The Surrey Pension Fund Committee met on Friday 27 March 2026 to discuss the fund's strategic plan, investment performance, and operational matters. Key decisions included approving the strategic plan and budget for 2026/27, and agreeing to delegate authority for certain constitutional changes related to new regulations.

Glossary, Action Tracker & Forward Programme of Work

The committee reviewed the action tracker and forward programme of work. Discussions highlighted ongoing work on the general ledger accounting area, with a follow-up audit on banking controls receiving reasonable assurance. The implementation of a separate pension system within Unit 4 was noted as crucial for aggregating council data and was being reported to the Resources and Performance Select Committee. Concerns were raised about the adequacy of consultation regarding local government reorganisation and its impact on the pension fund. The committee also discussed the manual interventions required due to the general ledger issue, which, while not expected to lead to a qualified audit report, were described as laborious and a major issue for our people. The progress on the Unit 4 implementation, particularly concerning member benefits and contributions, was reported as resolved, with data being as clean as it can be. However, there are ongoing efforts to address legacy cases of incorrectly collected contributions. The committee agreed to note the content of the report and monitor progress on recommendations.

Surrey Pension Team Overview - Quarter 3

This report provided a high-level overview of the Surrey Pension Team's activities for October to December 2025. A significant point of discussion was the potential changes to the Council's constitution in line with anticipated new regulations. The committee was asked to grant permission for necessary changes to the terms of reference of the Pension Fund Committee and the scheme of delegations. These changes include the addition of an independent, non-voting member, the requirement for the committee to determine policies on governance strategy, training strategy, and conflict of interest, and the need to cooperate with the relevant strategic authority to identify and develop local investment opportunities. The committee approved the delegation to the senior LGPS officer, in consultation with the chair and monitoring officer, to make these changes once the regulations are laid. Concerns were raised about the timing of these changes, particularly the need to comply with regulations coming into force in April, necessitating a nimble approach. The committee also noted the overall performance measure of 97% and discussed the lack of progress on admission agreements, with a commitment to provide further detail in the next board update.

Investment Manager Performance and Assets/Liabilities Update

The fund value had increased to £6.9 billion during the period under review, representing a 40% increase over the last four years. Despite market volatility, the benefits of staying calm with asset allocation and diversification were highlighted. The report noted an underperformance driven by the very poor performance of Border to Coast UK Alpha, which has been a long-term concern. The committee discussed the need for alternative measures to assess the performance of private markets, beyond comparison with quoted indices, and the potential for using absolute return targets for more mature funds. The impact of private markets on performance when listed markets are rallying was also discussed. The committee noted the findings of the report regarding the fund's valuation, funding level, performance returns, and asset allocation. They also approved the delegation of authority to the chair of the pension fund committee and the senior LGPS officer to invest in series 3B of the Border to Coast private markets fund.

Responsible Investment Update

The committee reviewed the fund's responsible investment activities for the quarter ending 31 December 2025. This included nearly 500 engagements with companies, with themes such as water, corporate governance, and remuneration being prominent. The fund voted on 90 resolutions across eight meetings, voting against management on nearly 27% of these, primarily concerning board remuneration and audit selections. Two resolutions, both related to AI and Microsoft, reached a 20% threshold, gaining more importance. The fund's continued signatory status to the UK Stewardship Code was discussed, with the preparation of the annual submission underway. The committee agreed to delegate the final approval of this renewal application to the chair. Discussions also focused on the effectiveness of engagement versus divestment, with concerns raised about the lack of tangible outcomes from prolonged engagement with certain companies. The committee noted the engagement outcomes and voting record, and approved the delegation for the UK Stewardship Code renewal.

