Agenda and draft minutes

Apologies were received from County Councillor M Ritson and County Councillor I Duxbury had been delayed.

Members are asked to consider any pecuniary and non-pecuniary interests they may have to disclose to the meeting in relation to matters under consideration on the agenda.

County Councillor J Tetlow declared a non-pecuniary interest as the Chair of the Lancashire County Council Pension Fund Committee.

County Councillor G Mirfin asked for an update in relation to fuel supply, the Director of Corporate Services (DoCS) advised that he would provide an update outside of the meeting.

County Councillor G Mirfin suggested that the introduction of a Pensions Committee be considered. The Chair advised that this would be considered outside of the meeting.

The previous minutes were moved by the Chair and seconded by County Councillor G Mirfin.

Resolved: That the Minutes of the last meeting held on 25 March 2026 be confirmed as a correct record and signed by the Chair.

The DoCS advised that this report presented the financial outturn position for 2025-26, and the impact of this on usable reserves. The draft 2025-26 financial statements had been prepared using this provisional information and presented to the External Auditors following the Audit Committee meeting.

The annual budget for the year was set at £77.511 million. The provisional outturn position showed net expenditure of £77.243 million, giving a total underspend for the financial year of (£0.268 million). The detailed provisional revenue outturn was set out in Appendix A of the agenda pack, with the major variances of note shown separately in table 1.

Table 1 – Major variances of note

Future Pressures

Although the 2026-27 budget and Medium Term Financial Strategy (MTFS) included prudent allowances for pay and price inflation (including 4% for pay in 2026-27 and 3.8% general inflation in 2026-27, reducing to 2% thereafter), the continued conflict risk in the Middle East increased the likelihood of inflation remaining higher for longer and becoming more volatile across key cost drivers, particularly energy and supply chain dependent goods and services. In-year indicators already showed this volatility, with utility costs tracking materially above the planning assumption. The Authority had previously established a utility volatility reserve of £0.600 million to help manage short-term movements in energy costs above budget, alongside other in-year mitigations and monitoring. However, the most significant longer-term risk related to pay: national pay negotiations for Green Book (from April 2026) and Grey Book (from July 2026) remained unresolved and there was a risk they could settle above the budgeted assumption; each additional 1% added around £0.600 million of in-year cost pressure (circa £0.500 million Grey Book and £0.100 million Green Book) and, because pay awards were cumulative, any above-assumption settlement created an ongoing baseline pressure that was not fully offset by Consumer Price Index (CPI) linked income in later years and would therefore need to be funded through additional recurring savings or service redesign.

An Inflation Sensitivity Assessment was provided at Appendix D of  ...  view the full minutes text for item 4-26/27

The DoPD presented the report to members.

Information

The role of the Local Pension Board, was defined by the Public Service Pensions Act (PSPA) 2013 Sections 5(1) and (2), was to assist Lancashire Combined Fire Authority as Scheme Manager, in ensuring the effective and efficient governance and administration of the Firefighters’ Pension Scheme.

The Board’s role included assisting the Scheme Manager in securing compliance with:

·         The Pension Scheme regulations.

·         Other legislation relating to the governance and administration of the Pension Scheme.

·         Requirements imposed by The Pensions Regulator.

The Board was not a decision-making body but provided oversight and assurance to support the effective and efficient governance of the Firefighters’ Pension Schemes.

The Combined Fire Authority had delegated its Pension Scheme Manager responsibilities to the Director of People and Development.

Governance Overview

The Board met twice during 2025-26 as set out in its terms of reference.  Meeting activity focused on:

·         Maintaining oversight on key pension risks, including review of the pensions risk register

·         Receiving regular updates on the implementation of age discrimination remedy and the Matthews Second Options exercise

·         Receiving and reviewing quarterly pension reports from the Local Pensions Partnership Administration (LPPA) relating to the performance of LPPA.

·         Receiving regular updates on Internal Disputes Resolution cases and Pension Ombudsman matters.

·         Monitoring compliance with statutory requirements and emerging issues.

Age Discrimination Remedy (McCloud/Sargeant)

The McCloud/Sargeant judgment confirmed that the transitional protections introduced under the 2015 Firefighters’ Pension Scheme reforms were unlawfully age discriminatory. As a result, from 1 April 2022, all active members were moved to the reformed scheme (FPS 2015), with retrospective remedy now being implemented for the period 1 April 2015 to 31 March 2022.

The Pension Board had actively monitored progress and performance in relation to the implementation of the McCloud/Sargeant remedy.

During 2025-26, the Board received updates on implementation progress, administrative impacts, and emerging risks associated with the remedy programme.

Matthews Second Options Exercise

The Matthews remedy provided eligible on-call (retained) firefighters with the opportunity to access pension benefits under the Modified Pension Scheme. Legislative changes introduced by the Government from 1 April 2026 required the Second Options exercise to be completed by 31 March 2027.

