The Surrey Local Pension Board met on Tuesday 21 July 2026 to discuss a range of important matters concerning the Surrey Pension Fund. Key decisions included endorsing proposed enhancements to the risk scoring methodology and impact framework, and noting the progress on the implementation of a Single Purpose Pensions Authority. The Board also reviewed the fund's draft statement of accounts for 2025/26, which showed a strong financial position with net assets increasing to £6.8 billion.

Risk Management Enhancements and Investment Strategy

The Board endorsed proposed enhancements to the Fund's risk management process, including an updated risk scoring methodology and an expanded impact framework. Option 1 was favoured for the likelihood scoring approach, which narrows the central Possible/Moderate category to a 20% range (40-60%) to improve differentiation between risks. The impact framework was also expanded to include pension-specific categories such as Impact on Members, Impact on Strategic Objectives, and Regulatory and Legal Consequences. These changes aim to provide clearer differentiation between risk levels and support better risk prioritisation and escalation.

The Board also discussed the implications of the Government's 'Fit for the Future' reforms on the Fund's Investment Strategy Statement (ISS). New regulations require the Fund to set high-level investment objectives, including return, risk, cash flow, and local investment targets. The ISS must be published by 31 March 2027, with primary strategic advice to be sourced from the pool, Border to Coast Pensions Partnership¹. Decisions regarding local investment targets, expected returns, and the geographical area for local investment will be made by the Committee.

Financial Performance and Operational Updates

The Surrey Pension Fund's draft statement of accounts for 2025/26 revealed a strong financial position, with net assets increasing from £6.1 billion to £6.8 billion, attributed to positive investment returns. The accounts are currently undergoing external audit by Ernst and Young, with final sign-off expected in November.

Operational updates highlighted continued high performance in Customer Operations, with 96% of KPIs achieved. The McCloud remedy work is on track for completion by 31 August 2026, and the new data strategy aims to formalise data governance and improve consistency. The Surrey Pension Team's Pulse survey indicated generally improved staff sentiment, although a slight dip in communication and retention was noted.

Single Purpose Pensions Authority and Local Government Reorganisation

Ministerial approval was confirmed for the establishment of a Single Purpose Pensions Authority (SPPA) for the Surrey Pension Fund, effective from 1 April 2027. This transition is integrated into the wider Local Government Reorganisation (LGR) programme for Surrey. A statutory instrument is being drafted to legally establish the SPPA, with a first draft expected by the end of July. The SPPA will operate from November 2026, allowing a shadow form to meet and agree on its constitution and budget before becoming operational.

Risk Management and Governance

The Board reviewed the updated Risk Register for Quarter 1 of 2026/27, noting that the overall risk profile remained stable. Three sub-risks related to Unit 4 have increased in score, specifically concerning banking controls, reporting configuration, and the new chart of accounts, indicating ongoing challenges with the system. However, progress has been made in reducing the risk associated with MySurrey access for SPF staff. The top risks identified include the impact of Devolution/LGR on the Fund, investment returns impacted by market volatility, and the impact of 'Fit for the Future' reforms.

Other Matters

The Board also noted the Surrey Pension Team Overview for Quarter 1, which included updates on customer operations, fund performance, staffing, and finance. The Annual Report for 2025/26 was also presented, summarising the Board's activities throughout the year, including its monitoring of administrative performance, risk management, and policy reviews. Recent developments in the Local Government Pension Scheme (LGPS) were also discussed, including updates on 'Fit for the Future' reforms, changes to the SCAPE discount rate, and guidance on the use of AI in pensions administration.