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Report to: |
Pension Board
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Date of meeting:
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12 February 2026 |
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By: |
Chief Finance Officer
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Title: |
Pension Reform Agenda
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Purpose: |
To provide an update on changes affecting Local Government Pension Schemes and the East Sussex Pension Fund |
RECOMMENDATION:
The Pension Board is recommended to note the updates in relation to next steps for the East Sussex Pension Fund in terms of pension fund pooling as set out in this report.
1. Background
1.1 The report has been prepared to update the Pension Board on the government’s proposed changes to pension fund pooling, highlighting the key proposals and the government’s response to the proposal put forward by the ACCESS pool.
1.2 Officers have extensively covered the background to the ‘Fit for the Future’ consultation and the requirements the Fund must comply with by 31 March 2026. Full details can be found in previous reports at agenda item 6.
1.3 Board members will be aware that, following the decision by government not to support the proposal put forward by the ACCESS pool to comply with the requirements of the ‘Fit for the Future’ consultation, officers worked extensively with advisors and officers from the West Sussex Pension Fund (recognising the impact of proposed devolution and new Mayoral Combined County Authority for Sussex and Brighton) to identify a new pooling partner for the Fund. The new pooling partner was identified as Border to Coast Pensions Partnership Ltd pool.
1.4 As part of the process of joining the new pool the following documentation must be agreed to entered into on behalf of the Fund:
· Shareholders’ Agreement
· Supplemental Shareholders’ Agreement
· Articles of Association
· Inter-Authority Agreement
· Pension Cost Recharge Agreement
· Pension Guarantee
1.5 At its meeting on 18 November 2025, the Pension Committee provided final approval to join Border to Coast Pensions Partnership, subject to finalisation of the required governance documentation. Pension Committee delegated authority to the Chief Finance Officer to finalise and enter into the agreements necessary to ensure the Fund is a member of the Border to Coast Pensions Partnership Pool from 1 April 2026.
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2 Update on joining Border to Coast Pensions Partnership Ltd Pool
2.1 A review of Pension Committee delegations has been undertaken to ensure the required delegations are in place to approve the actions required to both join Border to Coast Pensions Partnership Ltd pool and exit the ACCESS investment pool. This has been confirmed.
2.2 There are 3 key documents from a governance perspective that are required to be completed and signed on behalf of East Sussex County Council in order for the Fund to become a member of the Border to Coast Pensions Partnership Ltd pool: The Shareholder Agreement, Inter-Authority Agreement and the Articles of Association. The pension re-charge costs must also be agreed but are not part of the key suite of documents required for the Fund to become a shareholder in the new pool.
2.3 A review of these three key documents has been completed by Squire Patten Boggs on behalf of the 7 ACCESS funds looking to join Border to Coast Pensions Partnership and the final draft of the documentation has now been agreed by all partner funds (existing and incoming Border to Coast Pensions Partnership funds). As at the date of writing, the documentation is very close to being sent for execution and signing and it is anticipated that the final documents will be signed and sealed within the coming weeks and well ahead of the 1 April 2026 deadline.
2.4 The Fund is also in receipt of a paper setting out initial detail in relation to pension cost sharing, however further actuarial advice will be required in relation to this area. Given the limited number of staff impacted by this arrangement and the already well funded position of the existing pension funds, officers believe the costs associated with pension provision will be limited when split across the 18 partner funds post 1 April 2026.
2.5 Officers from the Fund continue to attend regular weekly meetings with the 6 other ACCESS funds and Border to Coast Pensions Partnership to review progress on a weekly basis. The Head of the Fund, the Chief Finance Officer and the Monitoring Officer also meet regularly to oversee progress.
2.6 It remains the view of officers that it will take some time post 1 April 2026 to reorganise the Fund’s assets and the Fund will remain invested in ACCESS pooled investment funds for some time to come. The priority is to carry out any reorganisation in the most efficient manner possible to protect the members of the Fund.
2.7 The draft Regulations set out that within 21 days of first participating in an asset pooling company, administering authorities must ensure that all the assets of their fund (other than cash needed to pay benefits and expenses) are held on behalf of the relevant administering authority by the relevant asset pool company and properly managed by that company with a view to implementing the administering authority's investment strategy.
