The Lincolnshire County Council Pensions Committee met on Thursday, 22 January 2026, to review the fund's performance, administration, and risk management. Key decisions included the endorsement of updated responsible investment policies and the approval of the Border to Coast Responsible Investment Policy, Corporate Governance and Voting Guidelines, and Climate Change Policy.

Pension Fund Update Report

The committee received an update on the Lincolnshire Pension Fund for the quarter ending 30 September 2025. The total value of the Fund's invested assets increased by £161.4 million to £3,827.7 million. However, the Fund's overall performance for the quarter was 4.37%, underperforming its benchmark of 5.02% by -0.65%. This underperformance was also noted across the one-, three-, and five-year periods, and since inception.

The report also detailed asset allocation, noting that all asset classes were within tolerance of their strategic benchmark allocations, with the exception of cash, which was overweight to fund expected property drawdowns. The funding level is currently being assessed as part of the 2025 Valuation, with updated results to be provided at the next meeting. No breaches requiring reporting to The Pensions Regulator¹ had occurred in the period.

Pensions Administration Update

Matt Mott, Head of Governance and Business Development at West Yorkshire Pension Fund (WYPF), provided an update on the administration service for the period 1 July to 30 September 2025. Several Key Performance Indicators (KPIs) were not met during this quarter. These included:

• Transfer In Actual: Underperformance was attributed to additional training for new staff, with efforts underway to improve this.
• Transfer Out Payment: Three cases were processed outside the target days.
• Estimates for Deferred Benefits into Payment: One case with a future date of 2028 was prioritised lower than other cases with closer retirement dates.
• Interfund Out Quote and Actual: Underperformance in these areas was significantly impacted by the need to assess all cases for McCloud² eligibility, adding an extra administrative step. The administration software is currently unable to perform McCloud underpin calculations, requiring manual spreadsheet work. Efforts are being made to clear backlogs with new starters and support from other areas.
• Interfund Linking In Quote and Actual: Underperformance was attributed to prioritising Annual Benefit Statements (ABSs)³ and reduced staff levels due to holidays.

The report also highlighted staffing updates within the shared service, with a projected underspend of £0.62 million for the full year 2025/26, primarily due to underspends on IT and employee salaries. The cost per member is projected to be £20.95, which is £1.35 less than budgeted. A cash provision of £2.0 million is being built up for the regulatory impact of McCloud and the Pensions Dashboard⁴.

Risk Register Annual Review

The committee reviewed and approved the Lincolnshire Pension Fund Risk Register and Risk Management Policy. The policy, which outlines the Fund's appetite for risk and its approach to managing it, had no changes since the previous year. The risk register was updated to reflect changes in how the council records and manages risk, focusing on genuine threats that are actively managed. Risks were categorised under Governance, Investment and Funding, Operational, and People.

Key governance risks identified included:

• G1 Committee Knowledge and Understanding: Assessed as limited assurance, improving, due to committee turnover and training requirements.
• G2 Asset Pooling Governance: Management of the relationship with Border to Coast Pensions Partnership⁵ was assessed as adequate assurance, improving, with changes noted due to the 'Fit for the Future' consultation⁶.
• G3 Government Direction: Changes imposed by central government on the structure of pools or funds were assessed as limited assurance, improving, due to increased clarity following the 'Fit for the Future' consultation.
• G4 Relationship with Administering Authority: Assessed as substantial assurance, static, with clear understanding of roles and responsibilities.
• NEW G5 Local Government Reorganisation: The outcome of Local Government Reorganisation in Lincolnshire was assessed as limited assurance, declining.

Investment and Funding risks included:

• I1 Required Returns Not Met: Assessed as substantial assurance, static, with professional advice and regular monitoring in place.
• I2 Transition of Legacy Assets: Assessed as limited assurance, declining, due to tighter deadlines imposed by the Pensions Bill⁷ and the integration of new partner funds into Border to Coast.
• I3 Stewardship: Failure to meet responsible investor requirements, including Environmental, Social and Governance (ESG) risks, was assessed as adequate assurance, static, due to significant changes in the Pensions Committee and a delay in TCFD⁸ reporting pending further guidance and training.

Operational risks included:

• O1 Failure of the Administration Service: Assessed as substantial assurance, improving, due to successful recruitment, automation, and management of regulatory changes.
• O2 Cyber Security Breach: Assessed as adequate assurance, static, due to the increased national risk of cyberattacks.
• O3 Fraud: Assessed as substantial assurance, static, with preventative measures and regular audits in place.

People risks included:

• P1 Loss of Key Staff: Assessed as adequate assurance, static, with measures in place to develop existing staff and diversify teams.

The Pensions Regulator (TPR) Data Quality Report

The committee received an update on the data quality scores for the Lincolnshire Pension Fund, as reported to The Pensions Regulator (TPR) in November. The current data scores for LPF, including current and legacy data, were 96.67% for Common data and 89.57% for Scheme Specific data. For current data only, the scores were 98.87% and 98.75% respectively.

Several data issues were highlighted, including missing addresses for deferred members, missing earnings and CARE⁹ benefits, start date inconsistencies, and missing National Insurance contributions or Guaranteed Minimum Pensions (GMPs)¹⁰. A Data Improvement Plan has been devised by WYPF to address these issues, with reports to measure improvements to be run on a half-yearly basis. TPR does not expect 100% scores, provided a Data Improvement Plan is in place.

Report by the Independent Chair of the Lincolnshire Local Pension Board

George Graham, Independent Chair of the Lincolnshire Local Pension Board, provided an update on the Board's work over the last few months. The Board met on 23 October 2025, focusing on the performance of the administration service, the annual review of the Fund's risk register, the Fund's Annual Report for 2024/25, the Annual Assurance Report from Internal Audit, and the results of the actuarial valuation and Funding Strategy Statement (FSS)¹¹.

The Board noted that while actual administration performance remained similar, the adoption of Scheme Advisory Board (SAB) targets had significantly reduced in-time performance indicators. The Board expressed concern that this approach appeared to be a knee jerk reaction and would be probing resource implications further. Limited progress on the McCloud remedy was noted due to software development pace. Positive progress was observed on long-standing concerns such as temporary bank accounts and branding, and the Fund was ready for connection to the Pensions Dashboard. The Board also noted the positive impact of automation in freeing up resources.

The Board was content that the risk register fairly represented the most significant risks facing the Fund and that the Annual Report met relevant guidance. The Head of Internal Audit presented a positive report on the overall control environment. The Board received a presentation on the actuarial valuation and FSS, noting that the results demonstrated an appropriate level of prudence and provided benefits to employers.

The Board gained assurance in the performance of the administration service, the Fund's risk management process, the overall control environment, and compliance with statutory guidance on annual reports and the FSS. Future meetings will focus on resource planning in the administration service, delivery of long-standing projects, emerging risks, and detailed planning for the McCloud remedy.