The East Sussex Pension Board met to discuss the upcoming Pension Committee agenda, updates to pension fund pooling, governance, employer engagement, communications, administration, internal audit, and the risk register, as well as to review the work programme. The board reviewed and noted the Pension Fund Risk Register and the Internal Audit report on Pension Fund Governance Arrangements. They also noted updates on legal and regulatory changes, and the updated Governance and Compliance Statement.

Pension Reform and Investment Pooling

The board received an update on the government's proposed changes to pension fund pooling, including the government's response to the ACCESS pool's proposal. Following the government's decision not to support the ACCESS pool proposal, officers have been working with advisors and officers from the West Sussex Pension Fund to identify a new pooling partner.

The Pension Committee approved officers' recommendation to focus further due diligence on the Border to Coast Pension Partnership (BCPP). BCPP has been informed of the fund's preference and welcomes East and West Sussex Pension Funds into the partnership. East and West Sussex are part of a group of seven ACCESS partner funds that have indicated a preference for moving to BCPP. The remaining ACCESS partner funds have expressed a preference to join LGPS Central. ACCESS will now start to work towards its dissolution.

Governance and Compliance

The board received an update on governance workstreams and changes affecting Local Government Pension Schemes and the East Sussex Pension Fund.

The government published its response to the 'Local Government Pension Scheme (England and Wales): Fit for the future' consultation on 29 May 2025, outlining core proposals to be taken forward. Key changes include:

• All assets to be managed by the new pool from April 2026.
• The Administering Authority will retain control of strategic asset allocation, with advice from the pool, not investment consultancy firms.
• Pools must be registered with the Financial Conduct Authority.
• Funds will set out their aspiration for local investments and work with local authorities and Mayoral Combined County Authorities to identify opportunities.

Primary governance reforms will include:

• Appointing a senior Local Government Pension Scheme (LGPS) officer with overall delegated responsibility for the management and administration of the Scheme.
• Preparing strategies on governance, knowledge and training (replacing the governance compliance statement), and administration.
• The knowledge and training strategy will be required to include a conflicts of interest policy.
• A requirement to take part in an independent governance review (IGR) every three years.
• Ensuring pension committee members meet new knowledge and understanding standards.
• Appointing an independent adviser (non-voting) to the Pension Committee.

The Pensions Scheme Bill was introduced in Parliament on 5 June 2025, granting the Secretary of State powers to direct LGPS funds to join or leave a pool company, provide guidance to pool companies, and direct a pool company in 'prescribed circumstances' on how it manages its activities or decisions.

The board was also informed of changes regarding inheritance tax¹ on pensions, following a consultation from HM Treasury. For deaths occurring after April 2027:

• The majority of unused pension funds and death benefits will be included in assessing the value of a deceased person's estate for inheritance tax purposes.
• Pension scheme administrators will be responsible for reporting and paying any inheritance tax due on pensions to HM Revenue and Customs (HMRC).

However, following the consultation, key amendments were made to the proposals:

• All death-in-service benefits from the LGPS will be excluded from the value of an individual's estate for inheritance tax purposes.
• It will be the responsibility of the personal representative to the estate to report and pay any inheritance tax liability to HMRC, not pension scheme administrators.
• To support personal representatives and beneficiaries unable to pay inheritance tax on pensions, the government will provide a range of payment options.

HM Treasury has published draft clauses for inclusion in the Finance Bill 2025-26, open for technical consultation until 15 September 2025, which will amend the Inheritance Tax Act 1984.

The board considered the updated Governance and Compliance Statement, which will undergo a full review incorporating investment pooling reforms following their conclusion.

Employer Engagement and Communications

The board received an update on activities by the Employer Engagement team and on fund communications activities.

Regarding employer contributions, the report noted that from August 2024 until June 2025, there have been 25 late payments of contributions out of 1,665 expected payments. Revised LGPS31 forms with updated contribution rates were sent to all employers in April 2025, with subsequent email reminders.

The Employer Engagement team will repeat the 3-part member level training series in October 2025.

The communications team is working on a knowledge base of over 200 questions and answers to test as part of the new digital assistant, which will sit on designated pages of the website as an automated tool to support members.

The agenda for the 2025 Employer Forum (face to face) has been finalised, with approximately 63 registrations to date.

