The Cumbria Pensions Committee met on 16 September 2025, in Leeds, to discuss several key items, including the 2025 fund valuation, responsible investment activity, and the review of pension administration. The committee agreed to key parameters for the 2025 fund valuation, including discount rates and surplus repayment periods, and approved a draft revised Funding Strategy Statement, subject to consultation.

Here's a more detailed look at the key discussion points:

2025 Fund Valuation Decisions

The committee agreed to key parameters proposed by the Actuary for the 2025 valuation, subject to consultation with scheme employers. These included:

• A past service discount rate of CPI + 2.75%
• A future service discount rate of CPI + 2.25%
• A surplus buffer of 15%
• A surplus repayment period of 15 years
• A minimum deficit recovery period of 10 years

The committee also approved the draft revised Funding Strategy Statement (FSS), pending consultation with interested parties. The FSS outlines how the pension fund aims to meet its financial obligations, considering factors like investment strategies, risk management, and employer contributions.

The Director of Resources (Section 151 Officer), David Hodgkinson, advised that the Fund was estimated to have a funding level of 124%.

Review of Investment Activity

The committee reviewed the fund's investment performance for the quarter ending 30 June 2025. The report noted that the value of the Fund increased by £77m to £3,517m at 30 June 2025, and that the estimated funding level of the Fund was 112.8%. However, the report also noted that the Fund underperformed, lagging its benchmark by -0.6% during the quarter (2.3% v 2.9%). The committee noted the update on progress of implementation of the Fund's agreed investment strategy and the Responsible Investment policy, and agreed to the proposed work programme of the Investment Sub Group for the next reporting period.

The committee were informed that the largest contributor of outperformance over the year was from the Border to Coast externally managed Global Equity Alpha fund, but that the Overseas Equity fund negatively impacted performance, lagging its benchmark over the twelve months.

The committee also discussed the importance of monitoring the quality of new purchases made by the Border to Coast UK Real Estate fund, to ensure the property fund achieves its intended objectives.

Responsible Investment Update

The committee received an update on responsible investment (RI) activity, including engagement with companies on environmental, social, and governance issues. The Stewardship Manager reported on the voting records of Border to Coast and Robeco, and further explained the recent engagement with BP as covered in the report. The Stewardship Manager had attended BP's AGM at which the company had voted against a number of agenda items and explained that Border to Coast was regarded as a leading shareholder in holding BP accountable for its strategy reset and its opposition to weakened climate targets and transition plans was regarded as significant by peers. The Stewardship Manager, Colin Baines, explained that such engagement and escalation was part of plans to maintain long term viable and profitable investments rather than acting in an 'activist' capacity, and reiterated that all decisions were made with investment performance as a priority.

Pensions Review Update

The committee received an update on the 'Fit for the Future' pension review, including reforms to asset pools, local investment, and governance. The Senior Manager – Cumbria Pension Fund, Kate McLaughlin-Flynn, noted that the Fund was continuing with implementation of the investment strategy and were seeking to use influence as a partner in the Border to Coast pool to develop future solutions. The report noted that seven funds from the Access pool had expressed their desire to join BCPP.

Review of Oversight and Governance Matters

The committee reviewed issues relating to the oversight and governance of the Fund, including the updated risk register¹ of the Fund. The Senior Manager Cumbria Pension Fund noted that the Senior Manager – Cumbria Pension Fund, in consultation with the Chair of the Pensions Committee, Councillor Doug Rathbone, had exercised a discretion to extend the McCloud remedy² implementation period from 31 August 2025 to 31 August 2026. The committee requested the Local Pension Board to review the Fund's current Additional Voluntary Contribution (AVC) provision and make recommendations to the next Pensions Committee meeting.

Review of Pensions Administration Activity

The committee reviewed pensions administration activity for the quarter ended 30 June 2025. The report noted that combined performance against key performance indicators for Local Pensions Partnership – Administration (LPPA) was 98.7% for the quarter to 30 June, exceeding the LPPA target of 95%. The report also noted that twelve Administering Authority discretions were exercised during the quarter, all relating to the payment of death grants.

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