Havering Pension Fund is set to implement a significant reform agenda, dubbed Fit for the Future,
aimed at strengthening governance, adapting to new regulations, and increasing local investment over the next four years. The fund's business plan for 2026-2030 and an updated investment strategy were discussed at a Pensions Committee meeting on Tuesday, September 29, 2026.
The Fit for the Future
reforms are primarily driven by the Pension Schemes Act 2026, which came into force on June 30, 2026, alongside two associated statutory instruments. These regulations mandate enhanced governance structures within the Local Government Pension Scheme (LGPS). As part of this, the fund plans to appoint an LGPS Senior Officer and an Independent Person by December 31, 2026. The recruitment for the LGPS Senior Officer, a Head of Service level role, is expected to launch in September 2026 and conclude by the statutory deadline. The job description for the Independent Person is being finalized, with recruitment anticipated to start within the month, also aiming for a December 31, 2026, appointment. The appointment of the independent member to the committee as an advisor will be delegated to the chair and reporting officer, with sign-off from the chief executive.
The fund has already met the asset pooling deadline, having entered into an agreement with London CIV in July 2026. An updated draft Investment Strategy Statement (ISS) has been approved for consultation, with a final version to be presented following the consultation period at the December 2026 meeting.
A significant aspect of the updated strategy is the approach to local investment, with a target allocation of up to 10% for opportunities within the London CIV pool area, which includes Havering. Councillor Liz Tyler raised concerns regarding the definition of local investment
and the potential for political influence, seeking safeguard measures. James Wilson from London CIV clarified that potential investments could encompass housing, social housing, employment projects, and infrastructure. The committee acknowledged that suitable local opportunities may not always be available and that the target should be a long-term objective, not a reason to invest in unsuitable projects. The risk and return appetite for these investments were also discussed, with a leaning towards a broader definition to maximise opportunities, potentially accepting lower returns if significant local benefits are demonstrated.
The fund's investment portfolio was valued at £1.18 billion as of June 30, 2026. While the fund achieved a net positive return of 6.1% for the quarter, primarily driven by strong global equity markets, it underperformed its benchmark across various periods. For the quarter ending June 30, 2026, the fund returned 6.09% against a benchmark of 6.44%. Over the last 12 months, the fund returned 12.93% compared to a benchmark of 15.04%. The underperformance extended to longer periods, with a 9.07% return over three years against a benchmark of 11.30%, and 4.69% over five years against a benchmark of 8.10%.
The strategic asset allocation remains largely unchanged, with target allocations of 40% to listed equity, 12.5% to property, and 12.5% to infrastructure.
The proposed budget for 2026/27 is £6.724 million, representing a 7.6% increase from the previous year. This rise is attributed to enhanced governance, regulatory, administration, and investment oversight requirements. The increase of £476,000 is allocated to cover additional governance and regulatory activity, policy reviews, assurance work, implementation of LGPS requirements, ongoing administration and data quality improvements for Pensions Dashboards, and investment management and oversight costs. Specifically, £243,000 is allocated for salaries, including the LGPS Senior Officer, an Independent Person, and an interim accountant. An additional £30,000 is for the LCIV Pass service, and £185,000 is allocated to oversight and governance. Fund manager fees are expected to increase based on market value, with anticipated returns of 5.5%.
The business plan also outlines priorities such as improving data quality for Pensions Dashboards and managing funding risks. The fund aims to ensure affordability and stability of employer contributions through prudent funding and investment strategies, with a risk objective to maintain the funding level above 100% with at least a 75% likelihood over a 20-year horizon. Strategies include ongoing monitoring of the fund's position, cashflow, and liquidity, particularly as liabilities mature. Mitigation for funding risks like financial mismatch, longevity, inflation, and interest rate risk involves setting strategic asset allocation based on asset-liability modelling, regular actuarial reviews, and a diversified asset class range.
The pension administration budget for 2026/27 is set at £0.753 million, a 1.79% increase from the prior year. This service is contracted through Lancashire County Council via Local Pensions Partnership Administration (LPPA).