The Pensions Committee of Havering Council met on 17 March 2026 to review the fund's actuarial valuation, investment strategy, and performance. Key decisions included the approval of the 2025 actuarial valuation report, the 2026 investment strategy statement, and the pension fund performance monitoring report for Q4 2025.

2025 Actuarial Valuation Report

The committee received and approved the draft 2025 actuarial valuation report, which indicated a significant improvement in the Havering Pension Fund's financial position. The fund's funding level has risen from 80% in 2022 to 101% as of March 2025, representing a surplus of approximately £13 million. This improvement is largely attributed to an increase in the discount rate from 3.2% to 5.5%, reflecting improved long-term market expectations. The report also included an analysis of climate change scenarios and presented the final Funding Strategy Statement, which had been amended to clarify wording regarding academy contributions following consultation with employers. The committee agreed to delegate authority to the Chair and the Strategic Director of Resources to publish the final version of the report by 31 March 2026.

2026 Investment Strategy Report

The committee considered and approved the draft Investment Strategy Statement (ISS) for 2026, which has been updated to reflect anticipated regulatory changes, including the move towards full asset pooling under the draft Local Government Pension Scheme (Pooling, Management and Investment of Funds) Regulations 2026. The revised strategy maintains a 40% allocation to equities but introduces a 2.5% allocation to private equity, funded by a reduction in multi-asset allocation. Property allocation increases to 12.5%, and private credit rises to 10%. A new local investment ambition of 2.5% of total assets has been introduced, focusing on opportunities within Greater London. The committee also noted the forthcoming transition of implementation responsibilities, such as manager selection and rebalancing, to London CIV¹ from April 2026.

Pension Fund Performance Monitoring Q4 2025 Report

The committee reviewed the fund's performance for the quarter ending 31 December 2025. The total value of the fund's invested assets increased by approximately £22.5 million to £1,118.9 million. Overall fund performance for the quarter was 2.0%, which was behind both the tactical benchmark (-0.7%) and the strategic benchmark (-1.6%). While the fund's performance lagged in the short term, it has continued to show positive asset growth over the 12-month and 3-year periods, outperforming the strategic benchmark. The report noted that the underperformance against the tactical benchmark was primarily due to the LCIV Global Alpha Growth Paris Aligned Fund. The committee also reviewed the analysis of cash balances and noted updates on the London CIV's activities and progress on the Fit for the Future initiative.

2025 Voting and Engagement Report

The committee considered the annual review of investment managers' voting and engagement activities for the year ending 30 June 2025. The report, prepared by Hymans Robertson LLP², indicated that voting rights were exercised at a high rate by both L&G and LCIV mandates. The proportion of votes cast against management remained consistent with previous years, although the percentage of abstained or withheld votes increased, particularly for LCIV mandates. Environmental themes continued to be the primary focus for engagement activities. The committee noted the recommendations for ongoing stewardship oversight and expectations of LCIV, especially as LCIV assumes delegated responsibility for investment strategy implementation from April 2026.

Fit for the Future Update

An update was provided on the legislative and regulatory changes to the Local Government Pension Scheme (LGPS) stemming from the Fit for the Future initiative, expected to take effect from 1 April 2026, subject to the passage of the Pension Schemes Bill. As of 31 December 2025, approximately 40% of the fund's assets were invested through London CIV, with plans to transition the remaining assets to ensure compliance with upcoming regulations. The report detailed the implications of the proposed Investment Management Agreement (IMA) with London CIV, which will designate London CIV as the legal investment manager for all Havering Pension Fund assets, while the committee retains responsibility for setting the investment strategy. The committee was also informed of forthcoming governance requirements, including the appointment of a Senior Executive Officer and an Independent Person by 30 September 2026.