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Kensington and Chelsea council will droop employer pension contributions for a 12 months from April, beginning the firing gun on reductions which might be anticipated from 2026 after an enchancment in schemes’ skills to satisfy fee obligations.
The London native authority pension fund’s funding committee on Tuesday voted to decrease its contribution price from 7.5 per cent now to zero between April 1 2025 and March 31 2026, after members determined that the scheme’s funding degree of 207 per cent meant the cash can be higher spent elsewhere.
The £9mn financial savings will go in direction of a fund to help victims and survivors of the 2017 Grenfell Tower fireplace within the London borough. Worker contributions are unaffected by the vote.
Quentin Marshall, chair of the £2bn pension fund, which has outperformed its friends over the previous decade, mentioned: “That is cash that’s so clearly superfluous to our must pay pensions that when confronted with both having to seek out assets from elsewhere or doing this, in our judgment this can be a higher choice.”
The transfer comes as cash-strapped city halls throughout England and Wales are expected to cut the amount they pay towards staff pensions after a giant enchancment in funding ranges, pushed by an increase in company and authorities borrowing prices.
Adjustments to contribution ranges are attributable to take impact from April 2026.

Kensington and Chelsea’s determination to chop charges sooner comes regardless of the fund’s actuaries, Hymans Robertson, saying earlier than the vote that it could be “inappropriate” to decrease contributions earlier than the tip of the present three-year price cycle subsequent spring.
Hymans additionally cautioned that the choice might result in expectations {that a} zero contribution price could possibly be sustainable in the long run.
Marshall mentioned the choice to chop employer contributions to zero from April 2025 was “undoubtedly taking place”, barring any problem from the federal government or the Pensions Regulator.
It was “completely not the case” that reducing the speed to zero for a 12 months from April 2025 would set expectations that it could stay at that degree in future “and we’re very clear about that”, he added. “We are going to take a look at these yearly however there’s no precedent in any respect that it units.”
Kensington and Chelsea, which offers providers to each the wealthiest components of the UK and neighbourhoods with vital deprivation, is the one city corridor pension fund with a funding degree of over 200 per cent.
It has the bottom employer contribution price of England and Wales’s 86 native authority pension funds, and has delivered the most effective efficiency of any UK native authority fund over the previous decade, at 10.8 per cent, in response to shareholder advisory Pirc.

Seventy-two folks died within the 2017 Grenfell Tower fireplace, the worst fireplace catastrophe within the UK because the second world battle, when flames tore up the exterior partitions of the lately refurbished high-rise residence block.
A public inquiry final 12 months criticised Kensington and Chelsea for having proven “persistent indifference to fireplace security, notably the security of susceptible folks”.
Marshall, former chair of the council’s housing and property scrutiny committee, mentioned the financial savings can be paid into the native authority’s Grenfell Reserve fund.
It has been used for the settlement with the victims of the hearth and their households and any future contingencies which may have to be paid in relation to the tragedy.
The £391bn Native Authorities Pension Scheme, which covers pensions for greater than 6mn employees throughout England and Wales, had a funding degree of 107 per cent at its newest valuation in 2022. However this determine is anticipated to rise at its subsequent triennial valuation in March this 12 months.
The common employer contribution price amongst LPGS funds is 21 per cent of employees salaries.
Kensington and Chelsea’s determination comes after Prime Minister Sir Keir Starmer last month vowed to unlock a number of the £160bn of surplus held in company defined-benefit pension schemes in a bid to spice up financial development.