The Surrey Pension Fund Committee met on 30 June 2025 to discuss investment performance, responsible investment, and various administrative and governance matters. The committee noted reports on investment manager performance, responsible investment policies, and updates from the Local Pension Board. They also approved recommendations related to the McLeod remedy¹ and delegated decisions regarding audit fee variations.

Public Questions

Six public questions were submitted and addressed by the committee.

• Fossil Fuel Investments: Jackie Macy asked about the effectiveness of engagement with fossil fuel companies, expressing concern over their continued exploration and expansion. The committee responded that its policies are robust and effective, but they would continue to seek assurance that these policies are appropriate.

• Adaptation Risk: Jennifer Condit raised concerns about adaptation risk, referring to the risk of trying to survive in a collapsing infrastructure due to climate change. She requested that Border to Coast Pensions Partnership (BCPP) consider this risk in their climate change analysis. The committee agreed to take this point on board and discuss it further.

• Investment Belief Sessions: Lindsay Cool Bell asked about the next round of investment belief sessions, including who would participate, how they would be structured, and what criteria would be used to aid the debate. The committee responded that the next session would be about divestment and would include external input from Minerva[^2], investment consultants and Border to Coast.

  [^2]: Minerva Analytics is an independent provider of research, advice, and technology relating to environmental, social, governance and responsible investment issues.

• Divestment from BP: Luciana Cole asked if action would be taken and if consequences could be applied to BP before January 19th, given the urgency of the climate situation. The committee responded that they are reliant on advice from Border to Coast and will wait for expert advice before making any recommendations.

• Investments and the Israel-Palestine Conflict: Sasha raised concerns about investments in companies with unhealthy relationships with Israel and suggested that the committee ask BCPP to look at watch lists on campaign against arms trade and Palestine solidarity campaign. The committee responded that they rely on outside advice but will have a good look at the quality of that advice as it comes through.

• Planetary Risks: Kevin Clark asked if the Surrey Pension Fund would notify BCPP that collaboration is too slow, given the failure to agree a global plastic treaty in 2024. The committee responded that this concern would be addressed in collaboration with Border to Coast when they review their responsible investment policy this year.

Glossary, Action Tracker and Forward Programme of Work

The committee reviewed the action tracker and forward programme of work, noting the content of the report and agreeing to monitor progress on the implementation of recommendations from previous meetings. They also reviewed and noted any changes on the Forward Programme of Work in Annexe 2 of the agenda.

Surrey Pension Fund Team Overview

The committee discussed the Surrey Pension Fund (SPF) team's overview for quarter four, noting the content of the report. Neil Mason, Director of Pensions, reported that the administration backlog is now complete. The committee agreed to commend the Surrey Pension Fund external audit plan for 2024/25 to the Audit and Governance Committee and to delegate decisions regarding fee variations to the LGPS senior officer in consultation with the chair of this committee.

Tom Lewis, Head of Pensions Customer Operations, requested that the committee approve exercising the discretions not to include McLeod information in the annual benefit statements for 2024/25 and to approve extending the rectification period for the McLeod remedy to the 31st of August 2026 to all affected members, which was approved.

Government Response to the Local Government Pension Scheme (LGPS): Fit for the Future Consultation

The committee reviewed the government's response to the LGPS: Fit for the Future consultation and its implications for the Surrey Pension Fund. Neil Mason, Director of Pensions, summarised the report, noting that the government plans to implement proposals to reform the LGPS, including changes to asset pooling, local investments, and governance. The committee noted the government's response and its implications for the Surrey Pension Fund.

Surrey Pension Team Strategic Plan - Outturn Report

The committee reviewed the Surrey Pension Team Strategic Plan - Outturn Report for the 2024/25 financial year, which summarised the activities completed against the strategic plan. The committee noted the content of the report.

Investment Manager Performance and Assets/Liabilities Update

The committee reviewed the investment manager performance and assets/liabilities update. Lloyd Whitworth, Head of Investment and Stewardship, reported that the fund's value was slightly down at 1.7%, but that this was a slight outperformance of the benchmark. The funding ratio was 150%. He also noted that the big trade was the switch from Global Alpha to Legal in general, which resulted in savings of over £1.5 million compared to expectations. Joe, Chief Investment Officer of Border to Coast, provided an update on the multi-asset credit fund, noting that a review had been paused until September to establish which new funds might come to Border to Coast. The committee noted the findings of the report in relation to the fund's valuation and funding level, performance returns, and asset allocation.

Asset Class Focus - Equity

The committee discussed the asset class focus on equity, reviewing the performance of the fund's equity investments. George Potter raised concerns about the overall underperformance and the robustness of the underlying data. Duncan Eastoe asked about the balance between actively managed funds and passively managed funds. The committee noted the fund's equity exposure and the review from the fund's independent advisor.

Responsible Investment Update

The committee received an update on responsible investment, including a review of the RI policy, changes to the voting template, and a review of the net zero date. David Crum, Managing Director for Asset Owner Solutions at Minerva, and Thomas Bolger, head of stewardship at Minerva, presented the RI policy review and the voting template. Steve from Mercer presented the review of the net zero investable universe. The committee noted that the RI policy continues to be aligned with industry good practice and agreed to review it if any changes are made to the committee's RI and general investment beliefs.

Company Engagement and Voting Update

The committee reviewed the company engagement and voting update, which summarised various engagement and voting issues carried out on behalf of the Surrey Pension Fund. Mel Butler, Deputy Head of Investment and Stewardship, presented the report, highlighting engagements by the Local Authority Pension Fund Forum (LAPFF), Robeco, Border to Coast Pensions Partnership (BCPP), and Legal & General (L&G). The committee noted the content of the report and acknowledged the outcomes achieved for the quarter ending 31 March 2025.

Summary of the Local Pension Board

The committee reviewed a summary of the Local Pension Board, which provided a summary of administration and governance issues reviewed by the board at its last meeting. The committee noted the content of the report.

Recent Developments in LGPS (Background Paper)

The committee considered recent developments in the Local Government Pension Scheme (LGPS), noting the content of the report.

Exclusion of the Public

The committee resolved to exclude the public from the meeting for the following items of business on the grounds that they involve the likely disclosure of exempt information under the relevant paragraphs of Part 1 of Schedule 12A of the Act.

Border to Coast Pensions Partnership Update

This paper provides the Pension Fund Committee with an update of current activity being undertaken in partnership with BCPP.