The Surrey Pension Fund Committee met on Monday 29 June 2026 to discuss a range of financial, governance, and investment matters. Key decisions included approving the draft statement of accounts for the 2025/26 financial year and endorsing proposed amendments to the council's constitution to reflect new LGPS governance regulations. The committee also discussed the ongoing implementation of a single-purpose pension authority and the appointment of an independent person to the committee.

Fit for the Future Compliance Update and Constitutional Amendments

The committee received an update on the 'Fit for the Future' reforms impacting the Local Government Pension Scheme (LGPS), which introduce enhanced governance and compliance requirements for administering authorities. These changes, stemming from the Pension Schemes Act 2026 and associated regulations, necessitate amendments to Surrey County Council's Constitution. The committee endorsed these proposed amendments, which include formalising the LGPS Senior Officer role and establishing the process for appointing an Independent Person to the Pension Fund Committee. The amendments will be taken to Full Council for approval.

Appointment of an Independent Person

Following government mandates, the committee discussed the process for appointing an Independent Person to the Pension Fund Committee. This non-voting role, requiring professional pensions expertise and independence, aims to provide enhanced scrutiny and challenge to investment strategy, governance, and administration. The committee approved commencing a recruitment process for this role, with an initial term of up to three years, and delegated authority for overseeing the advertisement and appointment process to a panel comprising the LGPS Senior Officer, the Committee Chair, and the Chair of the Local Pension Board.

Surrey Pension Fund Draft Statement of Accounts 2025/26

The committee reviewed and approved the draft statement of accounts for the Surrey Pension Fund for the 2025/26 financial year. The accounts indicate a strong overall financial position, with net assets of approximately £6.8 billion at 31 March 2026, largely driven by investment returns. The draft accounts will be published on 30 June 2026, subject to external audit.

Implementation of Single Purpose Pension Authority

Ministerial approval was confirmed for the establishment of a Single Purpose Pension Authority (SPPA) for the Surrey Pension Fund, effective from 1 April 2027. This implementation is integrated into the wider Local Government Reorganisation (LGR) programme for Surrey. Key priorities include establishing the SPPA's governance framework, budget, and constitution before the transition. Discussions are ongoing with constitutional and shadow authority workstreams to define the governance structure and member assignments for the new authority. The committee noted the report and agreed to work with officers to ensure risks are mitigated ahead of the vesting day.

Investment Manager Performance and Assets/Liabilities Update

The committee received an update on investment performance and the Fund's funding level. The Fund's value stood at £6.8bn as of 31 March 2026, a 1.5% decrease over the quarter, attributed to market volatility influenced by the Iranian conflict. Despite this, the Fund's long-term returns exceeded the strategic target. Underperformance was noted in specific equity mandates, including the BCPP UK Equity Alpha Fund and the Newton Global Equity mandate, partly due to exposure to companies perceived to be at risk from AI and a lack of exposure to energy stocks. The funding ratio was reported at 128%, down from 133% in the previous year, reflecting asset growth offset by an increase in liabilities due to a reduction in the discount rate.

Responsible Investment Update

The committee reviewed the quarterly update on responsible investment activities. Engagement efforts, undertaken through partners like LAPFF, Robeco, and Legal & General, focused on themes such as water sustainability, corporate governance, and climate action. The Fund voted against management recommendations on 44.12% of resolutions, primarily concerning board composition, remuneration, and audit transparency. The Fund's Responsible Investment Policy was reviewed and found to be aligned with industry good practice and the 'Fit for the Future' reforms. The Net Zero target of 2050 or sooner was reaffirmed following analysis of the investable universe.

Surrey Pension Team Overview – Quarter 4

An overview of the Surrey Pension Team's activities for January-March 2026 was presented. The Customer Operations team achieved 95% of KPIs, with significant progress in digitally enabling pensions increases. The Finance team reported an operational underspend of £0.5m against the budget, primarily due to timing differences in IT costs. External audit for the 2025/26 accounts had commenced.

Glossary, Action Tracker & Forward Programme of Work

The committee noted the content of the Action Tracker and Forward Programme of Work. Actions related to Unit 4 system improvements and banking controls were proposed for closure, with ongoing work to be captured within the Unit 4 optimisation programme. The committee also agreed to write to the Section 151 Officer to emphasise the need for a specific approach to the Unit 4 system rebuild.

Other Matters

The committee also noted the Surrey Pension Team Strategic Plan Outturn Report for the 2025/26 financial year and received a summary of the Surrey Local Pension Board's recent activities. Recent developments in the LGPS, including legislative changes and updates from The Pensions Regulator and HMRC, were also presented as a background paper.