Agenda and minutes

The minutes of the meeting held on 5 December 2025 were taken as read, confirmed and signed.

The Chief Executive reported that no questions had been received under Standing Order 35.

The Chief Executive reported that no questions had been received under Standing Order 7(3) and 7(5).

There were no urgent items for consideration.

The Chairman invited members who wished to do so to declare any interest in respect of items on the agenda for the meeting.

No declarations were made.

The Committee considered a report of the Director of Corporate Resources, which provided information of a proposed change to the Fund’s cessation approach when an employer left the scheme. The change would be incorporated into the Fund's final Funding Strategy Statement (FSS). A copy of the report marked ‘Agenda Item 6’ is filed with these minutes.

The Chairman welcomed Mr. Steven Tart and Mr. Richard Warden from Hymans Robertson who had joined the meeting online for the report.

Arising from discussion, the following points were made:

1. Clarification was sought on the process an employer would have followed if they were considering leaving the scheme, noting that an employer might have wished to understand their position within the 85–95% funding rule before making such a decision. Officers confirmed that where an employer had expressed interest in leaving, the Fund would have worked with them to provide the relevant information to support their decision making, adding that the Fund would not have prevented an employer from exiting, provided the process complied with regulations and the Fund was satisfied with the approach.
   
   
2. A Member noted that the forthcoming local government reorganisation (LGR) would result in many current authorities ceasing to exist, and questioned what mechanisms were in place to ensure continuity within the pension fund. Officers confirmed that some employers would indeed have ceased under LGR. It was reported that regulations required a cessation valuation to be undertaken in such circumstances. The Fund, with support from actuaries, would have determined member transfers and allocated assets and liabilities appropriately, whether to a single new authority or divided across several.

3. A Member queried whether the Fund should have avoided adjusting assumptions or risk profiles solely because market valuations fluctuated. Officers responded that other funds had adopted similar approaches, as confirmed by Hymans, and explained that while the Fund had previously been in deficit, it had taken a measured approach to avoid sharp increases in employer contribution rates. Now that the Fund was in a stronger position, the strategy had been to retain an element of surplus to protect both the Fund and employers against future volatility. Hymans supported this view, noting that the fund had historically experienced market rises and falls and was a long-term investor. Surpluses should not have been distributed entirely, nor should deficits have resulted in excessive contribution increases. They added that prudence had increased in the latest valuation due to economic uncertainty and long-term assumptions had not yet been realised.
   
   
4. Concern was raised whether the timing of the proposed changes was appropriate given the forthcoming LGR, and that decisions made beforehand might require revisiting following LGR. Officers explained that the regulations required a cessation valuation, and regardless of whether applying the proposed or previous approach, the Fund would still need to assess and allocate assets and liabilities upon employer exit. The timing of LGR therefore did not materially affect the requirement. The Director of Corporate Resources added that the structure of LGR meant future unitary authorities would still have been required to offer LGPS membership. Assets and liabilities would have transferred accordingly, and although administratively complex, the change would not have altered the operation of the Fund.

5. A Member expressed support for the proposal, noting the importance of protecting the Fund from employers exiting when the Fund was performing strongly. It was questioned whether employers could have attempted to leave under the old policy before the new policy came into effect, and how changes in funding positions between initial assessment and exit date would have been handled. Officers confirmed that the calculation was fixed by regulations and must be based on  ...  view the full minutes text for item 120.

The Committee considered a report of the Director of Corporate Resources which provided information on the outcome of the annual review of the Leicestershire County Council Pension Fund’s (the Fund) strategic investment allocation and structure. The report also provided guidance regarding the Fund’s approach to local investment, as required by Government’s draft regulations, as well as the approach to engagement and divestment. A copy of the report marked ‘Agenda Item 7’ is filed with these minutes.

The Chairman welcomed Mr. David Walker from Hymans Robertson, who delivered a presentation as part of this agenda item.

Arising from discussion, the following points were made:

i.          A Member questioned whether the mix of active equity managers, some operating defensively and others more aggressively, might be neutralising each other’s performance, resulting in benchmark-like returns despite higher active management fees. Officers and advisers acknowledged that the risk had been identified through blending active managers but noted that LGPS Central’s role was to ensure the mix of styles was complementary and continued to justify active risk. Whilst the last five years had been challenging for most active managers due to narrow market leadership, longer term evidence still supported selective active management where conviction existed.

ii.          Questions were also raised regarding active bond mandates, specifically whether reported outperformance figures were net of fees, and whether the Fund was receiving sufficient value for money. Officers advised that typical fees were in the region of 20–30 basis points, and that while performance had been mixed, passive bond investing had drawbacks. Alternative index-based bond solutions existed but were less common and could incur higher turnover costs. The buy and maintain approach was highlighted as attractive due to low turnover and benchmark agnostic flexibility.

iii.          In relation to valuation matters, members queried the feasibility of employers requesting interim funding valuations in light of strong market performance since the last formal valuation. Officers advised that while regulations allowed for such requests, they were expected to be rare, and any such review would need to be considered case by case and in line with the Funding Strategy Statement. It was noted that interim reviews were often impractical due to their complexity.

