The Westminster Pension Fund recorded a negative absolute return of 2.95% for the quarter ending March 31, 2026, falling short of its benchmark. This performance dip was primarily attributed to the LCIV Global Equity Quality Fund, a holding from which the fund has since divested.
The fund's estimated funding level decreased to 126% as of March 31, 2026, down from 140% the previous year. This reduction was largely driven by a decrease in the funding discount rate from 5.3% to 4.9% within the actuarial model used for calculating future asset returns and liabilities. Hymans Robertson confirmed this change reflects revisions to their Economic Scenario Service (ESS) model and not a shift in prudence or funding basis.
While a 126% funding level offers some resilience against short-term underperformance by managers, the target funding level is not explicitly stated in the meeting information. The fund's investments managed by LCIV amounted to £503.9 million, representing 23% of total assets directly, and £1,457.9 million when including passive assets.
Patrick Rowe, Tri-Borough Director of Treasury and Pensions, presented the investment performance report at a meeting on July 9, 2026. He highlighted that the transition to BlackRock's passive global equity fund, which replaced the LCIV Global Equity Quality Fund, was completed in April 2026. This move was described as both successful and cost-effective, with the transition costing less than anticipated due to a positive opportunity cost, where the time out of the market benefited the fund through favourable asset price movements.
Significant volatility and negative sentiment in global investment markets were identified as the primary risks facing the Pension Fund. These conditions were exacerbated by geopolitical and economic uncertainties, including the US election, potential trade tariffs, and ongoing conflicts involving Ukraine, Russia, Israel, Gaza, and Iran. The outlook for advanced economies deteriorated due to heightened uncertainty, setbacks to growth and confidence, tightened financial conditions, reduced risk appetite, and increased credit risks.
Other key concerns for the fund included investment managers failing to meet targets, potential further deterioration in funding levels, regulatory and compliance risks, and inflation exceeding expectations. Further details on the meeting can be found in the Public reports pack and the Draft Pension Board Minutes.