The Board would continue to monitor progress and performance closely, particularly in relation to legislative changes, outstanding cases and emerging risks.

Internal Dispute Resolution Procedure and Pensions Ombudsman

In 2020-21, the Service implemented the pensionable allowances project, applying pensionable allowances retrospectively for a six-year period. As a result, the Service had received several Internal Dispute Resolution Procedures (IDRP) appeals from current and former employees. These applications related to members who were dissatisfied that they were not included in the pensionable allowances exercise, either because of the type or temporary nature of the allowance, or because their service falls outside of the backdating period, 01 June 2015 to 31 May 2021. The Board had been kept informed of several complex cases considered at Stage 1 and Stage 2 of the Disputes Procedures. The Service had also been contacted by the Pensions Ombudsman regarding  ...  view the full minutes text for item 5-26/27

The HR Manager presented the report to members.

Internal Disputes Resolution Procedure – Stage 2 (IDRP)

Lancashire Fire and Rescue Service (LFRS) had several cases that had previously progressed through both stages of the IDRP process. These related to the payment of pensionable allowances within LFRS. Some members remained dissatisfied, particularly regarding the limitation of backdated allowances to six years or the classification of allowances as non-pensionable when applied to temporary roles. The Pensions Ombudsman had contacted the Service regarding these cases. While LFRS had provided the relevant information, no formal outcomes had been received to date.

Changes to Superannuation Contributions Adjusted for Past Experience (SCAPE) Rate

The SCAPE discount rate was a government set actuarial assumption used in public service pension calculations. Changes to this rate affected the factors used to calculate certain pension options and, for some members, could reduce the lump sum available on retirement.

On 19 May, the Local Government Association (LGA) advised Scheme Managers that HM Treasury had confirmed through a Written Ministerial Statement that the SCAPE discount rate was to increase with effect from 19 May 2026. This change triggered a review of the actuarial factors used within the scheme. This included, but was not limited to:

• Lump sum commutation for the Firefighters Pension Scheme (FPS) 1992
• early retirement factors
• transfers in and out of the scheme
• pension debits and added pension.

On 21 May, Government Actuary’s Department (GAD) published the revised FPS 1992 lump sum commutation factors, which took immediate effect for any retirements on or after 21 May 2026. As a result of the increase to the SCAPE discount rate, commutation factors had reduced. In some cases, the reduction in the lump sum could be up to 5% but this would vary depending on personal circumstances.

The immediate impact for Lancashire Fire and Rescue Service (LFRS) was administrative and member-facing, as retirement illustrations and packs needed to be reissued where affected. Local Pensions Partnership Administration (LPPA) was managing this process.

Age Discrimination Remedy (McCloud/Sargeant)

In 2015, the Government introduced reforms to public service pension schemes, including the Firefighters’ Pension Scheme 2015 (FPS 2015). Transitional protections were applied so that some members of the legacy schemes (FPS 1992 and FPS 2006) remained in those schemes for longer, or did not move to FPS 2015 at all, depending on their age. Following the legal challenge known as McCloud/Sargeant, these transitional protections were found to be unlawfully age discriminatory.

From 1 April 2022, all serving members were moved to FPS 2015. The current phase of work was the implementation of the retrospective remedy for the period 1 April 2015 to 31 March 2022. This required eligible members to be given a choice between legacy scheme benefits and reformed scheme benefits for the remedy period.

A central part of the remedy was the issue of Remediable Service Statements (RSSs), which set out the pension benefit choices available to affected members. The original statutory deadline for issuing these statements was 31 March 2025. As with other public  ...  view the full minutes text for item 6-26/27

The DoCS advised that this report set out the Authority’s borrowing and investment activity during 2025-26. All treasury management activity undertaken during the year was carried out in accordance with the Treasury Management Strategy for 2025-26, which was approved by the Combined Fire Authority in February 2025.

Economic Overview

As in 2024-25, inflation remained above the Bank of England’s 2% target during 2025-26. The Consumer Prices Index (CPI) was 3.5% in April 2025 and peaked at 3.8% between July and September 2025. It then fell to 3.0% in January and February 2026 before ending the year at 3.3% in March 2026. The latest available figure was 2.8% for April 2026. However, forecasts indicated that CPI could rise above 4.5% during 2026-27.

At its March 2026 meeting, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to maintain Bank Rate at 3.75%. However, the MPC indicated that rates may need to rise if inflationary pressures increased materially. The Committee stated that it “stands ready to act as necessary” and remained alert to the risk of domestic inflationary pressures feeding through into wages and prices.

This economic context was relevant to Members because changes in inflation and interest rates directly affect the Authority’s treasury position. They influenced how much it would cost to borrow in future, the level of income that could be earned on surplus cash, and the extent to which treasury performance supported the overall financial position of the Authority.

Borrowing

The Authority’s borrowing remained unchanged at £2.0 million at 31 March 2026, with no new long-term borrowing undertaken during the year. The existing loans were taken from the Public Works Loan Board (PWLB), a government body that lent to local authorities and similar public bodies, in 2007, when Bank Rate was 5.75%.

