Agenda item

To receive a presentation from the London CIV on local government pension developments.

The Chair welcomed Stephanie Aymes (Client Relations Manager) and Christopher Gardiner (Chief Financial Officer) from the London CIV (LCIV), who had been invited to update the Sub-Committee on developments at the London CIV and on the Fit for the Future reforms (recent national government reforms to the UK’s pensions sector). The key points from the presentation and update provided are highlighted below:

·            Christopher Gardiner began, outlining the origins and purpose of the London CIV, which members were advised had been formed 11 years ago by the 32 London boroughs with three core aims: to bring the benefits of scale and fee savings by pooling investments; to deliver cost efficiencies through central management of assets; and to provide partner funds with access to a broader range of investment products than would otherwise be available individually, alongside enhanced investment governance. The London CIV was owned by the 32 London boroughs along with the City of London and, since April 2026, also included Buckinghamshire County Council as a member authority and remained one of six pension asset pools established nationally following the Fit for the Future reforms. London CIV’s approach to managing partner fund assets was underpinned by three principles: fiduciary responsibility to meet current and future pension liabilities; providing choice to enable partner funds to implement their desired investment strategies; and delivering long-term value through efficient management of assets, all delivered on a collaborative basis under which the Sub-Committee retained responsibility for setting investment strategy, local investment policy and responsible investment policy, with the London CIV responsible for implementation.

·            Regarding London CIV’s progress in implementing the changes mandated by the Pensions Scheme Act 2026 and Fit for the Future reforms, Members were advised that the London CIV had been assessed as meeting all minimum standards required by Government as at the end of March 2026. As of the previous month, the London CIV was managing approximately £40 billion of assets directly and indirectly, and expected to be managing approximately £60 billion on behalf of all  partner funds by 30 September 2026, as partner funds completed the onboarding of Investment Management Agreements (IMAs); Brent had signed its IMA on 11 June 2026.

·            Following on from this, Stephanie Aymes, provided further detail on progress since the London CIV's Strategic Plan was approved in 2025, including strengthening of the investment team, investment in systems to monitor and record assets accurately in conjunction with custodians, and the development of a product range to close gaps in the funds available to partner funds off-pool.  Having noted that the Fit for the Future reforms placed a greater focus on UK and local investment, members were advised that a dedicated senior investment team member was working with private markets colleagues on this, supported by a survey of partner funds' requirements with the London CIV's property investments in London highlighted as an example.

·            Following sign off of Brent’s Investment Management Agreement (IMA) members were advised that next steps would involve the London CIV proposing an investment implementation plan for approval, following which trading would commence to move the Fund towards its strategic asset allocation. In concluding her address, Stephanie Aymes noted that quarterly reporting, as well as reporting on performance and local investment, would begin for the June to September 2026 quarter, which would be provided to the Sub-Committee after September 2026.

Following presentation of the report, the Sub-Committee was invited to raise any comments or questions, with the following issues highlighted summarised below:

·            In opening the discussion, Members sought further clarification on how the London CIV's performance was scrutinised and monitored. In response, Members were advised that, in future, an independent person and a senior officer would be appointed to support scrutiny of the London CIV's performance at partner fund level. Adding to this, Christopher Gardiner explained the escalation route available in the event of unresolved performance concerns involving the Senior Responsible Officer at partner fund level, to the London CIV's shareholder committee (at which partner funds had elected representation, meeting twice yearly, with the Chair of Pension Fund Sub-Committee representing Brent), and ultimately, if necessary, to the Financial Conduct Authority, given the London CIV's status as an FCA-regulated investment manager.

·            Moving on, the London CIV representatives were questioned regarding how individual fund managers were monitored, with Members advised that the London CIV's investment team met with managers on at least a quarterly basis to review progress, performance, compliance and business stability.  Monitoring updates were provided on an annual basis to the London CIV's Investment Committee with the performance of individual Fund Managers continuing to be provided within quarterly performance monitoring reports to the Sub Committee. It was noted, by way of example, that the manager of the LCIV Emerging Markets Fund had previously been delisted and replaced following prolonged underperformance, with the fund's performance since being closely monitored.

·            In response to a specific question raised by the Chair on the performance of the LCIV Ruffer Multi-Asset Fund, Stephanie Aymes agreed to provide a written follow-up from the relevant investment team for circulation to all members of the Sub-Committee.

·            A final question was posed to the London CIV representatives, seeking clarification on the future role of the Fund's investment advisers (Hymans Robertson) once the London CIV assumed responsibility for implementation. Members were advised that, under the new regulations, investment strategy advice was required to be provided by the pool going forward, such that the next triennial investment strategy review would be commissioned through the London CIV rather than an external investment consultant, and that Brent was required to appoint an independent person to support the Sub-Committee, with this process due to take place over the coming months. Members asked for the timing of this transition, to which they were advised that Hymans Robertson's advisory responsibilities would reduce over the coming months, following completion of the investment implementation plan now being developed with the London CIV.

With no further questions or comments, the Sub Committee thanked Stephanie Aymes and Christopher Gardiner for attending and for the update provided which it was RESOLVED to note.