Agenda item

Surrey County Council (SCC) has the dual role as Administering Authority for and a scheme employer of the Surrey Pension Fund (SPF). This dual role creates potential conflicts of interest. This report recommends ways in which the governance of the SPF can be improved to enable this conflict to be more effectively managed. It also explores areas in which the recognition of the autonomy of the SPF can enhance the effectiveness of its Strategic Plan.

Speakers:

Neil Mason, Assistant Director – LGPS Senior Officer

Key points raised in the discussion:

1.    The Assistant Director – LGPS Senior Officer noted that the report went through a rigorous consultation process. It reflected the relationship between the Council as a scheme employer in the Fund and as the administration authority. It sought to more effectively manage the potential conflicts of interest, there would be a requirement to annually bring a Conflict of Interest Policy to the Committee. The delegations had been tidied up. The services and products provided by the Council to the Fund had been reviewed. The recommendations from Internal Audit from their last governance audit were being met.

2.    The Chairman noted that the proposed changes to the Constitution were modest but important. The review of services sought to understand the nature of the charges, introducing some Service Level Agreements.

3.    A Committee member welcomed the management of conflicts of interest. He asked whether the changes in the report were in response to the possible impacts of potential future legislation including the delegation of investment decisions to officers. The Assistant Director – LGPS Senior Officer clarified that there were no changes in the delegation of what were Committee decisions to officers; the report was horizon scanning. 

4.    A Committee member noted the arguments for the benefits of the Single Purpose Combined Authority such as resolving the conflict of interests and asked what the position was on that. The Chairman explained that the report by the independent pensions industry expert outlined the options available. It was a first step and he urged caution against making changes that future legislation might prohibit.

5.    A Committee member noted that the right decisions should be made for governance based on the current situation. The indications from the Government were that combined authorities and equivalent bodies were their preferred route. He asked whether the issue would be revisited in the future and was unclear whether the Single Purpose Combined Authority would be considered. The Assistant Director – LGPS Senior Officer explained that the Single Purpose Combined Authority was a potential solution, the report was the first step on establishing better governance within the existing framework and the Constitution. Forming a combined authority was not viable in London Boroughs.

6.    A Committee member noted concern that with a significant number of organisations around the county who were employers within the Fund, it would be sensible to wait until the Government’s position is known. The Assistant Director – LGPS Senior Officer clarified that there were no radical changes proposed in the report, it improved governance best practice now. Organisations using the Fund should not be nervous as it ensured that the Fund was treating them equally to the Council.

7.    The Vice-Chairman welcomed the commitment to benchmark costs and have clear Service Level Agreements in place, demonstrating that conflicts of interest were being managed and Fund employers and members get the right deal.

RESOLVED:

1.    Supported the proposed changes to the Council’s Pension Fund Committee Terms of Reference and Scheme of Delegations and recommended approval of these changes to SCC at the full Council meeting of 8 October 2024.

2.    Noted that officers are exploring options for the future of SPF, as outlined in this report. Any proposed options to be taken forward will be subject to further consideration by the Pension Fund Committee and the Council’s governance, legal and financial due diligence.

Actions/further information to be provided:

None.