The capital programme approved for 2026-27 in February 2026 did not require borrowing until 2027-28. The current debt therefore related to earlier capital programmes. Borrowing remained above the Capital Financing Requirement (CFR), which represented the Authority’s underlying need to borrow for capital purposes. This was because the Authority had historically set aside revenue each year to repay debt through Minimum Revenue Provision (MRP), while the remaining external loans continued until their maturity dates unless repaid early. In practice, this meant the Authority had reduced its underlying need to borrow more quickly than the actual loans had been repaid.

If the loans were repaid early, a premium would be payable. Although early repayment could generate an estimated saving of £32,000 in future interest costs, the Authority was currently planning for a need to borrow from 2027-28 onwards. Any saving from early repayment would therefore need to be considered alongside the likely cost of replacement borrowing, which was expected to be at higher rates than the existing loans.

This was relevant to Members because it explained why no action had been taken to repay debt early. Although an early repayment might reduce future interest costs, it could also create additional costs now and may not represent best value  ...  view the full minutes text for item 7-26/27

The Director of Corporate Services (DoCS) presented the report to members.

Productivity and Efficiency Plans had been produced annually since 2024-25 and formed part of the national framework for fire and rescue authorities in England. For 2026-27, responsibility for the plan had moved to MHCLG and the format of the plan was prescribed nationally.

The national requirements for 2026-27 were broader than in previous years. The plan now required: multi-year financial information through to 2028-29; an efficiency narrative showing how savings had been achieved; a productivity narrative supported by stronger evidence where possible; reporting for both wholetime and on-call activity; and a new section on service changes and achievements. Direct employee savings could still be described in the wider financial strategy, but they no longer counted towards the headline efficiency total in the same way as under the previous approach.

The key elements of the plan included:

·         Strong delivery in 2025-26, including significant non-pay efficiencies and operational improvements linked to dynamic resource management and reduced standby activity.

·         A pipeline of future opportunities from 2026-27 onwards, including fleet, ICT, estates, charging and operating model changes, with delivery subject to the normal approval, assurance and consultation arrangements where required.

·         A broader set of productivity initiatives, such as digitisation of operational processes, improvements in training delivery, on-call development changes and better capture of workforce activity, which were intended to release capacity for front-line and support priorities.

·         Finally, the plan highlighted the Service’s collaboration activity, income generation work and Modern Ways of Working arrangements as part of a wider approach to continuous improvement.

The plan set out a number of material headlines for Lancashire, including non-pay efficiency savings delivered in 2025-26, the continued benefits of dynamic resource management and dynamic cover approaches, a pipeline of future efficiency opportunities, and a wider range of productivity initiatives covering operational, digital, training and workforce activity. The full productivity and efficiency plan was included at appendix A within the agenda pack.

In response to a question from County Councillor G Mirfin in relation to premises expenditure, the DoCS explained that this related to day-to-day running costs.

In response to a question from County Councillor J Tetlow in relation to direct employee costs, the DoCS explained that this related to an assumption on pay awards and staffing numbers which was set out within the authorities budget within establishment.

In response to a question from County Councillor G Mirfin in relation to the lifespan of vehicles and depreciation, the DoCS explained that the lifespan of vehicles would be expanded where it represented value for money, with fleet vehicles moved around the service as appropriate to support this. County Councillor J Tetlow asked how vehicles at the end of their life cycle were disposed of, the DoCS explained that vehicles at the end of their life cycle had a very low financial value and were therefore donated to charity and often taken abroad by charities.

In response to a question from County Councillor G Mirfin in relation to the reduction on  ...  view the full minutes text for item 8-26/27

The next scheduled meeting of the Committee has been agreed for 10:00 hours on Wednesday 30 September 2026 in the Main Conference Room, at Lancashire Fire and Rescue Service Headquarters, Fulwood.

Further meetings are:          scheduled for Wednesday 25 November 2026

                                                proposed for Tuesday 16 March 2027

The next meeting of the Committee would be held on Wednesday 30 September 2026 at 1000 hours in the Main Conference Room at Lancashire Fire and Rescue Service Headquarters, Fulwood.

Further meeting dates were noted for 25 November 2026 and 16 March 2027.

The Committee is asked to consider whether, under Section 100A(4) of the Local Government Act 1972, they consider that the public should be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

Resolved: That the press and members of the public be excluded from the meeting during consideration of the following items of business on the grounds that there would be a likely disclosure of exempt information as defined in the appropriate paragraph of Part 1 of Schedule 12A to the Local Government Act 1972, indicated under the heading to the item.

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Members considered a report in relation to compensatory ill health within the firefighters’ pension scheme.

Resolved:  That the Committee noted the report.

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Members considered a report that provided an update on contracts valued above £175,000 since the last report in March 2026.

Resolved:  That the Committee noted the report.