The Pensions Committee of Hillingdon Council met on Tuesday 29 September 2026 to discuss the administration of the pension fund, investment strategy, responsible investment, risk management, and governance training. Key decisions included noting the administration update, approving the risk register approach, and noting and approving an updated training policy and plan.

Administration Report

The committee received an update on the administration of the pension fund, which is managed in partnership with Hampshire County Council through Hampshire Pension Services (HPS). The report highlighted that HPS successfully processed 313 administration cases during the reporting period, with 100% completed within service level agreements. Membership of the fund saw a slight increase of four members between June and July 2026. The online member portal has seen increased registration, with 57.5% of members now registered. Telephone call answer rates remained high at 97.5%, and no formal complaints were received during the period, although four compliments were noted. Councillor Philip Cawthorn raised concerns about digital inclusion for older members, and officers confirmed that Hampshire actively engages with members who have not opted out of digital services. The committee noted the administration update.

Investment Strategy and Fund Manager Performance

The committee reviewed the quarterly performance report, which indicated that fund assets had increased to £1.673 billion by the end of June 2026, driven by strong market gains. The fund delivered an 8.9% return in the second quarter of 2026 and 16.6% over the preceding 12 months. While the five-year annualised return of 6.7% met the long-term actuarial discount rate, it was noted that performance was behind the benchmark. Listed equities were identified as the primary driver of performance, benefiting from global equity markets and AI-related investment themes. The fund remains materially overweight in listed equities, with an implementation plan in place to rebalance allocations towards infrastructure, private credit, and private equity. Responsible investment activity continues to develop, with London CIV reporting a 35% reduction in scope one and two emissions intensity against 2020 baselines.

An interim funding valuation update showed a significant improvement, with the fund now being 124% funded, a surplus of £0.33 billion. Liabilities reduced marginally, despite a slight fall in the discount rate. The Local Authority Pension Fund Statistics report indicated strong short and medium-term performance for Hillingdon, outperforming many peers, although performance over 10 and 20-year periods remained weaker. Despite outperforming the majority of its LGPS peers, the fund was noted to be underperforming its own benchmark by approximately 1% overall. Discussions also touched upon the impact of Artificial Intelligence (AI) on future staffing levels and its potential impact on actuarial valuations, with the committee agreeing to raise this with the actuary at the December meeting. The committee noted the fund performance and progress against responsible investment priorities.

Responsible Investment

The committee received an overview of the ESG activities undertaken by the fund managers, Legal and General Investment Management (LGIM) and London CIV, as well as the Local Authority Pension Fund Forum (LAPFF). LGIM's voting activity was extensive, with 8,851 meetings attended and nearly 95,000 resolutions voted upon, supporting management recommendations 76% of the time. London CIV's managers also showed significant engagement, with Ruffer supporting management recommendations 96.6% of the time and Baillie Gifford supporting them 79.8% of the time. Engagement activities highlighted included LGIM's dialogue with Anglo American regarding its climate transition plan and LAPFF's engagement with BP on fossil fuel financing transparency. Councillor Cawthorn questioned the practicalities of mandating fund managers' voting within the London CIV pooling arrangement, and officers explained the process of developing a central stewardship and engagement policy. The committee noted the fund managers' ESG activities and compliance efforts, as well as the activities of LGIM, London CIV, and LAPFF.

Risk Register Report

The committee reviewed the pension fund's risk register, which identified 14 risks categorised as either closed or open. Seven risks were classified as closed, meaning they are managed as business as usual and are of minimal relevance at present, while seven remained open and are actively managed. The report noted an increase in the risk rating for Key Officer Risk (PEN 13) due to uncertainty surrounding the implementation of the Fit for the Future regulations, which mandate the appointment of a Senior Responsible Officer. Concerns were raised about the potential for a leadership gap if the current Director of Pensions could not transition into the SRO role. Councillor Cawthorn questioned why active investment manager underperformance relative to benchmark was listed as a closed risk, and the committee discussed the cyber security risk, noting that financial consequences were considered unquantifiable and rested with fund managers and custodians. The committee considered and agreed the approach to the risk register and noted the format for retired and open risks.

Governance - Training Policy and Plan

A significant portion of the meeting was dedicated to governance, with a focus on a new training policy and plan for committee members, pension board members, and officers. The Fit for the Future regulations necessitate a more formalised and evidence-based approach to training, with a minimum of 15 hours of CPD required annually for committee members, and more for the Chair and Pension Board members. The proposed plan includes a structured induction, a 12-month training schedule covering core and enhanced topics such as cyber security and ESG, and a competency assessment framework. The committee discussed the potential for monthly formal meetings to facilitate training, alongside the existing quarterly meetings. Councillor Adam Huddle proposed that training sessions be recorded for accessibility. The committee agreed to the recommendations, including noting the dates for future meetings, the committee work plan, and approving the updated training policy and plan, with an extension to include officers reviewing the possibility of monthly formal committee meetings. The committee also noted that the start time for future meetings would be confirmed as 6:00 PM.