The Investment Committee of Kensington and Chelsea Council met on Thursday 9 July 2026 to discuss a range of financial and strategic matters concerning the council's pension fund. Key topics included updates on direct property investments, the investment strategy statement, quarterly performance reviews, fund manager benchmarks, and rebalancing of assets. The committee also reviewed draft financial statements, a conflicts of interest policy, and an update on the Pension Schemes Act 2026.

Direct Property Update

The committee was scheduled to receive an update on the direct property mandate, including a summary of performance during the last quarter and information on recent and pending acquisitions. Representatives from CBRE were expected to provide an oral update on the market overview and properties in the pipeline.

Investment Strategy Statement Update and Investment Beliefs

A report was presented concerning the updated Investment Strategy Statement (ISS) for the Royal Borough of Kensington and Chelsea Pension Fund. This included a new appendix detailing the Fund's core long-term investment principles, intended to provide clarity to the London Collective Investment Vehicle (LCIV) and other stakeholders. The report outlined updates to the existing ISS and discussed future guidance expected from the Ministry of Housing, Communities and Local Government (MHCLG). The committee was invited to review the updated ISS and comment on priorities for its further revision.

Quarterly Performance Review

This report provided a summary of the Fund's valuation and the performance of each fund manager as at 31 March 2026. It detailed the portfolio valuation, highlighting movements in asset allocations and performance against benchmarks. Key updates included the completion of the transition from active to passive global equities and the performance of Adams Street (Private Equity) and directly held properties. The report also noted a drop in the funding level to 164% and changes to the funding discount rate.

Fund Manager Benchmarks

The committee was to receive an update on the review of performance benchmarks for the Fund's investment mandates. This followed a previous discussion on the importance of appropriate benchmarks for overseeing LCIV investment performance. The report detailed updates to benchmarks for BlackRock Passive Equities, Adams Street Private Equity, Direct Property, and Temporary Accommodation investments, with the intention of incorporating these into future Northern Trust reports.

Rebalancing

This standing item on the agenda presented the most recent investment asset valuations and outlined actions required to realign the strategic asset allocation. The report detailed the unaudited valuations from fund managers, noting variances from target allocations, particularly in global equities and direct property. It also explained the plan to address the over-allocation to private equity and the use of cash for upcoming property acquisitions.

Active Equity Update

This report provided a summary of the completed Global Equity transition from the Baillie Gifford Global Alpha Growth Fund to the BlackRock Aquila Life RBKC Global Equity Fund. It detailed the successful completion of the transition on 25 March 2026, outlining the key elements of the process, including in-specie redemption, portfolio restructure, and in-specie subscription. The report highlighted the significant exposure shifts resulting from the move to a broader passive mandate and confirmed that the transition was delivered within agreed timelines and risk parameters.

Draft Financial Statements and External 2025/26

This report presented the draft Financial Statements for the Pension Fund for the year ending 31 March 2026. These statements were prepared in accordance with the Code of Practice on Local Authority Accounting and were ready for submission to external auditors. The report detailed the Fund's income, expenditure, and net assets, including movements in investments and liabilities.

Conflicts of Interest Policy

The committee was presented with an updated Conflicts of Interest Policy for the Royal Borough of Kensington and Chelsea Pension Fund. This policy was developed to meet new statutory requirements introduced under the Government's Fit for the Future reforms and the Local Government Pension Scheme (Amendment) Regulations 2026. The policy applies to all individuals involved in the governance, management, and operation of the Fund and includes strengthened arrangements for declaration, registration, and mitigation of conflicts.

Pension Schemes Act 2026 Update

This report outlined the changes to LGPS pooling arrangements and governance arising from the Pension Schemes Act 2026. It detailed the statutory basis for strengthened LGPS pooling and governance, including mandatory delegation to the pool, new statutory roles, and enhanced regulatory oversight. The report identified priority actions for the fund, including the development of a Governance Strategy, Training Strategy, and a dedicated Conflicts of Interest Policy. It also highlighted key risks associated with these reforms and proposed mitigation strategies.

Temporary Accommodation (TA) Investment Update (Exempt)

This item was scheduled for discussion in the private session of the meeting, indicating it contained information exempt from public disclosure.

Judicial Review (Exempt)

This item was also scheduled for discussion in the private session, suggesting it involved legally privileged information related to a judicial review.

Judicial Review (Open)

This report updated the Investment Committee on a legal challenge by ClientEarth concerning the Royal Borough of Kensington and Chelsea Pension Fund's employer contribution rate and Funding Strategy Statement. It detailed the pre-action protocol letter received, RBKC's responses, and the issuance of proceedings by ClientEarth. The grounds of challenge were noted to differ from those in the pre-action letter. Discussion on this item was expected to be exempt under specific paragraphs of Schedule 12A to the Local Government Act 1972.

Funding Strategy Statement: Corrections and Approval

This report presented proposed amendments to the Funding Strategy Statement (FSS) for the RBKC Pension Fund, intended to correct various identified errors. The amendments were stated not to alter the Committee's funding strategy, objectives, actuarial assumptions, or certified employer contribution rates. The report referenced relevant regulations and guidance, including those related to climate risk reporting and the need for consultation. The committee was asked to consider the revised FSS.

Legacy Wharf (Exempt)

This item was scheduled for discussion in the private session of the meeting, indicating it contained information exempt from public disclosure.

Any Other Oral or Written Items Which the Chairman Considers Urgent

This agenda item allowed for the discussion of any urgent matters not otherwise listed on the agenda.

Exclusion of the Press and Public

The committee considered moving into a private session to discuss exempt items, including the Temporary Accommodation (TA) Investment Update, Judicial Review, and the 2025 Valuation. The decision to exclude the press and public was based on the reports containing information relating to financial or business affairs, legal professional privilege, and where the public interest in maintaining exemption outweighed the public interest in disclosure.