Harrow's Pension Fund saw its investments decrease by £25.1 million, reaching £1.07 billion by the end of March 2025, according to a report reviewed by the Harrow Council Pension Board on Thursday, 31 July 2025. The board also reviewed the Harrow PF Committee Workplan 25-26, Quarterly Actuarial Funding Position at 31/3/2025, and Monthly Fund Valuations to 31 March 2025. As of March 31, 2025, the asset allocation is approximately:
- Equities: 50%
- Diversifying Return Assets: 18%
- Risk Control Assets: 28%
- Cash & NCA: 4%. Changes over time can be seen in the Investment Valuation at 31 March 2025 report.
The fund experienced a -1.9% return, net of fees, during the quarter. Over the 12-month period ending 31 March 2025, the fund underperformed its benchmark by 2.3%, despite achieving a 3.1% return. The underperformance was attributed primarily to the LCIV active equity funds.
Longer-term performance figures were also a cause for concern, with the fund underperforming against its benchmarks over 3, 5, and 10-year periods. The report noted that the fund's performance relative to its benchmark was -1.4% over three years, -0.9% over five years, and -1.0% over ten years.
Councillor Pritesh Patel voiced his disappointment with the fund's performance, noting that it had been underperforming its benchmark for the last 10 years and not meeting peer group performance levels. Over a 1 year period, the fund returned 3.1% while the peer group returned 3.4%. Over a 3 year period, the fund returned 2.8% while the peer group returned 3.6%. He hoped that discussions in Part Two of the Pension Fund Committee meeting would lead to decisions on how to change this trend.
Patrick Kilgallen, Interim Treasury and Pensions Manager, explained that the committee would hold a strategy day in August to consider changes to the portfolio in detail. Mercer's and the independent advisors will be providing the committee with views on potentially moving away or taking some action to try and improve performance with the fund managers. He added that he would report to the board on any decisions made at the September meeting.
Gerald Balabanoff, Scheme Members' Representative - Pensioners, inquired about when Harrow had engaged Mercers. Mr. Kilgallen responded that it was during 2024, replacing aeon as the investment consultants. Mercer's role is to do due diligence whenever it comes to deciding to divest from a fund manager or select a new fund manager. They do the research, peer group analysis and give the committee confidence that there's data that they can look to to make decisions. Mr. Balabanoff sought clarification on Mercers' role, to which Mr. Kilgallen explained that they conduct due diligence when deciding to divest from or select a new fund manager, performing research and peer group analysis to give the committee confidence in their decisions.
Mr. Balabanoff also asked if the government's proposals for pension scheme changes would make investment consultants redundant. Mr. Kilgallen stated that the government's view is that investment consultants should not be retained as a normal course of action, with the advisory role expected to shift to the London CIV (LCIV). The London CIV (LCIV) is the London Collective Investment Vehicle. The government expects that the advisory role for the Harrow Pension Fund will go to the London CIV, eliminating the need for an investment consultant except in special circumstances.
