The Local Pension Committee met on Friday 3 July 2026 to discuss a range of investment and governance matters. Key decisions included the approval of revised Terms of Reference for the committee, the appointment of officer representatives for LGPS Central, and the noting of various investment performance reports and policy updates.

LGPS Central Presentation

The committee received an update on LGPS Central's public market investments, including performance figures for their global active equity, climate multi-factor, investment grade credit, and multi-asset credit funds. Representatives from LGPS Central also provided an overview of their Fit for the Future strategy, which aims to consolidate investment solutions and centralise asset class decision-making. The committee was informed that the transition to pooled assets would be a gradual process, with no big bang approach. An update was also given on the implementation of a new UK Gilts investment, which was completed in three tranches.

Responsible Investment Update

The committee reviewed the Fund's progress against its Responsible Investment (RI) Plan for 2026. Updates were provided on voting and stewardship activities undertaken by LGPS Central, Legal and General Investment Management (LGIM), and the Local Authority Pension Fund Forum (LAPFF). The report highlighted that the government's position is that decisions on boycotts, divestments, and sanctions are matters of UK foreign policy for central government, and local authority pension funds should not adopt policies that differ from these positions. The committee noted the ongoing work on the Net Zero Climate Strategy and the development of a new stewardship strategy for 2027-2026.

Cash Management Policy and Forecast

A report detailing the Fund's cash management policy and forecast was presented. The committee was informed that the Fund's cash holding had reduced significantly, with a forecast to be around 3% of total fund assets by March 2027. The report explained the rationale behind the current cash levels, which were a result of the strategic shift towards private market investments. The committee discussed the target of zero cash allocation, acknowledging that a small operational float would always be necessary.

Valuation of Pension Fund Investments

The committee received an update on investment markets and the total value of the Fund's investments as at 31 March 2026. Global investment markets delivered positive returns over the year, with equities and commodities performing particularly well. Fixed income generated modest positive returns, while private markets also saw gains. The report highlighted the concentration risk in passive global indexes due to the outperformance of technology and AI-related themes. Hymans Robertson's capital markets review was also discussed, noting the resilience of global economic conditions despite geopolitical tensions, and the cautious approach of central banks to monetary policy. The committee noted that the Fund's overall investment performance over the short and medium term was positive and compared favourably to the required future investment return calculated in the latest actuarial valuation.

Fit for the Future Update

This report provided an update on the Fit for the Future reforms, including the Pension Schemes Act 2026 receiving Royal Assent and new regulations coming into force. Key changes include an extension for the revised Investment Strategy Statement deadline to March 2027 and the introduction of two new roles: a Senior LGPS Officer and an Independent Person. The committee was informed that the Senior LGPS Officer role would be a dedicated position with responsibility across all pension fund activities, and the Independent Person would act in an advisory capacity to strengthen oversight. The committee resolved to approve the Director of Corporate Resources, in consultation with the Chairman of the Local Pension Committee, to make the final appointment decision for the Independent Person, having taken into account any views expressed by committee members.

Risk Management and Internal Controls

The committee reviewed the Fund's risk register, noting updates to several risk areas, including those related to investments, governance, and regulatory changes stemming from Fit for the Future. The report detailed revisions to specific risks, such as market returns, asset allocation policy, and the implications of the McCloud case and the national dashboard project. The committee approved the updated Pension Fund risk register.

Terms of Reference Update

The committee considered a report proposing revisions to its Terms of Reference to align with Fit for the Future regulations and guidance. Key changes included updated roles and responsibilities, clarification on substitutes, and revised wording regarding LGPS Central's governance bodies. A significant proposed change was the delegation of the Shareholder Representative role for LGPS Central to the Director of Corporate Resources (S151 Officer), with the Assistant Director of Finance as Deputy. This change was based on legal advice and the evolving governance requirements. The committee approved the revised Terms of Reference and the proposed shareholder representative arrangements.