The Pensions Board of Lambeth Council met on Wednesday 28 January 2026 to review the fund's performance, risk register, and administration, and to approve a new overpayment and underpayment policy. Key discussions included the upcoming Fit for the Future transition, the actuarial contract tender, and the fund's exposure to companies involved in the illegal occupation of Palestine by Israel.

Work Programme and Business Plan Tracker

The board reviewed the work programme for the remainder of the municipal year, noting that the final results of the valuation and the funding strategy update, along with the investment strategy, had been postponed to the April meeting. An update on the governance review by Hyman Robertson will also be presented in April. The business plan tracker showed that the annual report and stewardship code report had been completed, with positive news regarding the stewardship code submission. A significant item marked as red on the tracker is the actuarial contract, for which a full retender exercise will be undertaken due to insufficient documentation from the previous process.

Pensions Administration Performance Report

Linda D'Souza, Assistant Director for Payroll and Pensions, presented the Pensions Administration Performance Report for October to December 2025. The report indicated that approximately 1800 cases were handled during the quarter, with consistently high performance metrics. Planning for retirement courses were well-attended, and academies were informed about an online session on the actuarial evaluation process. The report also detailed progress on the cloud pensions dashboard, with 60% of multiple member records reviewed to ensure accurate accounting of service periods. The fund is connected to the dashboard infrastructure and is awaiting national testing commencement. A consultation on access and protection had closed, with the response detailed in Appendix 2. A key outcome is the likely reinstatement of LGPS access for councillors in June 2026. Councillor Griffiths inquired about the reasons for reinstating LGPS access for councillors, which was attributed to political alignment and the recognition of their valued service. The impact on the fund was deemed minimal. The report also addressed an increase in members opting out of the LGPS, which was explained as a standard consequence of automatic enrolment. The board agreed to note the report.

Risk Register Update

Robert Browning, Acting Assistant Director for Treasury and Pensions, presented the Risk Register, noting no changes since the previous meeting. However, he highlighted that changes are anticipated following the implementation of recommendations from the governance review. Councillor Griffiths raised concerns about risk PA 2, concerning insufficient knowledge and understanding of pension board committee members and the need for training. It was acknowledged that this risk has persisted due to changes in board and committee membership. The governance review by Hyman Robertson has recommended refreshing the training policy to address new requirements, including enhanced knowledge and understanding for the Pensions Committee, which currently has a lower requirement than the Board. The process for updating policies involves officers reviewing and updating them, with ultimate sign-off from the Pensions Committee, and input from the Board. The potential for increased risks associated with new pooling arrangements was also discussed, with a recognition of a transition period and a commitment to a comprehensive update of the risk register. Councillor Rebelo inquired about the outcome of interviews conducted as part of the governance review, which will be summarized in a paper for the April meeting. Councillor Griffiths also raised concerns about climate change risk (PA 19), noting an increase in the fund's climate exposure. The fund has a 2040 net-zero target, and while investments in funds with climate reduction targets are in place, the increase in fossil fuel exposure was attributed to price variations rather than active investment decisions. A new allocation to infrastructure, expected to include renewable infrastructure, will further support the decarbonisation pathway. Regarding investment risk (PA 15), the London C Buyer Maintain Credit Fund is generating income as expected, though it is still early days for performance assessment. The audit of the accounts (PA 22) is ongoing, with a cautious optimism for an unqualified opinion by the April meeting. The qualification of previous accounts was attributed to data quality issues stemming from a system change, not deliberate malpractice. The board agreed to note the risk register update.

Overpayment and Underpayment Policy

Linda D'Souza introduced the new Overpayment and Underpayment Policy for the Lambeth Pension Fund. This dedicated policy aims to strengthen governance by setting out clear procedures for preventing, identifying, and correcting under and overpayments, replacing reliance on the council's corporate debt policy. The policy details how errors will be avoided through strong controls, how overpayments will be recovered proportionately, and how underpayments will be corrected promptly, including the payment of interest where applicable. While much of the policy reflects existing practices, it formalizes them for the pension fund. Councillor Daley inquired about the average time from error creation to detection, noting that it can vary significantly, with some historic errors being picked up much later. Councillor Griffiths sought clarification on whether the new policy replaces the council's corporate debt policy in case of disputes, and it was confirmed that the pension fund policy would take precedence. The board also discussed whether any overpayments or underpayments were discovered during the reconciliation for the McCloud remedy and GMP reconciliation, with some issues identified, particularly during the GMP reconciliation. A potential clerical error in the policy wording regarding child pensions was noted and will be reviewed. The policy is scheduled to go to the Pensions Committee for approval in March. The board agreed to the recommendations.

General Update

Robert Browning provided a general update, covering the Fit for the Future transition and the London CIV. He noted that consultations on new regulatory changes and guidance are ongoing, with the fund's response to a technical consultation attached as Appendix 1. The Pension Schemes Bill is still progressing through Parliament. The governance review update will be presented in April. Regarding the fund's exposure to companies identified by the United Nations as engaged in activities in the illegal occupation of Palestine by Israel, a review as of June 2025 found no exposure to companies on the updated UN list. Councillor Griffiths raised concerns about the narrowness of the UN list and the potential for indirect investment in companies with links to Gaza, suggesting that a 100% divestment cannot be guaranteed. It was clarified that the fund's exposure is measured against the UN list, which is an established and recognized list. The Pensions Committee has agreed to measure exposure against this list, acknowledging that it may not capture all potentially problematic companies. The discussion also touched upon the responsible investment matrix developed by the London CIV, comprising three pillars representing different levels of exclusionary screening. The Pensions Committee has indicated a preference for Pillar 3, which includes exclusions for all weapons and conflict zones, but this is intended as a guide for new fund development rather than a restriction on current investments. The board was informed that the Pensions Committee has an additional meeting in February to address year-end items, including investment strategy and CIV transition, and another in March for substantive business. The board also discussed the investment management agreements (IMAs) for the transition, with the expectation of a single IMA covering all assets, though separate IMAs for each investment are a possibility. The inclusion of sliding scales for underperforming managers within the IMAs was confirmed as part of performance management processes.

Investment Performance Report

Robert Browning presented the Investment Performance Report for the quarter ending September 2025. The fund's performance was above benchmarking, returning 4.7% for the quarter, with no significant detractors, except for private equity funds which returned just under 2% against a target of nearly 10%. This underperformance was attributed to the maturing of these funds, requiring reinvestment to maintain exposure. Deviations from strategic allocations were noted, with some outside tolerance ranges, but these have been addressed in the investment strategy update. The report also reiterated the increase in fossil fuel exposure over the quarter, attributed to pricing valuations. An update was provided on Invesco funds, with the European fund divested and proceeds received, while the UK residential fund details were deferred to the Part 2 paper. The board agreed to note the report.