The Harrow Council Pension Fund Committee met on 8 September 2025, and among the items discussed was the approval of a draft responsible investment policy with a target of net zero emissions by 2050, and the setting of actuarial assumptions for the 2025 triennial valuation, including increasing the prudence level for the discount rate assumption from 70% to 80%. The committee also reviewed the fund's performance, noting underperformance against benchmarks over various periods, and received updates on investment pooling and the London Collective Investment Vehicle (LCIV).

Actuarial Assumptions for 2025 Triennial Valuation

The committee agreed the actuarial assumptions to be used for the 2025 triennial valuation¹ of the fund. These assumptions are estimates relating to the future experience of pension fund assets and liabilities, and are key inputs into the valuation process, which determines the funding level and employer contribution rates.

Key decisions included:

• Discount rate: The committee agreed to increase the prudence level for the discount rate assumption from 70% to 80%, resulting in a discount rate of 5.6%. This decision was driven by increased uncertainty in financial markets.
• Other financial assumptions: The committee agreed to maintain the current approach for other financial assumptions, such as inflationary salary increases and CARE revaluation/pension increases, but updated them to reflect current market conditions. This included allowing for a 0.25% supply/demand premia for CPI and an approach of CPI + 1% for salary increases.
• Life expectancy: The committee agreed to maintain the current approach to life expectancy assumptions, but adopted the latest data.
• Other demographic assumptions: The committee agreed that other demographic assumptions, such as rates of withdrawal and ill-health early retirement, should be based on Local Government Pension Scheme (LGPS)-wide analysis, adjusted for fund-specific experience where required.

Draft Responsible Investment Policy

The committee considered and approved a draft Responsible Investment (RI) Policy, as detailed in Appendix 1 - Draft Responsble Investement Policy. The policy sets out the fund's approach to responsible investment, including how environmental, social, and governance (ESG) considerations are embedded in the fund's investment processes, and how the fund stewards its investment assets.

The policy includes a commitment to managing the scheme's assets in line with a net zero 2050 target for the whole investment portfolio.

The committee expects that the approach outlined in the policy will enhance and protect the value of its assets over the long term and is therefore consistent with its fiduciary duty.

Investments & Managers Performance Review June 2025

The committee reviewed the fund's investment performance for the quarter ending 30 June 2025. The fund returned 3.8% net of fees, underperforming the benchmark by 0.8%. The market value of investments increased by £20.4m to £1.11bn.

Longer-term performance numbers were also a point of discussion, with the fund having underperformed against its benchmarks for 3, 5 and 10 years on an annualised basis.

The committee also noted the asset allocation as of 30 June 2025, and discussed an underweight position in diversifying return assets, which was attributed to several factors, including drawdowns from the LCIV Infrastructure Fund and the LCIV Renewables Infrastructure Fund, and the continuing distribution of proceeds from asset sales by LaSalle Investment Management in respect of the LaSalle Property Fund of Funds.

The committee received updates on the LaSalle Property Fund of Funds wind-down, with LaSalle expecting to fully exit all remaining open-ended funds by the end of the year, and to wind down closed-ended funds over the next 1-2 years.

The committee discussed the importance of rebalancing the fund to its strategic benchmark allocations, and noted that no rebalancing decisions were taken in the last quarter.

Update on London CIV, Investment Pooling and LGPS

The committee received an update on the current position of the fund's investments in context of the government's requirements for pooling, and on current developments within the London CIV and LGPS in general.

As of 30 June 2025, the London CIV had £35.5bn of client fund assets under management, of which £19.9bn is under LCIV management, and £15.6bn is passive investments managed by LGIM and Blackrock which are deemed pooled by MHCLG.

The committee noted that fund officers are working with LCIV and other funds to establish an investment management agreement (IMA) that will replace the old agreement between the fund and LCIV. The new IMA is designed to effectively support transitioning off-pool assets to the pool, in line with the government's target to have all assets pooled by March 2026.

The committee also received an update on a consultation published by the Ministry of Housing, Communities and Local Government on the Local Government Pension Scheme (Miscellaneous Amendments) Regulations 2025, which includes measures designed to address historic inequities, in particular gender inequities.

Pension Board Minutes

The committee received the minutes of the Pension Board meeting held on 31 July 2025.

The Pension Board discussed the administrative performance of the fund, noting that overall performance had dipped to 52% of tasks completed on time. The Board requested a written understanding of the dip in performance, and requested that an additional column be added to performance reports to show the number of days for each target.

The Board also reviewed Pension Fund Committee items, expressing disappointment over the fund's performance for the past 10 years, and challenging the LCIV in relation to its level of performance.