The Pension Fund Committee of Lancashire Council met on Friday 19 September 2025 to discuss the draft Funding Strategy Statement, review responsible investment activities, and address an urgent decision regarding the McCloud Remedy. The committee decided to consult on the draft Funding Strategy Statement, noting that it incorporates updated guidance and combines previous policy documents into a single statement. They also noted an urgent decision to exclude the McCloud Remedy underpin value from certain members' 2024/25 Annual Benefit Statements and that no breach of law report would be submitted to The Pensions Regulator.

Draft Funding Strategy Statement Review

The committee was presented with a draft Funding Strategy Statement (FSS) for the Lancashire County Pension Fund, which is a requirement under the Local Government Pension Scheme Regulations 2013. This draft FSS incorporates updated guidance from the Scheme Advisory Board and consolidates previous policy documents into a single, comprehensive statement. Key changes proposed include an increase in the real discount rate for both past and future service, a higher funding buffer from 10% to 20% to enhance contribution stability, and an extended surplus recovery/spread period from 16 to 20 years. These changes are expected to lead to a material reduction in overall employer cash contributions while increasing the prudence of the Fund's assumptions. The committee was asked to consider and comment on the draft FSS and a summary of the key changes. Following this consultation, a final version will be presented for approval in March 2026.

Responsible Investments Report

The committee received an update on the responsible investment activities undertaken by the Fund's pooling partner, Local Pensions Partnership Investments Limited (LPPI), for the period of April 1st to June 30th, 2025. The report highlighted LPPI's submission to the Net Zero Asset Managers initiative review consultation and the publication of the 2026 Stewardship Code by the Financial Reporting Council (FRC). LPPI expressed concerns about the potential breadth and interpretation of the new Stewardship Code. The report also detailed climate metrics, showing a decrease in Brown exposure (investments in fossil fuels) from 2.13% to 1.98% and a slight decrease in Green exposure (investments in decarbonisation efforts) from 3.94% to 3.86% of the portfolio. LPPI's voting activity in listed equities showed a 7.3% dissent rate on director-related resolutions and a 16.5% dissent rate on compensation resolutions. The report also included case studies on positive ESG outcomes in real estate investments, such as energy efficiency measures and the development of affordable housing.

Urgent Business Decision Relating to McCloud Regulatory Decision and Reporting to the Pension Regulator

The committee was informed of an urgent decision made by the Executive Director of Resources on 20 August 2025, under the Urgent Business Procedure, to exclude the McCloud Remedy underpin value from certain classes of scheme members' 2024/25 Annual Benefit Statements (ABSs). This decision was necessary because the deadline for issuing ABSs was before the next scheduled committee meeting, and regulatory guidance allowed for such discretion if deemed reasonable. Fund officers also decided that there was no requirement to submit a breach of law report to The Pensions Regulator, as the criteria for such a report were not met. This was because the discretion to delay the provision of McCloud Remedy information was exercised in time and considered reasonable, and there were no indications of failures in internal controls or data quality. LPPA confirmed that eligible members who received a standard ABS will be provided with a corrected McCloud-relevant ABS in 2025/26. The committee was asked to note these decisions.

Pension Fund Annual Report 2024/25

The committee was presented with the draft Lancashire County Pension Fund Annual Report for the year ended 31 March 2025 for approval. The report details the Fund's activity and financials, highlighting a 3.9% increase in membership to 205,216 and an increase in investment assets to £12.0 billion. The report also noted estimated fee savings of £22.4 million due to pooling arrangements and a maintained healthy funding position. The committee was asked to approve the draft report, subject to the inclusion of the external audit opinion, minor accounting updates, and any minor changes prior to publication.

Lancashire County Pension Fund - Governance Compliance Statement

The committee was asked to approve revisions to the Lancashire County Pension Fund's Governance Compliance Statement. These revisions, reviewed and recommended by the Local Pension Board, reflect updates to the Fund's Training Policy and the introduction of the LGPS Online Learning Academy (LOLA). The statement outlines the Fund's governance arrangements and compliance with regulatory guidance. The revised statement will be hyperlinked in the 2024/25 Annual Report and published in full on the Fund's website.

Pension related training for Committee members

The committee received an update on the pension-related training undertaken by its members. The report detailed participation in internal workshops, external events, and online LOLA modules. The training plan aims to ensure committee members maintain the necessary knowledge and understanding to effectively discharge their roles, in line with legal requirements and best practice.

Urgent Business

No items of urgent business were raised under this heading.

Date of Next Meeting

The next meeting of the Pension Fund Committee was scheduled for 12 December 2025.