iv.          Members also sought clarification on currency risk, particularly regarding the impact of US dollar movements on overseas investments. Officers explained that the Fund operated a currency hedge of approximately 30% on major foreign currency exposures, including the US dollar, providing partial protection against currency volatility.

v.          A Member wished to avoid misleading messaging such as “diversification produced little gain” which could be misinterpreted, particularly because as there was strong pressure on members to diversify at a scheme level and because, under fiduciary duties, diversification did not necessarily yield “little gain”. Officers responded that at the Fund’s current level of diversification, and given the sheer number of strategies, the marginal benefit of each additional strategy had reduced. Also noted was the Fund had been simplified over the last decade, moving from well over 25 managers to around 20 and slightly fewer asset classes.

vi.          A Member queried whether the small differences in the projections simply reflected that the four alternative portfolios were themselves only marginally different from the current strategy and suggested that it might have been useful to model a wider range of options, both more defensive and more adventurous strategies, to test outcomes more meaningfully. Hymans explained that, given a strategy review had been conducted around 12 months earlier, the team had aimed to avoid drastic changes to limit costs and to maintain a steady approach to funding and investment. It was acknowledged that larger changes could have been  ...  view the full minutes text for item 121.

The Committee considered a report of the Director of Corporate Resources which provided information on ongoing regulatory developments with regard to pooling and LGPS Central. A copy of the report marked ‘Agenda Item 8’ is filed with these minutes.

The Chairman welcomed Mr. Louis-Paul Hill from LGPS Central, who delivered a presentation as part of this agenda item.

Arising from discussion, the following points were made:

i.          A Member asked about the timeline for incorporating the Committee’s investment and responsible investment (RI) beliefs into LGPS Central’s asset class solution process adding that once the Committee provided its preferences, and sought clarity on how the integration process would work. Central responded that it had taken the Committee’s beliefs as they stood at the end of the previous year and would speak with officers to ensure that any updates were incorporated into the ongoing process.

ii.          It was stated that, LGPS Central intended to finalise the direction of travel by April 2026 while allowing time later in the year for further adjustments. It was further clarified that areas where there was already strong agreement could begin to be locked in and implemented, while areas where there was uncertainty or where Partner Funds’ views were still developing would remain subject to continued consultation.

RESOLVED:

That the update on Fit for the Future and LGPS Central Pooling report and presentation be noted.

The Committee considered a report of the Director of Corporate Resources, which provided information on the key changes expected for the Fund’s Investment Strategy Statement (ISS). A copy of the report marked ‘Agenda Item 9’ is filed with these minutes.

RESOLVED:

a)    That the draft Investment Strategy Statement (ISS) be noted.

b)    That it be agreed that consultation on the ISS with scheme employers commence.

The Committee considered a report of the Director of Corporate Resources which provided an update on Training Needs Self Assessments which had been undertaken and set out progress against the Fund’s Training Policy and 2025 Training Plan. A copy of the report marked ‘Agenda Item 10’ is filed with these minutes.

Arising from discussion, the following points were made:

i.          Members were reminded if they had not done so to complete the training needs assessment, and any Aspire modules online that had not been completed.

ii.          It was confirmed that the chart included in the report was anonymised, and that the there was less focus on Local Pension Board members to undertake training on investments, which was the focus of the Local Pension Committee.

RESOLVED:

That all members of the Local Pension Committee be requested to complete the training needs assessment if not yet completed by 31 January 2026.

The Committee considered a report of the Director of Corporate Resources which sought Members comments on the Leicestershire Pension Fund’s Responsible Investment (RI) Plan 2026, to enable the Fund to further improve the management of responsible investment risks. A copy of the report marked ‘Agenda Item 11’ is filed with these minutes.

Arising from discussion, the following points were made:

i.          A Member asked whether, in light of recent geopolitical instability, the Fund should undertake reviews of conflict affected and high-risk areas to improve transparency around related investment risks. It was noted that other funds had begun considering such reviews and queried how this aligned with the Fund’s RI strategy, as well as whether any local work could be done to understand the level of exposure to these risks. Officers confirmed that conflict affected and high-risk areas were an emerging area within RI. It was stated Central had been engaging on those issues, although it was difficult to quantify the financial risk because many underlying companies were large multinational organisations with broad exposure. Central also prioritised engagement in sensitive and topical areas. Feedback on the subject would be provided to the Committee at the July meeting.

ii.          It was reported that the related survey had closed on 5 January and received over 2,000 responses, exceeding previous engagement levels. Officers were reviewing the substantial number of comments and would present high-level findings at the workshop on 4 March. The RI Plan would accompany the formal report at the March meeting.

RESOLVED:

That the draft Responsible Investment Plan be noted.

The date of the next meeting is scheduled for 20 March, 2026 at 10.00am.

RESOLVED:

That it be noted that the date of the next meeting would be 20 March 2026, at 10.00am.