The Surrey Local Pension Board met to discuss the performance of the pension fund, updates to customer service operations, and key risks. The board agreed to note the reports presented, focusing on maintaining a balance between prudent financial management and excellent customer service, and they agreed to exclude the public from the meeting for the following items of business. They also thanked Helen Clack for her service on the board, and wished her well in her new role as the Deputy Cabinet Member for Children, Families and Lifelong Learning at Surrey County Council.

Pension Fund Performance and Strategy

The board reviewed the summary of the Pension Fund Committee meeting, noting the fund's funding level of over 150%. Brendan Bradley noted that this was a testament to prudent management and changes in bond and gilt yields. Neil Mason clarified that the fund had been able to strike a balance between providing material decreases in employer contributions and increasing the prudence in assumptions. He also noted that the results aren't finalised until consultation with employers regarding the funding strategy statement. Lloyd Whitworth added that the 150% plus funding ratio is using the 2022 assumptions, and when looking ahead to the 2025 assumptions, that number would be 130%. Richard Walsh underlined that the key words were prudence and stability.

The board also discussed the fund's performance relative to its benchmarks. Lloyd Whitworth explained that the strategic target was set at 5% per annum, with the asset allocation having an expected return of about 5.9%. He noted that while relative performance is important, there are nuances, particularly with private markets investments. William McKee raised the question of whether it was time to consider a more defensive approach to investments. Lloyd Whitworth responded that the committee had recently moved some weight towards credit fixed income and moved from an actively managed portfolio to a passively managed one. He also noted that a formal review would start in a couple of weeks, with a new investment strategy statement expected by March next year.

Surrey Pension Team Overview and Dashboard Update

Neil Mason introduced the new pensions team structure, welcoming Kay Chohan as the new head of pensions responsible for resources, and Lloyd Whitworth, whose portfolio has expanded to include governance and risk. He also noted that Tom Lewis's portfolio has expanded to include all customer interactions. Neil Mason expressed optimism that the accounts would have a clean audit by 19 November, allowing for the submission of the annual report declaration to the Scheme Advisory Board on 1 December.

Jeremy Webster asked about the people metrics on the dashboard, noting that while retention was at 100%, diversity, health and wellbeing, and engagement were declining. Neil Mason acknowledged the decline but noted that the figures were still very good compared to other staff morale surveys. He attributed the decline to the recent restructure. Kay Chohan added that she would be working closely with her team to understand the reasons behind the decline and implement improvements.

The board congratulated the pensions team on being shortlisted for several Professional Pensions Women in Pensions Awards and Pension Administration Awards.

Customer Operations Review

Tom Lewis presented the customer operations review, highlighting that overall performance had risen to 96% and all service level agreements (SLAs) were met or exceeded. He noted the continued demand for the online retirement portal, with 70-75% of retirements now initiated through that platform. Tom Lewis also provided an update on the McCloud remedy¹, pensions dashboards, and the new member portal, which is anticipated to go live in the beginning of December. Tom Lewis reported that the work to correct Guaranteed Minimum Pension (GMP)² under and overpayments had been completed, with a total cost to the fund of £772,000. Of this, £126,000 was the amount of underpaid benefits that had to be given out, and £137,000 had been overpaid to pensioners. Brendan Bradley praised the team's performance, particularly in light of the staff restructure. He questioned how to keep staff motivated to drive further improvements when targets were already being met. Tom Lewis responded that the team was considering deploying tighter shadow key performance indicators (KPIs) but needed to tread carefully due to the upcoming local government reorganisation. He also noted that the team was exploring what customers were looking for and whether industry KPIs needed to be challenged. Chris Draper asked how often the SLAs were reviewed. Tom Lewis said that they were currently being reviewed, and that the team was in the process of reviewing its own set of performance metrics as part of its customer strategy.

Chris Draper noted that two complaints related to the online retirement portal not working for those with Additional Voluntary Contributions (AVCs)³. Tom Lewis acknowledged that the portal was not clear enough on this point and that the new Engage portal would address this issue.

Risk Register Update

The board discussed the risk register update. William McKee questioned the high rating of the risk associated with devolution, arguing that its impact was primarily disruption and interruption. Lloyd Whitworth responded that he and the team would be reviewing the risk register, including the scoring and the mindset of the individuals assigning the scores. He noted that the likelihood scores for local government reorganisation were high because it was happening.

Internal Audit Report

Liam Pippard presented the internal audit report, noting that the online retirement process received substantial assurance. He also noted that the team had started to provide support to the Unit 4 entity split project and had provided fraud awareness training to the Surrey pension team. Liam Pippard reported that a recent audit of customer relations had received partial assurance. Neil Mason clarified that the work on splitting the pension fund from Surrey County Council's financial systems within Unit 4 was commissioned irrespective of the upcoming changes, as it was needed now to address labour-intensive workarounds.

Recent Developments in the LGPS

Neil Mason provided an update on recent developments in the Local Government Pension Scheme (LGPS). He noted that the pensions bill was going through parliament and had been amended to prevent asset pools from being directed to make specific investments. He also noted that the government had allowed the retrospective validation of past changes regarding indexed values that didn't have actuarial sign-off. Neil Mason highlighted the additional workload for the team due to consultations on access and fairness and access and protections, including the reintroduction of access to the LGPS for councillors. He also updated the board on the situation with the letter and position paper from the Palestinian Solidarity Campaign, noting that the Scheme Advisory Board had sent a letter to the local government minister requesting advice from the UK government.