The Westminster City Council Pension Fund has achieved a significant milestone, surpassing a 140% funding level as of March 31, 2025. This represents a notable increase from the 128% funding level recorded at the previous valuation in March 2022.

The latest actuarial valuation, conducted by Hymans Robertson, shows the fund's assets at £2,104 million against liabilities of £1,506 million, resulting in a surplus of £598 million. This positive development is primarily driven by updated actuarial assumptions that reflect higher expected future investment returns.

A waterfall chart illustrating the changes in the pension fund's surplus from the 2022 valuation to the projected 2025 valuation, detailing contributions from known events and future expectations.
A waterfall chart illustrating the changes in the pension fund's surplus from the 2022 valuation to the projected 2025 valuation, detailing contributions from known events and future expectations.

During a Pension Board meeting on Thursday, March 26, 2026, Steven Scott, Actuary to the Westminster Pension Fund, presented these valuation results. He explained that the improved funding level is largely attributable to revised assumptions regarding investment returns. The previous expected rate was 4.8% per annum (with a 67% likelihood of success), and the new expected rate is 5.3% per annum (with an 86% likelihood of success). This change was made to reflect higher assumed future investment returns at the 2025 valuation compared to the 2022 valuation. The discount rate assumption was increased to 5.3% per annum from 4.8% per annum.

The fund's investment strategy is described as growth-orientated. The target asset allocation as of 31 December 2025 is 55% in global equities, 19% in fixed income, 11% in renewable infrastructure, 5% in infrastructure, 5% in property, and 5% to affordable and socially supported housing.

A stacked bar chart showing the asset allocation of the Westminster Council's pension fund from January to December, with categories including Fixed Income, Equities, Property, Renewable Infrastructure, Infrastructure, Affordable Housing, and Cash/Temp. Investments.
A stacked bar chart showing the asset allocation of the Westminster Council's pension fund from January to December, with categories including Fixed Income, Equities, Property, Renewable Infrastructure, Infrastructure, Affordable Housing, and Cash/Temp. Investments.

This surplus has led to a reduction in employer contribution rates. The primary rate for employers has been set at 20.5% of pay for the period 1 April 2026 to 31 March 2029, a reduction from the previous valuation's rate of 17.5% of pay. The report states, On average, employer total contribution rates (ie Primary plus Secondary) have reduced mainly due to higher assumed future investment returns at 2025 compared to 2022. There is no mention of potential benefit enhancements for pensioners.

The report highlights several risks associated with the updated actuarial assumptions and the broader economic environment. Key risks include sensitivity to future investment returns, higher than expected inflation increasing liabilities, and higher than expected salary increases impacting liabilities. The report notes, if future inflation was 0.1% pa higher than assumed at this valuation, then the funding level would reduce by c2% (with a c£23m fall in the surplus). Similarly, if salary increases were 0.5% pa higher than assumed at this valuation then the funding level would reduce by c1% (with a c£7m fall in the surplus). Geopolitical uncertainty and market volatility also contribute to significant volatility and negative sentiment in global investment markets. Contingency plans are implicitly addressed through the increased level of prudence within funding strategies and contribution rates at the 2025 valuation.

Chart showing the relationship between assumed future investment return and funding level for the Westminster Pension Fund.
Chart showing the relationship between assumed future investment return and funding level for the Westminster Pension Fund.

To support comparison with other Local Government Pension Scheme (LGPS) funds, the Westminster fund's SAB funding level at 31 March 2025 is 126%. The report clarifies that SAB assumptions are to allow comparison only and are not intended to be appropriate for funding or setting contribution rates. Differences in funding positions and contribution rates across the LGPS exist due to varying assumptions and circumstances.

The next formal actuarial valuation is expected to be carried out as at 31 March 2028, at which point contribution rates payable from 1 April 2029 will be set. Factors that will be considered in that assessment will include changes in assumptions about the future (economic and demographic), actual experience being different from expectations at the last valuation, and market movements and changing asset values. The fund will continue to monitor the environment in which it participates to understand and manage the impact of any changes. The full details of the valuation can be found in the Public reports pack for the Pension Board meeting on 26th March 2026 Public reports pack 26th-Mar-2026 18.30 Pension Board.