The Pension Board of Tower Hamlets Council met on Monday 2 March 2026 to discuss significant reforms to the Local Government Pension Scheme (LGPS) and review the fund's risk management framework. Key decisions included approving a redesigned Pension Fund Risk Register to reflect new regulations and noting updates on scheme engagement and communications.

Pension Fund Risk Register Redesign

The Board approved a significant redesign of the Pension Fund Risk Register, necessitated by the substantial structural and legislative reforms to the LGPS taking effect from 1 April 2026. These reforms stem from the government's 'Fit for the Future' programme and consultations on 'Access and Fairness' and 'Access and Protections', leading to new regulations such as the LGPS (Amendment) Regulations 2026 and the LGPS (Pooling, Management and Investment of Funds) Regulations 2026.

The redesigned register will better reflect the new operating environment, which includes mandatory full asset pooling, delegation of investment implementation to London CIV, the appointment of a statutory Senior LGPS Officer and an Independent Person, and mandatory Independent Governance Reviews. The new framework will distinguish between strategic risks, regulatory compliance risks, delegation risks, and operational execution risks, with a new explicit Regulatory reform & Direction Risk category. A new dimension, Control resides with: Fund / Pool / Shared, has also been introduced to clarify accountability.

Key risks identified within the redesigned register include:

• Regulatory & Statutory Compliance: Risks associated with failure to participate in pooling, appoint a Senior LGPS Officer, publish the Investment Strategy Statement (ISS), comply with governance strategy requirements, or manage asset transitions effectively.
• Governance & Oversight: Risks related to the failure to appoint a statutory Senior LGPS Officer, non-compliance with governance strategy requirements, adverse findings from Independent Governance Reviews, and delegation accountability gaps between the Fund and London CIV.
• Funding & Employer: Risks stemming from misalignment between the Funding Strategy Statement (FSS) and the revised Investment Strategy Statement (ISS), employer contribution instability due to local investment targets, and increased employer exit debt disputes arising from reforms to admission and exit rules.
• Investment & Pooling: Risks include potential failure by London CIV to implement strategy effectively, Secretary of State intervention powers, loss of tactical flexibility due to centralised strategic asset allocation, and non-compliance by London CIV with Financial Conduct Authority (FCA) authorisation.
• Administration & Systems: Risks associated with mandatory administration strategies, capacity issues for the Senior LGPS Officer, the interaction between McCloud remedy, access reforms, and benefit protection, system integration challenges with pool reporting, and failures in the Pensions Dashboards Programme.
• Engagement & Communications: Risks include failure to consult properly on the ISS, miscommunication of local investment objectives, and issues with pension fund reporting.

The Board delegated authority to the Director of Resources to implement the redesigned Risk Register framework from Q1 2026/27.

Scheme Engagement and Communications

The Board received an update on scheme engagement and communications activities. A key focus was the Pension Fund Information Forum (PFIF), with officers proposing to hold the next forum on 23 and 27 March 2026. The forum aims to inform members about scheme benefits, fund governance, funding, and investments, and to explain the implications of regulatory changes. The agenda for this forum includes topics such as membership benefits, valuation outcomes, pooling reforms, McCloud remedy implications, and the 'Engage' digital self-serve portal.

The Pension Fund Employer Forum (PFEF) was held on 22 January 2026, focusing on governance, valuation, funding, and regulatory reforms. While attendance was noted as low, feedback indicated a demand for periodic regulatory bulletins and data workshops. Future events will aim to support employers with training and resources for accurate data submissions.

Pensions Administration Report

An update was provided on the administration and performance of the Scheme for the quarter ending 31 December 2025. The report detailed membership statistics, showing a slight increase in active members and a decrease in deferred and frozen members. It also outlined the performance of various administrative tasks, with a general trend of improvement in processing times compared to previous quarters, attributed to a change in working methods and backlog clearance. The report noted that recruitment for three approved posts was on hold due to a temporary recruitment freeze.

Progress on data quality initiatives, including the rectification of Guaranteed Minimum Pension (GMP) and pensioner payroll, was also highlighted. The report indicated that member communications for these rectifications were being prepared for issue.

LGPS Pooling Update

The Board received an update on LGPS pooling reforms, noting the government's response to the 'Fit for the Future' consultation and the subsequent publication of draft 2026 Regulations. The reforms mandate a 31 March 2026 deadline for all LGPS assets to be delegated to and managed by FCA-authorised pools. This necessitates structural changes, including governance mandates, training, and statutory appointments.

The report detailed the implications of these reforms, including the requirement for Funds to have robust mechanisms to monitor and report local investments via pools. It also highlighted the Pension Schemes Bill, which is progressing through the legislative process, and the draft Statutory Fund Governance Guidance, Investment Strategy Statement (ISS) Guidance, and Pooling Guidance. Representatives from London CIV were noted to be attending the Committee meeting.

Training Events

The Board discussed training events, with members expressing the importance of access to external conferences and events for understanding the evolving pension landscape. It was confirmed that a budget exists for the Board's 'oversight and governance' function, and members were encouraged to contact Paul Audu directly with requests for training events. The Board's work plan for 2025/26 was also noted.

Other Matters

The Board also noted the agenda for the forthcoming Pensions Committee meeting and reviewed its own work plan for 2025/26. No other business was discussed.