The Local Pension Board of Leicestershire County Council met on Wednesday, 4 February 2026, to review the Pension Fund Administration Report for October to December 2025, discuss Key Performance Indicators, and consider the Pension Fund's Business Plan and Budget for 2026/27. The Board also received updates on the Draft Funding Strategy Statement, Draft Investment Strategy Statement, Climate Related Disclosure Progress, Pension Fund Training Needs Self Assessment, Pension Fund Policy Report, Record Keeping and Data Improvement, and Risk Management and Internal Controls.

Pension Fund Administration Report (October to December 2025)

The Board received an update on the main administrative actions undertaken by the Pensions Section during the fourth quarter of 2025. Key points included the ongoing implementation of the McCloud remedy, with work continuing on retrospective cases. Assurances were given that the timeline for the Pension Fund's new websites was on track for completion by 30 November. A member raised a query regarding the lower percentage of death benefit payments made within 10 days compared to other retirement and pension payments, which was explained as being due to the greater complexity of death benefit cases. Officers reported that figures for average days for retirement benefit notification and pension payments had been removed as they were misleading. Reporting practices were being reviewed, and KPI data reporting would be revisited.

A significant issue highlighted was an ongoing failure by South Leicester College to pay pension contributions. This was deemed a material breach by the Pension Manager and reported to The Pension Regulator. A payment plan had been agreed with the College and The Pension Regulator, with the first two payments made in full and on time. The Pensions Manager expressed confidence that the situation would be fully resolved with no impact on scheme members' pension benefits.

Internal Audit reports were received concerning Contribution Collection and Pension Creations. Both audits gave substantial assurance that controls were being managed effectively, with two recommendations made for the Contribution Collection audit, which were accepted by the Pensions Manager. No recommendations were made for the Pension Creations audit.

The new pension websites were launched on 6 January 2026, with a slight delay due to the addition of Electronic Identification Verification (EIDV) and SMS Multi-Factor Authentication. The launch resulted in a significantly higher number of calls to the Help Desk, with additional staff deployed to manage the volume. Approximately 10,000 scheme members had registered for a 'My Pension' account by 14 January 2026.

Officers continue to work on the implementation of the McCloud remedy, with the current focus on adjusting pensions for eligible pensioners. A further update on progress will be provided at the next Board meeting.

Pension Fund Key Performance Indicators

The Board was presented with proposed improvements to how workloads and key performance indicator (KPI) data are presented in the quarterly administration report, aligning this data with the requirements of the Fund's annual report. The proposed approach includes increasing the number of workload areas from 10 to 14, displaying the number of cases completed in the quarter and the number remaining, and showing the percentage of cases completed. All retirements will be grouped as one. The KPIs for the quarter will continue to be included in the appendix, expanded to align with Annual Report requirements.

Pension Fund Business Plan and Budget 2026/27

The Board was informed of the Pension Fund's Business Plan and Budget for 2026/27. The Pension Section's Administration Business Plan highlights significant changes including the continued implementation of the Pensions Dashboards programme, phase two of the McCloud implementation, a review of the Fund's administration system contract, and the review and implementation of changes arising from Local Government Reorganisation (LGR). The Investments Business Plan covers policies, asset allocation, Fund valuation, and reporting. A new Governance Business Plan is being introduced, supported by a Training Plan.

The Pension Fund budget is independent of the Council's budget. The total forecast cost for 2026/27 is £65.4 million. Approximately 90% of the budget is expected to be spent on investment management-related expenses. The 2026/27 Pensions Administration staffing budget covers 44 full-time equivalent staff, with a proposed increase of 1.5 FTE Pension Officers, including a new apprentice and a 0.5 increase at Assistant Team Manager level. This increase is attributed to the complexity of the McCloud remedy, ongoing recalculations, and anticipated increased workload in preparation for Local Government Reorganisation. IT costs are budgeted to remain at £500,000, pending the outcome of the administration system tender. Actuarial charges for 2026/27 are budgeted at £150,000, reflecting that 2025/26 was a Fund valuation year. Support Services/Other budget has increased to £948,000 to account for increased workload in investment and accounting areas.

Draft Funding Strategy Statement

The Board was informed of the results of the Fund's Funding Strategy Statement (FSS) consultation. The FSS underpins the Fund's policies and includes a framework for setting contribution rates for each employer group. Key proposed changes include the introduction of a corridor approach for cessations, moving from a fixed 90% likelihood to an 85% lower level and 95% upper level to provide greater certainty for employers approaching exit. The FSS will also be updated to make the exit credit methodology more explicit, and to include the Department for Education (DfE) as a guarantor in the assessment of an exit credit on a case-by-case basis. A covenant review is underway to assess the minimum likelihood of success for Universities. The Fund will retain a single investment strategy for all employers. Employers raised concerns about the negative 3% cap on the secondary rate, suggesting it is too prudent and should be relaxed for certain employer groups. The Board was asked to comment on this specific point.

