The Local Pension Committee meeting scheduled for 30 January 2026 was set to discuss significant changes to the Fund's cessation approach for employers leaving the scheme, a proposed update to the asset strategy for 2026, and the ongoing developments related to the Fit for the Future reforms and the LGPS Central pooling initiative. The committee was also scheduled to review a draft Investment Strategy Statement and a draft Responsible Investment Plan for 2026, alongside an assessment of pension fund training needs.

Cessation Corridor Approach - Draft Funding Strategy Statement

A key item scheduled for discussion was the proposed introduction of a cessation corridor approach to the Fund's funding strategy statement. This change aims to provide more certainty for employers when they leave the scheme, whether in surplus or deficit. The current approach, which uses a fixed 90% likelihood of achieving investment returns for cessation calculations, is proposed to be replaced by a corridor with an 85% likelihood as the lower bound and a 95% likelihood as the upper bound. This means an employer would only pay a debt if there was a deficit at the 85% lower level, and an exit credit would only be payable if a surplus existed at the 95% upper level. This is intended to reduce volatility in cessation valuations and provide greater certainty for employers planning for future exit events. The report noted that this approach is already in place at other Local Government Pension Scheme (LGPS) funds. The final Funding Strategy Statement, incorporating these changes, was scheduled to be presented for approval in March 2026.

Overview of the Current Asset Strategy and Proposed 2026 Asset Strategy

The committee was set to review the outcome of the annual strategic investment allocation and structure review, supported by advice from Hymans Robertson, the Fund's investment advisor. The report highlighted the Fund's strong funding position, with a 140% funding level as of March 2025, largely attributed to improved investment outlooks and rising global interest rates. The review considered the role of various asset classes, including listed equities, targeted return funds, and investment-grade credit, in meeting the Fund's objectives.

Key recommendations from the review included maintaining the 41% allocation to listed growth equity assets, increasing protection assets from 8% to 10% (funded from the Multi-Asset Credit allocation), and reviewing the income portfolio to ensure cashflow needs are met. The proposed Strategic Asset Allocation (SAA) for 2026 included a 1% allocation to local investments across private markets. The report also addressed the growing importance of climate risks, geopolitical instability, and liquidity risks, particularly concerning private market capital calls and alignment with pooling requirements.

The report also detailed the Fund's approach to local investment, a new requirement under the Fit for the Future reforms. This approach would focus on investments within the LGPS Central Pool area, primarily within private markets, and would be implemented incrementally. The Fund's definition of local was assessed as being the Pool area, with a recommended initial low appetite target for local investing, aiming to increase aspiration over time. The report stressed that local investments must achieve appropriate commercial returns and align with the Fund's fiduciary duty, with LGPS Central responsible for due diligence and investment decisions.

Update on Fit for the Future and LGPS Central Pooling

This item was scheduled to provide the committee with an update on ongoing regulatory developments concerning pooling and LGPS Central. The report detailed the Fit for the Future proposals, including draft statutory instruments that would mandate participation in an FCA-authorised asset pool, transfer of asset management responsibilities to the Pool, and the Fund retaining responsibility for setting high-level investment strategy. The report also outlined proposed changes to governance requirements, including the appointment of a Senior LGPS Officer and independent persons to the pension committee. The Fund had submitted a response to the technical consultation and was awaiting final regulations and guidance. Next steps for the Fund included reviewing governance arrangements, updating terms of reference, and preparing for the appointment of an independent advisor and a Senior LGPS Officer. The report also provided an update on LGPS Central's progress, including the review of legal documents and the potential inclusion of new partner funds.

Draft Investment Strategy Statement

The committee was to review a draft Investment Strategy Statement (ISS) for 2026, which had been restructured to reflect the Fit for the Future proposals and the evolving role of LGPS Central. Key changes included expanded investment beliefs with preferences to guide LGPS Central, the introduction of a target and framework for local investment, and an updated responsible investment section. The draft ISS aimed to comply with current draft regulations and guidance, with further refinements expected once the Pensions Bill is enacted. Following the meeting, a consultation with scheme employers on the draft ISS was planned.

Pension Fund Training Needs Self Assessment

This report provided an update on the Training Needs Self Assessments undertaken by committee and board members, based on CIPFA's eight core areas of knowledge for pension schemes. The results of the assessment, completed by ten out of twelve committee members and four out of six board members, were attached as an appendix. The report indicated that these results, along with current Fund priorities, would inform the approach and topics for future training. Progress against the Fund's Training Policy and 2025 Training Plan was also detailed, noting that most members were compliant with their training requirements. A draft training plan for 2026/27 was to be considered by the Local Pension Board before being presented to the committee in March.

Draft Responsible Investment Plan 2026

The committee was asked to provide comments on the draft Responsible Investment (RI) Plan for 2026. The plan builds upon previous iterations and incorporates outputs from the Fund's latest Climate Risk Report and the outcomes of a recent Responsible Investment Survey. Key highlights included a revised Net Zero Climate Strategy for consideration in June 2026, continuation of quarterly manager presentations on ESG factors, and progress on climate risk management reporting. The report noted that the Fund's approach to RI is broadly compatible with LGPS Central's framework, with a focus on engagement rather than broad exclusions. The committee was encouraged to provide feedback on specific areas of interest for more in-depth reporting. The report also highlighted the Fund's membership in the Local Authority Pension Fund Forum (LAPFF) and its ongoing engagement activities.