132.4 | UK commercial property | 3 | 1.2% | 1.2% | 6.5% | 6.7% |
| Franklin Templeton | 1.3% | 27.7 | Global property | N | -1.0% | 2.4% | -11.7% | 10.0% |
| Hearthstone | 0.4% | 9.6 | UK residential property | N | -19.9% | 1.8% | -31.6% | 8.6% |
| Standard Life | 3.6% | 77.7 | Corporate bonds | 2 | 0.7% | 0.7% | 4.1% | 3.7% |
| M&G Sustainable Alpha Opportunities | 4.4% | 95.8 | Multi Asset Credit | 2 | 1.5% | 1.8% | 6.3% | 7.9% |
| Schroders | 1.2% | 25.1 | Diversified Growth Fund | 2 | 5.7% | 1.6% | 10.0% | 9.5% |
| Churchill Senior loan Fund IV | 3.7% | 81.2 | Private Debt | 2 | 4.4% | 1.2% | 8.9% | 5.0% |
| Permira Credit Solution | 1.8% | 39.4 | Private Debt | 3 | 2.1% | 1.5% | 9.2% | 6.0% |
| Crescent Capital | 1.9% | 42.1 | Private Debt | N | 3.6% | 2.4% | 6.5% | 10.0% |
| Cash/legacy PE | 4.9% | 108.3 | cash | n/a | n/a | n/a | n/a | |
| Clean Growth Fund II | 0.0 | 0.2 | Venture/infrastructure | n/a | n/a | n/a | n/a | |
| Temporais Cap V | 0.4 | 8.9 | ||||||
| LCIV Private Debt | 0.5 | 9.4 | Private Debt | n/a | n/a | n/a | n/a | |
| Market value of total fund | 100% | £2,179.5m |
The report pack also provides additional information on the performance of specific funds:
- LCIV RBC Sustainability Exclusion Fund: The LCIV RBC Sustainability Exclusion version was fully funded in July 2025. The Mandate guidelines are similar to the RBC Sustainability Fund. The main differences are, it has exclusions that prevent it from investing in adult entertainment, alcohol, fossil fuels, gambling, tobacco and weapons manufacturing industries. The fund underperformed its quarterly benchmark to September by -1.1% and a twelve-month under performance of -2.3%.
- LCIV Newton Investment Management: The fund returned 5.6% against a benchmark of 9.7% for the September quarter and a 12-month under performance of 3.7% against a benchmark of 17.4%.
- Legal and General Paris Aligned ESG Passive Index: The fund returned 9.4% against a benchmark of 9.5% and valued at £429m at the end of the September quarter.
- Amundi Emerging Equity Focus: The manager achieved a return of 11.4% against a benchmark of 12.9%. Valuation is £115m.
- Aviva: The fund for this quarter delivered a return of 0.5% against a gilt benchmark of -1.4%. The All Property IPD benchmark returned 1.8% for this quarter.
- Columbia Threadneedle Property Pension Limited (TPEN): The fund returned a performance of 1.2% against its benchmark 1.2% for the September quarter.
- Franklin Templeton: The total distribution received to the end of the September quarter is \$62.1m. The NAV is (\$120.8k).
- Hearthstone: For the September quarter, the value of the fund investment was £9.6m and total funds under management is £20.6m. Performance net of fees was -19% compared to the IPD UK All Property benchmark of 1.7%. The FCA have agreed for the Fund to be terminated and liquidated effective from 1st December 2023.
- Quinbrook Infrastructure: Total capital call to the end of September was \$83.1 with a NAV of \$105m.
- Schroders: The September quarter performance before fees was 5.7% against the benchmark of 1.6% (inflation+5%) driven mainly by equities.
- Standard Life: During the September quarter, the fund returned 0.68% against a benchmark of 0.69% and an absolute return of 4.3% per annum since inception.
- M&G Sustainable Alpha Opportunities: The September quarter performance was 1.5% against a benchmark of 1.8% and a one year under performance of -1.7%.
London CIV Update
The committee will be asked to note an update on the London CIV (Collective Investment Vehicle). The report pack includes the LCIV October 2025 newsletter and further updates on fund launches. The London CIV has been constructed as a FCA regulated UK Authorised Contractual Scheme (ACS). Islington is one of 33 London local authorities who have become active participants in the London CIV programme.
The report pack states that Buckinghamshire Pension Fund have officially announced their preference to join London CIV as their pooling partner, and that all the existing shareholders have agreed to accept the transfer. The committee will be asked to agree delegated authority to the Corporate Director of Resources and Monitoring Officer to review and agree the LCIV Articles of Association and Shareholders Agreement.
Pensions Committee Forward Work Programme
The committee will be asked to note and make amendments to the Pensions Committee 2025/26 Forward Work Programme, and to review any training requirements.
The report pack states that the Local Government Pension Scheme Regulations 2013 provide that the Pensions Board will have responsibility for assisting the administering authority in relation to compliance with the Pension Scheme Regulations, other legislation relating to the governance and administration of the LGPS, and the requirements imposed by the Pensions Regulator in relation to the LGPS, and to ensure the effective and efficient governance and administration of the LGPS.
The report pack also notes that recent Fit for Future
response from Government has also proposed, pension committee Members will be required to have enhanced knowledge and skills.
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