Surrey Pension Team Strategic Plan 2026/27

The Surrey Pension Team's strategic plan for 2026/27 was presented, characterised as a rocket with a vision and mission focused on delivering value to customers. The plan's pillars are compliance, readiness for today, and being better for tomorrow, supported by boosters of people, systems, processes, communication, and culture. Key areas of focus include complying with new pensions reform outcomes, enhancing financial controls, improving data management, and embracing digital innovation. The plan also addresses the challenges of local government reorganisation and aims to position the fund as a leader in the evolving LGPS landscape. The committee approved the Surrey Pension Fund Team's strategic plan and budget for 2026/27.

Actuarial Update - Surrey Pension Fund Cashflows

The actuarial update projected the fund to be in a cash flow negative position over the next 20 years, meaning benefit payments are expected to exceed contribution income. This is a natural progression for a maturing pension scheme and is influenced by recent high pension increase orders and reduced contribution rates following the 2025 valuation. The report presented baseline projections, as well as scenarios for lower and higher inflation. The required income yield to cover the shortfall was projected to be manageable. The committee noted the Surrey Pension Fund's cash flow position.

Pension Administration Strategy

The committee reviewed and approved a revised pension administration strategy. The strategy has been updated to align with the fund's move to monthly data collection and to bring forward the employer payment date for earlier reconciliation. The strategy aims to demonstrate the value of pension administration to employers and their staff. A warm-up period will be implemented for the first year, during which charges will not be fully enforced, allowing employers time to resolve any administration issues before full operation.

SPT Policy Review: Communications Policy Statement 2026/27 and Training Policy 2026/27

The committee approved the annual review of the Communications Policy Statement and the Training Policy for 2026/27. The Communications Policy has been strengthened to improve accessibility and increase the focus on digital and online channels. The Training Policy will now issue training records twice a year, incorporate the TPR toolkits into the mandatory section, and has tightened references to regulations. The committee also agreed to explore the inclusion of continuous professional development within the training records.

Summary of the Surrey Local Pension Board

The committee received a summary of the Surrey Local Pension Board's recent activities. Key points included the performance of Key Performance Indicators (KPIs), with the 97% figure mentioned previously originating from this annex. A review of risk assessment metrics highlighted transition through local government reorganisation, the fit for the future process, and heightened market volatility as key risks. Internal audit reports provided reasonable assurance for banking controls, iConnect, and the customer relationship team. Progress on the McCloud^[1] remedy was reported as 52% complete, with a focus on deferred members and those in receipt of pensions. The committee noted the report and made no recommendations for further action.

Q3 Budget Monitoring Report 2025/26

The committee noted the Q3 budget monitoring report for 2025/26, which showed a total net increase to the fund of £808 million. Total operating expenditure, excluding investment costs, was £5.3 million for the first three quarters, representing a 0.5% underspend against the year-to-date budget.

Surrey Pension Fund Preliminary External Audit Plan 2025/26

The committee approved the Surrey Pension Fund's preliminary external audit plan for 2025/26, prepared by EY. The plan outlines EY's approach to auditing the fund's 2025/26 statement of accounts. Risks identified were similar to previous years, with materiality levels to be updated upon receipt of draft financial statements. The committee also approved the delegation of decisions regarding audit fee variations to the Director of Pensions, Senior LGPS Officer, in consultation with the Chair of the Pension Fund Committee.

Recent Developments in LGPS

The committee discussed recent developments in the Local Government Pension Scheme (LGPS). Tom, from the pension team, provided practical examples of how new regulations are affecting the fund. The Access and Fairness regulations, due to come into effect from April, will impact areas such as death benefits and the gender pay gap, requiring work from the system supplier and employers. The Access and Protection regulations will allow councillors to rejoin the LGPS scheme from 11 May, with membership being optional. The committee noted the report and made no recommendations for further action.

Single Purpose Pensions Authority Update

The committee noted the update on the single purpose pensions authority. The business case developed by members had been shared with MHCLG officials, and the chair of the committee and the leader of the council had formally written to the Secretary of State requesting the single pensions authority for Surrey County Council as part of local government reorganisation. Surrey is also being recognised as a pathfinder for this initiative by the National Scheme Advisory Board.