The Havering Council Pensions Committee is scheduled to meet to discuss the fund's valuation, investment performance, climate-related financial disclosures, and the government's Fit for the Future reforms. The committee will consider reports from officers and advisors, and review the fund's performance against benchmarks. They will also discuss and approve the draft Funding Strategy Statement and the Taskforce for Climate-related Financial Disclosures (TCFD) report.

Fit for the Future Update

The committee will receive an update on the implementation of the government's Fit for the Future proposals, following the publication of the Pension Investment Review on 29 May 2025. The government published the LGPS: Fit for the Future technical consultation on 20 November 2025, seeking views on draft statutory instruments. These instruments include the 'Local Government Pension Scheme (Pooling, Management and Investment of Funds) Regulations 2026', which will replace the current 2016 LGPS Regulations, and the Local Government Pension Scheme (Amendment) Regulations 2026.

The new regulations will:

• Require administering authorities to delegate the implementation of their investment strategy to their asset pool.

• Require administering authorities to take principal investment advice from their pool.

• Require all assets to be controlled and managed by the relevant asset pool.

• Establish minimum standards for pools, including FCA authorisation and capacity to manage local investments.

• Provide backstop powers for the Secretary of State to direct administering authorities to participate in specific pools, and for specific pools to facilitate participation.

Compliance with these regulations is expected from 1 April 2026, subject to the passage of the Pension Schemes Bill through Parliament.

As of 30 September 2025, approximately 40% of the Pension Fund's assets were directly invested with the London CIV¹. Another 26% of assets were considered under pooled management, which includes listed equity investments with LGIM and CBRE. The remaining 34% of assets are currently invested in off-pool assets.

Officers have been in discussions with the London CIV to agree on an asset transition plan to ensure that all assets are pooled by 31 March 2026. The committee will consider delegating authority to the Strategic Director of Resources, in consultation with the Chair of the Committee, to oversee the finalisation and approval of the Investment Management Agreement (IMA) with the London CIV and associated asset transition plans, to comply with the LGPS regulations. An IMA is a formal contract between London CIV and each Partner Fund that establishes the terms under which London CIV will assume investment management responsibilities for the Partner Fund's off-pool investments.

The committee will also discuss changes to the Shareholder Agreement, as Buckinghamshire Pension Fund has expressed a preference to join the London CIV pool.

Taskforce for Climate-Related Financial Disclosures

The committee will discuss the Taskforce for Climate-Related Financial Disclosures (TCFD) report for the year ending 31 March 2025. The TCFD was established in 2015 by the Financial Stability Board to improve climate-related financial reporting². The TCFD recommendations are structured around four pillars: Governance, Strategy, Risk Management, and Metrics & Targets, comprising 11 disclosures.

The report summarises the fund's position across the 11 disclosures, with future reports highlighting actions taken to strengthen alignment with best practice and address recommendations arising from ongoing analysis. This is the Fund's fourth TCFD report, and the committee will consider it.

The committee will assess the Fund's climate metrics against the baseline position (31 March 2022) against a range of standard climate metrics, in particular:

• Emissions intensity is measured using Weighted Average Carbon Intensity (WACI )³.

• Exposure to potentially stranded assets is measured using % assets with ties to fossil fuels.

• Exposure to climate solutions considers both green revenue exposure and direct exposure to climate solutions.

The committee has collated data across its three measurement areas as at 31 March 2025. These metrics have been averaged across all mandates within the portfolio. The committee notes that gaps in the Fund's climate data remained and agreed to engage with their investment managers to improve the quality of underlying data over time.

The committee has set objectives and actions for the Fund to achieve as part of its management of climate-related risks and opportunities and these are detailed in the Climate Policy and Action Plan.

Valuation Update and Draft Funding Strategy Statement

The committee will receive an update on the 31 March 2025 triennial valuation and discuss the draft Funding Strategy Statement (FSS). Every three years, Local Government Pension Scheme (LGPS) administering authorities have a statutory duty to carry out an actuarial valuation of their pension fund. The primary objective of the valuation is to establish employer contribution rates for the three-year period beginning one year after the valuation date, i.e. from 1 April 2026 to 31 March 2029.

The significant assumptions underpinning the valuation include:

• Discount rate (assumed future investment return)
• CPI inflation (benefit revaluation)
• Longevity assumptions

The report details that the initial results of the 31 March 2025 triennial valuation have been received from the Fund Actuary, Hymans Robertson. They show an improvement in the Fund's overall funding position since the previous valuation in 2022, with the Fund now in surplus.

The Funding Strategy Statement (FSS) is a statutory document that sets out the Fund's approach to meeting its long-term pension liabilities. Following the 31 March 2025 triennial valuation, the FSS has been updated, primarily to reflect new guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Scheme Advisory Board (SAB). The main changes to the FSS are:

• Structural Alignment
• Standardised Terminology
• Enhanced Governance
• Updated Assumptions

The committee will be asked to approve the draft Funding Strategy Statement, and note the initial whole fund results report.

Pension Fund Performance Monitor

The committee will receive a report summarising the Fund's investment performance and outlining key updates for the quarter ending 30 September 2025. The total value of the Fund's assets increased by £51.4m over the quarter to £1,096.4m as at 30 September 2025. The overall fund performance of 5.0% over the quarter ahead of both the tactical benchmark by 0.3% and the strategic benchmark by 5.9%.

The Fund's net performance is measured against the Strategic Benchmark (Gilts + 1.8% net of fees), which reflects the expected growth in liabilities. Comparing asset performance to this benchmark indicates whether the Fund's funding level has strengthened or weakened.

At the end of September 2025, the cash balance stood at £17.7m, which is invested with London Borough of Havering Treasury and available for operational cash requirements as needed. An operational cash balance in the range of £5m to £13m has been set.

Hymans have produced an LCIV quarterly oversight report, it reviews key developments and an overview of leadership, operations and relationships using a traffic light system. One item scored below 1.4 and receiving a red traffic light was Leadership due to high staff turnover signifying the Fund's need to engage further LCIV. LCIV have clarified that staff turnover remains stable at 4% which is significantly below the market norm of 10%.

The committee will also receive updates on London CIV meetings and training. The Fund subscribes to the LGPS Online Learning Academy (LOLA)⁴, an online platform designed to support the training needs of Pensions Committees, Local Pension Boards and Officers.