The Pension Fund Committee of Durham County Council met on Thursday 12 March 2026 to discuss the overall value and performance of the pension fund's investments. The meeting agenda also included reports on the pension fund's audit progress, internal audit plan, and accounting policies.

Overall Value of Pension Fund Investments

The committee was scheduled to receive an update on the overall value of the Pension Fund's investments as at 31 December 2025. The report indicated that the fund's value stood at £4.074 billion, an increase of £87 million from the previous quarter. The report also detailed the movement in the cash balance during the quarter, which was £39.927 million, with fund managers holding an additional £31.471 million in cash. Rebalancing activity was reviewed, with no asset classes hitting trigger points for rebalancing during the quarter. A withdrawal of £25 million from Legal and General (LGIM) was made to replenish the cash balance, as LGIM was approaching its upper target weight. The fund also transferred holdings in two CBRE assets to Border to Coast Pensions Partnership (BCPP) to fund an additional subscription to the BCPP UK Real Estate Fund.

Performance Measurement of Pension Fund Investments

A report from Northern Trust, the Fund's custodian, was scheduled to provide an overview of the investment performance of the Pension Fund up to 31 December 2025. This report was expected to detail the fund managers' benchmarks, the total fund performance for the quarter, and over one, three, five, and ten years, as well as since inception. It was also to provide individual fund managers' performance in absolute and relative terms against their benchmarks.

Pension Fund Audit Progress Report 2025/26

The committee was to receive the Pension Fund Audit Progress Report for 2025/26, detailing the work carried out by Internal Audit up to 28 February 2026. The report aimed to provide assurance on internal control systems, advise on areas needing improvement, and report on any other audit work undertaken. The progress against the planned audits for the year was to be presented, including the status and opinion for each audit. Audits brought forward from the previous year, such as Pension Fund Investments and Pension Fund Benefit Calculations, were noted as being in progress or having final reports issued.

Pension Fund Draft Internal Audit Plan 2026/27

A draft Internal Audit Plan for 2026/27 was presented for approval. This plan was developed following discussions between Internal Audit and officers responsible for the Pension Fund, using the strategic audit plan and risk assurance map as a basis. The proposed plan included audits deferred from 2025/26, such as Governance Arrangements and Cyber Security, as well as new audits scheduled for 2026/27, including Business Continuity and Tax Controls. The estimated audit fee for the 2026/27 plan was £20,000.

Agreement of Accounting Policies for Application in the 2025/26 Financial Statements

The committee was asked to review and approve the accounting policies to be applied in the preparation of the 2025/26 financial statements for the Pension Fund. The report indicated that the material accounting policies applied in the 2024/25 Statement of Accounts remained appropriate and that changes to the CIPFA code for 2025/26 did not impact the Pension Fund Accounts. The full list of proposed accounting policies was detailed in an appendix.

Provision of Treasury Management Services to the Pension Fund for 2026/27

The committee was to review the Treasury Management services provided to the Pension Fund and the associated charges for 2026/27. It was recommended that the Pension Fund continue to invest its cash balances with the Council in line with the Council's Treasury Management Strategy. The proposed arrangements included quarterly interest payments based on the daily cash balance and the 3-month rate of return earned by the Council, an administration fee of £3,355 per quarter, and a proportional sharing of any investment losses.

Pension Fund Committee Review of Terms of Reference

A review of the Terms of Reference for the Pension Fund Committee was scheduled. The report stated that the Terms of Reference clearly define the responsibilities, objectives, authority, and composition of the Committee and are reviewed annually. While the existing Terms were considered relevant and fit for purpose, the report noted that future changes to the LGPS, driven by the Pension Schemes Bill, would necessitate a revisit of these Terms.

Regulatory Update

The committee was briefed on developments in LGPS-specific matters and other relevant non-LGPS issues. This included updates on the LGPS 'Access and fairness' consultation, which proposed changes to survivor pensions, death grants, and the gender pension gap, and the LGPS Consultation on Scheme Improvements, covering normal minimum pension age, access for councillors and mayors, academy consolidation, and new Fair Deal arrangements. The report also provided an update on the McCloud judgement and its implications for the LGPS, as well as information on the LGPS Scheme Advisory Board's work and the development of Pensions Dashboards.

LGPS 'Fit for the Future' Implementation

This report provided an overview of the changes arising from the Pension Schemes Bill and draft 2026 LGPS Regulations, focusing on how these would affect the Fund's investment arrangements and its relationship with Border to Coast Pensions Partnership (BCPP). The reforms formalise the requirement for administering authorities to work through a single pool, with BCPP responsible for investment implementation. The report outlined revised roles and responsibilities for the Pensions Committee, the new Senior LGPS Officer, the Local Pension Board, and BCPP, and detailed the implementation timetable and key risks associated with the transition.