The Lambeth Council Pensions Board met to discuss the performance and administration of the Lambeth Pension Fund. Key topics included the fund's investment performance, risk management, and updates on governance and regulatory changes. The board reviewed the Pensions Administration Performance Report, the Risk Register, and received a general update on various issues affecting the fund.

Fit for the Future Consultation

The board discussed the government's response to the Fit for the Future consultation, which outlines significant changes to the pooling regime for Local Government Pension Schemes (LGPS). These changes will affect governance arrangements, investment strategy, and the responsibilities of the pensions committee.

Key points from the consultation include:

• Investment Strategy: While the committee will still set the investment strategy, the implementation of that strategy will be delegated to the London CIV.
• Investment Advice: The pool will be responsible for providing investment advice, with the option for the committee to appoint a pensions professional as an independent advisor.
• Skills and Knowledge: The pensions committee will need to demonstrate the same level of skills and knowledge as the board.
• Pooling of Assets: Funds must pool their assets by 31 March 2026.

Robert Browning, Acting Assistant Director for Treasury and Pensions, noted that the government is moving quickly on these changes, perhaps faster than expected. He also mentioned that 60% of the fund's assets are currently with the London CIV, and the CIV is working on investment management agreements to take temporary ownership of assets not yet inside the pool.

Councillor Liam Daley raised concerns about the impact of the new regulations on the Pensions Committee's decision-making power regarding investments. Browning clarified that the committee would still set the investment strategy (e.g., asset allocation percentages), but the London CIV would then decide how to implement that strategy.

Another concern was raised about political pressure on the London CIV to divert funds to support the UK economy, even if it might negatively impact fund performance. Browning responded that there are opportunities for the funds to provide input into the London CIV's decisions through various committees and working groups. He also noted that the committee is keen to invest in the UK and is exploring a UK private equity fund.

Investment Performance

The board reviewed the Investment Performance Report for the first quarter of 2025. The report indicated that the fund underperformed against its benchmark by 1.3%, driven by underperformance in global equity, emerging market equity, and UK Private Rented Sector (PRS) funds.

Browning noted that most funds have underperformed their benchmarks, which he attributed to the volatile economic environment and the specific makeup of the fund's equity funds. However, he reiterated that the fund is a long-term investor and expects peaks and troughs in performance.

Councillor Daley asked if there was any 'pain' to the fund managers when the pension fund performed negatively. Browning said he would address this in the next paper, where he would discuss steps the CIV had taken to derive benefit for shareholders when a fund was performing well.

Risk Register Update

The board discussed the Risk Register Update, which included two changes to risks on the register. One risk, concerning resources in the investment team, was moved from green to amber due to staffing pressures. The other change involved the all stewardship practices, PA 20, which was in direct response to a conversation that took place of pensions committee back in May.

The committee felt that the existing score of one was unrealistic and not a fair reflection of the reputation damage that the fund could be exposed to, in particular, reference to to our exposure to companies that are engaged in activities in the occupied Palestinian territories.

Councillor Daley questioned how reputational damage was measured. Browning acknowledged that it was a qualitative measure, but that the score had been uplifted to reflect that reputational damage was now, you know, quite likely.

Pensions Administration Performance Report

Linda D'Souza, AD for Payroll and Pensions, presented the Pensions Administration Performance Report for April to June 2025. She noted that the number of active members using the Pensions Online portal continues to rise, and the team is working to increase member engagement on the portal. She also provided an update on the McLeod project, stating that it is now in a business-as-usual phase.

A question was raised about colleagues having difficulty accessing pension information on the website. D'Souza said she would take that on board, but that the team was confined to what the intranet, LabNet, provided.

Presley Rebelo raised concerns about council restructuring and members not knowing what would happen to their pensions. D'Souza responded that a bite-size update had recently been issued about what happens to pensions in redundancy situations.

General Update

Browning provided a general update, including information on the fit for the future outcome from the government consultation on the future of pooling. He noted that there would be fairly significant changes to the pooling regime.

D'Souza provided an update on the access and fairness consultation, which is seeking views on proposed changes to legislation, predominantly focusing on entitlements, survivor benefits entitlements, so the equalization of survivor benefit entitlements.

Other Business

The board also discussed the Pensions Board Work Plan 2025-26 and the Pension Fund Business Plan Tracker 2025-26. They also reviewed suggested training and events for board members.