Kingston Pension Fund Assets Rise to £1.51bn Amidst Funding Level Dip

The Royal Borough of Kingston upon Thames Pension Fund has announced its net assets have reached £1.51 billion as of June 30, 2026. This represents an increase of £110 million from the previous quarter, a growth achieved despite a dip in the fund's overall funding level to 128% from 137% following the March 2025 valuation.

A line graph showing the trend of pension fund assets, liabilities, and funding level from March 2025 to March 2026.
A line graph showing the trend of pension fund assets, liabilities, and funding level from March 2025 to March 2026.Source: Pension Board papers, 14 October 2026

Katherine Gray, Head of Pensions Investments and Treasury, attributed the recent decrease in the funding level to higher-than-anticipated inflation impacting liabilities. Inflation has been higher than anticipated over 2026, resulting in LGPS benefit increases of 3.8% in April 2026 and an increase in the value placed on the Fund's liabilities, the meeting information states. The fund's strategic asset allocation is designed to manage these fluctuations, with a target allocation as of March 31, 2026, including 40.0% in Listed Equity, 10.0% in Property, and 8.0% in UK Government Bonds. The strategy also involves making sure we've got some inflation linked investments to match those liabilities.

The fund achieved a quarterly return of 7.6%, outperforming its benchmark of 7.3%. For the year ending June 30, 2026, the fund returned 13.7%, though this was below its benchmark of 14.7%. Over three and five-year periods, the fund returned 10.8% and 6.4% respectively, with the three-year return exceeding its benchmark.

Bar chart showing investment performance over 1, 3, and 5 years, with positive returns for 1 and 3 years, and a negative return for 5 years.
Bar chart showing investment performance over 1, 3, and 5 years, with positive returns for 1 and 3 years, and a negative return for 5 years.Source: Pension Board papers, 14 October 2026

Despite the overall growth in assets, the fund remains cash flow negative, meaning contributions received are lower than benefits paid out. This gap is expected to widen due to reduced employer contribution rates and increasing benefit payments. On average, there is a projected 4.0% per annum reduction in contribution rates by 2028/29, equivalent to approximately £5 million per year less cash received by the fund from employers. These reductions were a result of the 2025 valuation and the fund's strong funding level at that time.

Projected contributions versus benefit outflows and net cashflow position from 2026 to 2029.
Projected contributions versus benefit outflows and net cashflow position from 2026 to 2029.Source: Pension Board papers, 14 October 2026

The fund's strategy to bridge this gap relies heavily on investment income. The investment income is really important to bridge that gap so that we can make sure we can pay pensions on time without needing to sell assets, the meeting information highlights. The actual asset allocation as of June 30, 2026, shows a significant portion in Listed Equity (48.9%), followed by Corporate Bonds (10.3%) and Multi Asset Credit (10.8%).

The fund's annual report for 2025/26, due by December 1, 2026, shows net assets increased by £116 million to £1.41 billion over the year, with a positive investment return of 8.9% for the year.

The current funding level of 128% is a decrease from 137% following the March 2025 valuation. While the fund is projected to remain cash flow negative, the implications for future pension security beyond the widening gap are not explicitly detailed in the provided information.

For more details, refer to the Public reports pack Wednesday 14-Oct-2026 10.00 Pension Board and the Agenda frontsheet Wednesday 14-Oct-2026 10.00 Pension Board.