The Pension Fund Committee of Lancashire Council met on Friday 19 June 2026 to review the financial outturn for the 2025/26 year, discuss the external audit plan, and consider governance matters. Key discussions included the financial outturn for the 2025/26 year, the external audit plan for 2025/26, and various governance matters. The committee also reviewed the pension related training and the revised training plan for 2026/27, and considered the appointment of an Independent Person for the Fund. The committee discussed the Responsible Investments Report, the Investment Strategy Statement, and the Pension Administration Performance Update.

Lancashire County Pension Fund 2025/26 Budget and Outturn

The committee reviewed the financial outturn for the year ending 31 March 2026. Pete, Head of Fund, presented the report, noting that expenditure exceeded income by £82.3 million, which was an improvement of £19.1 million on the anticipated position. This was largely due to lower than expected investment returns, leading to a reduction in investment management fees. Councillor Edwards questioned the precision of budget estimations and the reasons for variances, particularly concerning member transfers. Pete explained that predicting the number of members transferring into or out of the pension fund at the start of the year is difficult, and that both transfers in and out had exceeded historic averages. The committee noted the report.

Lancashire County Pension Fund External Audit Plan 2025/26

Pete presented the external audit plan for 2025/26, prepared by Grant Thornton. He stated there were no surprises in the plan and that the audit process was consistent with previous years. The key risks identified by Grant Thornton were the potential for management override of controls, the valuation of Level 3 investments, and the valuation of directly held properties. Councillor Clifford sought clarification on the additional £10,000 fee for testing related to last year's valuation, which was confirmed as a regular tri-annual fee. Gary, Section 151 Officer, confirmed that the procurement of external auditors is managed nationally through the Public Sector Auditors Appointment (PSAA) framework, typically for a five-year period. The committee noted the report.

Lancashire County Pension Fund - Governance Matters

Pete provided an update on governance matters, highlighting progress on the Fit for the Future program. He confirmed that he had been formally designated as the Senior LGPS Officer for the fund. The report also detailed the addition of a new risk relating to Local Government Reorganisation (LGR) and an update on an employer that had gone into administration, resulting in an unrecoverable exit payment of £55,000, which would be shared across other employers. Councillor Pickup raised concerns about the potential impact of LGR on staff resources and the risk of delays and errors in pension administration. Joe Derbyshire, from LPPA, assured the committee that additional resources would be brought in to manage the LGR process, and that it would be managed as a discrete project. Councillor Pickup also questioned the absence of technological revolution risks, such as AI, from the risk register. Chris from LPPI explained that investment risks, including those related to technology and AI, are managed by LPPI and their delegate managers, and are a key focus of their investment committee discussions. Councillor Edwards raised concerns about data breaches and whether AI technology could help minimise them. Joe confirmed that LPPA is exploring the use of AI for administrative improvements, but also acknowledged the potential threats it poses in terms of fraud and cyber-attacks. The committee noted the report.

Pension Related Training and Revised Training Plan 2026/27

Pete presented the updated training plan for 2026/27, which had been revised to include more workshops and training sessions on the investment strategy statement. He explained that this was to ensure committee members had the necessary skills and knowledge to make informed decisions. The Chair highlighted that two members had completed some LOLA training, and five had completed none, urging members to complete the required training. Pete confirmed that his team would be engaging with those members who had not completed the training. Councillor Pickup and Councillor Ash noted they had not received meeting invites for the investment strategy sessions and these would be resent. The committee approved the revised training plan.

Appointment of the Independent Person for Lancashire County Pension Fund

Pete presented the recommendation for the appointment of Ms Marian George as the Independent Person for the Lancashire County Pension Fund. He highlighted her extensive experience in pensions, investments, and governance, and noted that she was currently one of the Fund's Independent Investment Advisors. Councillor Clifford and Councillor Redwood spoke in favour of the appointment, citing Ms George's valuable advice and experience. The committee approved the appointment of Ms Marian George for a three-year term commencing on 1 July 2026.

Responsible Investments Report

Pete presented the report on responsible investment activity, noting that it did not materially change from quarter to quarter. He proposed that the report would be published on the pension fund's website and brought to the committee annually unless anything material changed. The report highlighted an increase in green exposure from 3.9% to 4.1% and brown exposure from 2.0% to 2.2% of the fund's portfolio, largely due to valuation movements. LPPI maintained full voting coverage, supporting 93% of management proposals and voting against where governance concerns were identified. The committee noted the report.

Investment Strategy Statement - Investment Beliefs

Pete introduced the review of the Investment Strategy Statement, starting with the fund's investment beliefs. He highlighted the fund's strong financial position, with the eighth highest funding level among LGPS funds in England and Wales, and the third lowest contribution rate. The revised investment beliefs included tidied wording, greater emphasis on the long-term nature of the fund's investments, and a new belief around the requirement for local investment. Councillor Pickup and Councillor Clifford discussed the opportunities and risks of investing in social housing, with Chris from LPPI explaining the development of a platform to make such investments more viable. Councillor Edwards suggested engaging other committees to discuss local investment opportunities, particularly in the farming sector. The committee approved the revised investment beliefs.

Pension Administration Performance Update

Pete and Joe Derbyshire provided an update on pension administration performance, noting that LPPA continued to deliver within SLA targets. They highlighted that the likelihood of a scheme member receiving their pension within 30 days of retirement was 75-80% if LPPA received at least 30 days' notice, falling to 15-20% if notice was not provided. Councillor Rigby raised concerns about delays in calculating Additional Voluntary Contributions (AVCs) affecting pension payments. Joe confirmed that this was a complex issue and that LPPA was working with the AVC provider to speed up the disinvestment process. The committee noted the report.

Urgent Business

No urgent business was raised.

Date of Next Meeting

The next meeting was scheduled for 18 September 2026.

Exclusion of Press and Public

The committee agreed to exclude the press and public for Part II of the meeting.