The website continues to be updated with relevant information for members and employers, and the communications team continue to monitor the website to ensure accessibility guidelines are adhered to.

The communications team delivered a full internal communications plan to support the 'Border to Coast' pooling preference, including an internal email to all East Sussex County Council staff, an email to all employers in the fund, promotional call to actions on the homepage and an official statement on the website.

All communications have been drafted for the 2025 Annual Benefit Statement (ABS) exercise, with 24 individual templates to reflect members' McCloud status².

Pension Administration

The board received an update on matters relating to pensions administration activities.

On 29 July 2025, the Admin Working Group (AWG ) were provided with a performance for June 2025 and saw much improvement. The June 2025 SLA has exceeded 92% for the first time and is therefore green against the agreed target levels.

The Fund aims to achieve a gold standard service provision for the Pensions Helpdesk. The roll out of the East Sussex County Council (ESCC) telephony upgrade was completed mid-May 2025, but the Helpdesk is still awaiting access to call centre technology.

There have been no resignations since the last meeting, but a Project Officer has moved from PAT to the Fund team in August 2025. The PAT has appointed a new Pensions Administrator and Helpdesk Operator to replace last quarter's leavers. An offer has been accepted for a replacement Projects Officer from an internal candidate.

Work on part time hours history data loading to Altair has proven more complex and time consuming than expected. The PAT started to load data in May 2025 broken into 5 batches. The data had to be loaded through 4 stages – provisional and actual in the test system and then repeated in the live system. Between each load for each batch, officers have been correcting and reducing errors and issues.

The McCloud underpin protection was turned on 7 August 2025 which created new documents when running a Benefit Calculation.

ABS were run on 26 August 2025 and communications issued by 31 August 2025.

The AWG also determined that the retrospective McCloud underpin recalculation cases must be done without undue delay, with all calculations complete by the end of the extended implementation period i.e. 31 August 2026.

Heywood are the Fund's Integrated Service Provider (ISP), and the project remains on track. Officers are looking to create a new Prudential Additional Voluntary Contribution (AVC) data screen on Altair to hold the annual data that can be submitted to the ISP via a single source. A training session for Pension Board and Pension Committee members has been arranged for 16 September 2025.

Officers identified 300+ potential cases in scope for Annual Allowance (AA) for 2024/25 in August 2025. All the necessary calculations and letters will be issued before the statutory deadline 06 October 2025.

At the 27 February 2025 Pension Committee meeting, decisions were made regarding Additional Voluntary Contributions implementation of approved changes, and these decisions were implemented by the Chief Finance Officer and Officers after coordination with Barnett Waddingham (BW) and the Prudential (Pru).

Internal Audit Report

The board was advised of the outcome of the Pension Fund Governance Arrangements audit. The review of Pension Fund Governance Arrangements was completed as part of the Internal Audit Strategy for Pensions 2025/26 and provides assurance on the overall effectiveness of the system's controls.

As a result of the work, a substantial assurance opinion was provided over the controls in place.

Pension Fund Risk Register

The board considered the Pension Fund Risk Register, which identifies, analyses and controls threats to the achievement of the strategic objectives and operational activities of the Pension Fund.

There have been three amendments to the Risk Register since the last meeting of the Pension Board:

• Risk A3, 'Production of Statutory Member Returns' - The post-mitigation score has been increased on account of the added complication of displaying the McCloud remedy in annual benefit statements as at 31 March 2025 and other statutory documents such as pension savings statements.
• Risk G1, 'Key Person Risk' – The post-mitigation score has been increased on account of the Interim Deputy Head of Pensions having completed the fixed term contract and left in July 2025.
• Risk G3, 'Cyber Security' – Whilst the pre and post mitigation scores have remained constant, the Risk Control/Response details have been expanded to reflect the work carried out and planned to improve the resilience of the Fund to cyber risks.
• Risk I5, 'Funding risk – higher inflation' has been updated to reflect the preference expressed for the Fund to join Border to Coast Pension Partnership investment pool from 1 April 2026, to ensure compliance with prevailing pooling legislation from that date and the work and risks around completing this.

Work Programme

The board considered the Pension Board and Pension Committee work programme, which contains the proposed agenda items for future meetings and provides an update on other work going on outside the main meetings, including working groups, upcoming training and a list of any information requested by the Pension Board or Pension Committee that is circulated via email.