2.8 ACCESS authorities will each be legally obliged to join a new pool and to delegate effective “control” over all their fund assets to their new pool – including assets currently in the ACCESS Authorised Contractual Scheme (ACS). The fiduciary management agreement appointing the new pool to provide investment services will contain a wide-ranging power of attorney to achieve this. The Fund has not yet received a draft of this documentation.
2.9 The Fund is also aware of the need to implement an agreement with the Border to Coast Pensions Partnership pool that allows the Fund to receive investment advice from Border to Coast Pensions Partnership. Officers have not yet had sight of documentation setting out the approach to provision of investment advice but officers have attended meetings where the approach has been outlined by the Pool.
2.10 The Fund has now received a detailed appraisal of the costs associated with becoming shareholder in the new pool and officers are currently working through this detail to understand the full cost implications before costs are reported to the Pension Board and Pension Committee.
3 Dissolution of the ACCESS Partnership
3.1 With 7 ACCESS partner funds moving to Border to Coast Pensions Partnership Ltd and 4 ACCESS partner funds moving to the LGPS Central Pool, ACCESS will dissolve and fragment between the 2 destination pools.
3.2 As it will take some time to revise the current Inter-Authority Agreement (IAA) to deal with all the consequences of the current circumstance, a Memorandum of Understanding has been agreed and signed to act as a bridge between the current and new IAA and provide an agreed protocol for partner funds to move forward and work on the dissolution of the ACCESS Partnership.
3.3 As at the date of writing, the position is that a Head of Terms document is close to being agreed between the ACCESS authorities. The Heads of Terms document will set out the principles upon which the ACCESS pool will be dissolved and the basis upon which the costs will be shared. The aim is then to finalise a revised IAA in line with the Heads of Terms document by 1 April 2026. However, Squires Patton Boggs have confirmed that if the revised IAA is not finalised and signed by 1 April 2026, the current IAA combined with the MOU document is sufficient to continue to operate the ACCESS pool from a legal perspective.
3.4 At a high level, the agreed cost sharing principles are:
· Based on holdings at 30 June 2025
· General costs continue to be split equally
· Transition costs borne by relevant fund, except where additional costs arise to achieve a split of sub-funds with participants going to both pools – those will be shared in line with Assets Under Management (AUM) holdings and some equal splits of annual fees
· Commitment to transparency about method and timing of transitions
· Any changes to principles will require unanimous decision (delegated to officers)
3.5 The current draft of the revised Heads of Terms document recognises that the remaining functions for ACCESS authorities will be much more limited with all day-to-day operational matters for the ACCESS ACS being delegated to the new pools via power of attorney. The Joint Committee will have full delegated authority to terminate the IAA and Operator Agreement (by majority decision), and meetings will be on an “as required” basis with a simpler quorum.
3.6 There are ongoing discussions between ACCESS, Border to Coast Pensions Partnership, LGPS Central, Northern Trust (Custodian to ACCESS) and Waystone (Operator for ACCESS) to establish a protocol for the transfer of investment. The aim is to develop an approach to safely dissolve and reorganise the assets of the partner funds in ACCESS. This is complex and challenging process for which there is no precedent.
4 Pension Committee
4.1 Whilst the current Terms of Reference (“ToR”) for the Pension Committee do contain all the necessary powers and delegations for the Committee to oversee and authorise the process of leaving ACCESS and joining Border to Coast Pensions Partnership Ltd, the current ToR will need updating to make specific reference to the new pooling arrangements.
4.2 In addition, the future governance arrangements of the Pension Committee and Pension Board will be considered by the Pension Committee at its meeting on 26 February 2026. A report elsewhere on this agenda, will set out a proposal to seek to merge the Pension Committee and Pension Board as a consequence of the ‘Fit for the Future’ consultation outcome.
5.1 The Board is recommended to note the updates in relation to next steps for the East Sussex Pension Fund in terms of pension fund pooling as set out in this report .
IAN GUTSELL
Chief Finance Officer
Contact Officer:
Susan Greenwood,
Head of Pensions
Email:
Susan.Greenwood@eastsussex.gov.uk