Draft Investment Strategy Statement

The Board received an update on the expected key changes to the Fund's Investment Strategy Statement (ISS). These changes reflect the ongoing Fit for the Future proposals, the progressing Pensions Bill, and the evolving role of LGPS Central. Key amendments include expanded investment beliefs with preferences, the introduction of a target and framework for local investment in partnership with LGPS Central, and a streamlined and updated responsible investment section. Employers will be consulted on the ISS following the Local Pension Committee meeting on 30 January 2026.

Climate Related Disclosure Progress Update

The Board received an update on the latest Climate Related Financial Disclosure Report for the Leicestershire County Council Pension Fund and activities undertaken since the approval of the Net Zero Climate Strategy (NZCS). The Fund has achieved its interim target of reducing the weighted average carbon intensity (WACI) by 55.6% (exceeding the 50% target by 2030) and has reduced financed emissions by 42.2% (exceeding the 40% target by 2030). Over £1.5 billion (approximately 20% of the total Fund) is now allocated to climate-related investments. 75.8% of equity financed emissions are considered aligned or aligning with the Paris Agreement, or under an engagement programme. The report highlighted that these positive climate actions have not negatively impacted the Fund's fiduciary duty, with passive equities outperforming their benchmark. The Fund is performing comparably or better than the majority of peer LGPS schemes in terms of WACI.

Pension Fund Training Needs Self Assessment

The Board was updated on the progress of Training Needs Self Assessments undertaken by Local Pension Committee (LPC) and Local Pension Board (LPB) members. Ten out of twelve LPC members and four out of six LPB members had completed their assessments. The anonymised results are attached to the report. Members who had not yet completed the assessment were urged to do so. The report also detailed the completion status of the 2025 Training Plan, noting that all new members received induction training. Reminders will be sent to members with outstanding modules. A draft training plan for 2026/27 is set out elsewhere on the agenda.

Pension Fund Policy Report

The Board was presented with an annual update on the Pension Fund's current strategies and policies. Key amendments were noted for the Investment Strategy Statement, Cash Management Strategy, Administration Strategy, Fund Training Strategy, Conflict of Interest Policy, Fund Employer Risk Policy, and Data Improvement. The report highlighted that the draft Local Government Pension Scheme (Amendment) Regulations 2026, when enacted, will introduce additional requirements for the Fund, including the appointment of a Senior LGPS Officer and an Independent Person, and the development of a Governance Strategy.

Record Keeping - Data Improvement

The Board was informed of plans to maintain and improve the quality of pension data held during 2026-2027. The overall quality of pensions data remains high, with data quality scores over 97%. In addition to 'Business as Usual' actions, three key areas will be addressed: the Pension Dashboard Programme (PDP), involving ongoing data cleansing and an address cleanse of deferred members; the McCloud Remedy, with a focus on adjusting pensions for eligible pensioners and completing remaining categories of work by the 31 August 2026 deadline; and a Workflow Review to ensure casework processes on the Altair administration system are compatible with evolving reporting requirements.

Risk Management and Internal Controls and Fit for the Future Update

The Board received an update on changes to the risk management and internal controls of the Pension Fund. The risk register, approved by the Local Pension Committee on 5 December 2025, contains 19 risks across six areas: Investment, Liability, Employer, Governance, Operational, and Regulatory. There has been one change to risk scores, with Risk 5 (Assets held by the Fund are ultimately insufficient to pay benefits due to individual members) reducing significantly and turning green due to the 2025 Fund Valuation showing a 140% funding level.

The report also detailed the implications of the Fit for the Future proposals, including draft statutory instruments on pooling, investment management, and governance requirements. These include the appointment of a Senior LGPS Officer and an Independent Person, the requirement for a governance strategy, training strategy, and conflict management policy, and the commissioning of an Independent Governance Review. The Fund has responded to the technical consultation on these proposals. Next steps for the Fund include reviewing existing governance arrangements, preparing for the appointment of an independent advisor and Senior LGPS Officer, working with LGPS Central on asset transition, and seeking approval for an updated ISS and SAA.

The Board was asked to note the report.

Date of the Next Meeting

The date of the next meeting was scheduled for 29 July 2026.