Heightened geopolitical tensions and the UK Government's pension reforms are increasing the risk profile of the Tower Hamlets Pension Fund, according to a recent Pensions Committee meeting.
The committee received an update on the Pension Fund Risk Register - 31 March 2025, which highlighted several key risk movements. To mitigate these elevated risks, the Pensions Committee is considering reviewing and updating the Pension Fund's suite of Policies including Risk Management Policy in collaboration with its advisers.
One notable change was the elevation of the risk associated with increased liabilities due to market yields and inflation moving out of line with actuarial assumptions. This risk, identified as HRP0019 in the Pension Fund Risk Register - 31 March 2025, was escalated from ORANGE to RED due to heightened geopolitical tensions that could lead to higher oil prices and increased inflationary pressures.
Another risk, HRP0020 – Investment Strategy fails to deliver appropriate outcome, also changed from ORANGE to RED because the Government's 'Fit for the Future' response, detailed in the Pensions Investment Review Governments Response to the Fit for the Future Consultation, could undermine LGPS Funds' investment strategies if not properly managed.
These changes reflect growing concerns about the potential impact of global instability and policy shifts on the fund's ability to meet its obligations.
