The Surrey Local Pension Board met on Monday 1 June 2026 to review the Surrey Pension Team's performance and operational activities. Key discussions included the strategic asset allocation for the pension fund, updates on customer operations and digital service improvements, and the ongoing management of risks, including those associated with local government reorganisation and legislative changes. The Board also reviewed the internal audit progress and strategy for the upcoming year.

Summary of the Pension Fund Committee Meeting of 27 March 2026

The Board received a summary of the Pension Fund Committee meeting held on 27 March 2026. Neil Mason, Director of Pensions, highlighted that officers had engaged with the Ministry of Housing, Communities, and Local Government (MHCLG) regarding the proposed Single Purpose Pensions Authority (SPPA). The Committee had also approved changes to governance documents for the Border to Coast Partnership, incorporating seven new partner funds.

Trevor Willington raised concerns about a qualification from external audit, which Kay Chauhan addressed by stating that no issues had been flagged by EY, the external auditors, and that substantive testing would begin in August. Willington also questioned the investment performance of Border to Coast, noting a shortfall against the benchmark. Neil Mason explained that this was due to underperformance in specific funds, including a global alpha fund and a UK equity fund, and that actions were being taken to address this.

The strategic asset allocation was also discussed, with a proposed reduction in equity and private market exposure and an increase in index-linked gilts. This shift was debated, with some questioning its defensive nature, while others highlighted the current attractiveness of index-linked gilts due to real yields. The Board was assured that the fund would still maintain a significant equity weighting and that the changes were considered a tactical decision based on market conditions.

Surrey Pension Team Overview - Quarter 4

Neil Mason and Kay Chauhan presented an overview of the Surrey Pension Team's activities for January to March 2026. The team's service delivery performance was strong, with 95% of KPIs met or exceeded, including 100% achievement for ill health retirements and transfers out. A significant number of deferred benefits were processed, reducing backlogs. The introduction of online retirements continued to be successful, with over 60% of retirements now handled online.

A key discussion point was the appointment of an Independent Person as required by new government regulations. The role is described as wider-reaching than an independent investment advisor, akin to professional trustee roles. The process for recruitment and the potential cost were discussed, with the expectation that the role would be paid by the fund and be a non-voting member of the pensions committee.

Chris Draper raised a question about a budget underspend, which was explained as not being a budgeting error but rather a timing issue with IT costs paid in the previous year. The team has implemented more robust monthly budget controls to prevent similar issues in the future.

Customer Operations Overview

Tom Lewis, Head of Pension Customer Operations, provided an update on customer operations. Service delivery performance was strong, with 95% of cases meeting targets. The team processed a significant number of deferred benefits, reducing backlogs. Online retirements continued to be popular, accounting for 63% of all retirement cases.

The McCloud remediation work was on track for completion by the August deadline, with over 50% of cases processed. The team has also launched online refunds, improving efficiency and member experience. A new member portal has been rolled out with enhanced security and retirement planning tools.

Concerns were raised by Trevor Willington regarding the shift to digital communications and the potential impact on members who prefer paper-based correspondence. Tom Lewis assured the Board that traditional methods would still be available and that the team would conduct surveys to better understand member preferences.

The team has also seen staff changes post-restructure, with a focus on developing expert administration for employers. The valuation of the pension fund has been completed and signed off. There are currently 18 admissions and 31 cessations in process, with some bottlenecks identified that the team is prioritising.

Risk Register Update 2025/26 - Quarter 4

Lloyd Whitworth, Head of Pensions Investment and Governance, presented an update on the Surrey Pension Team's Risk Register. Three risks had seen a reduction in score: reputational issues due to public domain information, risks around committee membership, and the impact of Local Government Reorganisation (LGR) consultation. However, LGR remains the biggest overall risk.

Two new risks have been identified, linked to the wave of new regulations and legislation, including Fit for the Future and Access and Fairness. A specific sub-risk on Access and Fairness highlights a review of survivor benefits.

Trevor Willington raised concerns about Unit 4, a perennial risk related to the general ledger, noting that two related risks remained marked at a high level. Lloyd Whitworth explained that while the overall score had dropped, finance-related risks persisted, and the project was on hold due to LGR considerations.

Surrey Pension Fund Internal Audit Progress Report Quarter 4

Liam Pippard, Principal Auditor, reported on the internal audit work completed in Quarter 4. The iConnect Process audit received Reasonable Assurance, with recommendations made regarding documented guidance and an escalation process for outstanding returns. The Customer Relations audit also received Reasonable Assurance following a follow-up review, with recommendations for documented resolution guidance and improved reporting of performance against SLAs. All high-priority actions due for implementation by June 2026 were reported as complete.

Surrey Pension Fund Internal Audit Strategy and Plan 2026/27

Liam Pippard presented the Internal Audit Strategy and Plan for 2026/27. The plan includes audits of pension fund investment reconciliations, online refunds, pensioners payroll, automation of new joiners, and the Compensatory Added Years (CAY) process. The strategy is risk-based and aims to provide assurance on key areas of the fund's activities. The potential impact of Local Government Reorganisation (LGR) on internal audit services was discussed, with the future of the Orbis internal audit function still to be decided.

Recent Developments in LGPS (Background Paper)

Neil Mason provided an update on recent developments in the Local Government Pension Scheme (LGPS). The Pension Schemes Act 2026 has received Royal Assent, enabling Fit for the Future changes. MHCLG has responded to consultations on Access and Fairness, with phased implementation of changes to survivor benefits, death grants, and pension contributions during unpaid leave. Elected members will also have the option to join the LGPS from May 2026.

The Pensions Dashboard Programme is progressing, with plans for private sector dashboards and updated reporting standards. The Scheme Advisory Board (SAB) has published its 2025/26 Annual Review and is developing a new framework for its Code of Transparency. Updates were also provided on changes to Inheritance Tax treatment of pension death benefits and developments from The Pensions Regulator (TPR) regarding pension scams.

The Board noted the extensive information provided and expressed interest and concern about the ongoing developments and their potential impact.

The meeting concluded with the exclusion of the public for discussions on Local Government Reorganisation (LGR) and Single Purpose Pensions Authority (SPPA) updates.