The Local Pension Committee of Leicestershire Council met on Friday 30 January 2026 to discuss and approve changes to the Fund's asset strategy and funding approach. Key decisions included the approval of a new 2026 asset strategy, which involves a shift towards increased protection assets and an initial allocation to local investments, and the noting of a proposed cessation corridor approach for the Fund's funding strategy statement.

Cessation Corridor Approach - Draft Funding Strategy Statement

The Committee noted the proposed change to introduce a corridor approach for the Fund's cessation methodology. This approach, recommended by the Fund's actuary Hymans Robertson, aims to provide greater certainty for employers leaving the scheme by establishing an 85% likelihood as the lower bound and a 95% likelihood as the upper bound for calculating deficits or surpluses. Under this system, an employer would only pay a debt if a deficit exists at the 85% lower level, and an exit credit would only be payable if a surplus exists at the 95% upper level. The Committee also noted that the Fund's final Funding Strategy Statement, incorporating this change, would be presented for approval at the Pension Committee meeting on 20 March 2026.

Overview of the Current Asset Strategy and Proposed 2026 Asset Strategy

The Committee approved changes to the 2026 target Strategic Asset Allocation (SAA). These changes include an increase in protection assets from 8% to 10% of the total Fund, funded by a reduction in the allocation to Multi-Asset Credit (MAC). Additionally, a 1% initial allocation to local investments has been incorporated across private equity, property, infrastructure, and private credit asset classes. The Committee also agreed that two asset class reviews would be undertaken: one for listed equity and another for investment grade credit, with the outcomes to be presented to a relevant Committee meeting during 2026.

Update on Fit for the Future and LGPS Central Pooling

The Committee noted the update on the Fit for the Future proposals and LGPS Central pooling. The report detailed draft government regulations and guidance concerning pooling, investment management, and governance requirements for LGPS funds. It was noted that the Fund's response to the technical consultation had been submitted, and that the Fund would need to undertake several pieces of work to comply with the anticipated regulations, including reviewing governance arrangements, updating terms of reference, preparing for the appointment of a Senior LGPS Officer and an independent advisor, and continuing work with LGPS Central on asset transition and legal agreements. LGPS Central representatives provided an update on pooling developments, including the progress on legal agreements for asset transfers and the review of LGPS Central's draft strategic business plan and budget for 2026-29.

Draft Investment Strategy Statement

The Committee noted the draft Investment Strategy Statement (ISS) for 2026 and agreed to commence consultation with scheme employers. The draft ISS reflects the anticipated changes from the Fit for the Future proposals, including the evolving role of LGPS Central in implementing the investment strategy. Key changes include expanded investment beliefs to provide clearer direction to LGPS Central, the introduction of a target and framework for local investment, and a streamlined responsible investment section updated to reflect draft regulations. Further refinements are expected following the outcome of a responsible investment survey and ongoing regulatory developments.

Pension Fund Training Needs Self Assessment

The Committee noted the progress on the Pension Fund Training Needs Self Assessments. As of 16 January 2026, ten out of twelve Committee members and four out of six Board members had completed their assessments against CIPFA's eight core knowledge areas. The report highlighted that members who had not yet completed their assessments were asked to do so by 31 January 2026 to support the development of the year's training programme. The Committee also noted the completion of the 2025 Training Plan, with 10 out of 12 Committee members compliant with appropriate modules. A draft training plan for 2026/27 was to be appended for consideration.

Draft Responsible Investment Plan 2026

The Committee was asked to provide comments on the draft Responsible Investment (RI) Plan 2026. The plan builds upon previous iterations and incorporates recommendations from the Fund's latest Climate Risk Report. Key highlights for 2026 include the consideration of outcomes from the Responsible Investment Survey, a revised Net Zero Climate Strategy for consideration in June 2026, continuation of quarterly manager presentations on ESG factors, and ongoing work with LGPS Central and partner funds on pooling and responsible investment matters. The Committee was encouraged to provide feedback on areas of particular interest for more in-depth reporting.

The meeting also included updates on LGPS Central's activities, including a presentation on public markets investments and progress with pooling. The Committee noted reports on the valuation of pension fund investments, risk management and internal controls, and received quarterly reports from various investment managers.

The next meeting of the Local Pension Committee was scheduled for 20 March 2026.