The Sutton Pension Board met on Thursday, 08 January 2026, to review the fund's administration performance, project updates, budget monitoring, governance and risk, and investment strategy. Key decisions included noting the pension administration performance update, approving the budget monitoring report, and noting the governance and risk update.

Pension Administration Performance Update

The board received an update on the performance of the Shared Pensions Administration Service. While the total number of outstanding processes had slightly increased from 820 to 837, this was anticipated due to the end-of-year leaver processes following the academic year. The report highlighted that 97 of the 443 outstanding leaver cases had been processed and sent to the third-party benefits support. The board was informed of new performance targets, including ensuring no more than 10% of all cases are overdue and no more than 10% of overdue cases are more than a month overdue. As of 31 October 2025, 41.5% of total cases were overdue, exceeding the backlog threshold, while 15.3% of overdue cases were more than a month overdue, which was above target but below the backlog threshold. Officers reported that cases overdue by 31 days had improved significantly from 35.3% to 15.3% over the quarter. A recovery plan was in place to address the increased volume of leaver processes. Service Level Agreements (SLAs) remained positive, particularly for high-priority cases such as deaths and retirements, with transfer-in quotation performance at 97% year-to-date. No breaches of law or new Internal Dispute Resolution Procedure (IDRP) cases were reported.

Pension Administration Projects Update

The board was updated on several key administration projects. The Pensions Dashboard project was completed on time and under budget, with the fund successfully connecting by the statutory deadline of 31 October 2025. The Pensions Dashboards Programme has not yet confirmed the date for the Dashboards Available Point (DAP), but the estimated timeline is Autumn 2026.

Regarding the McCloud Remedy, a revised project plan with a new completion date of 30 June 2026 was established after the fund missed the original statutory deadline. Communications to 3,544 in-scope members explaining the delay were issued in November 2025. Progress had been made on the software dependency, with Civica installing an initial patch and a further patch expected. Manual processes remained in place to ensure accurate benefit calculations for retiring or leaving members. The primary risk identified was the timely delivery of software patches from Civica.

Other updates included the successful issuance of all required Pension Savings Statements (PSS) for the 2024/2025 tax year by the 6 October 2025 deadline. An annual exercise to collect life certificates from overseas pensioners was underway, with a deadline of 31 January 2026. The fund was also progressing an initiative to transition overseas pensioners to digital payslips and P60s, with plans to roll this out to UK-based pensioners in 2026/27. The annual pensions increase was expected to be processed by the April 2026 payroll deadline, with an anticipated increase of 3.8% in line with the Consumer Prices Index (CPI).

Budget Monitoring - 2025-26 Six Month Update & 2024-25 Outturn vs Budget

The board reviewed the pension fund's financial performance. For the 2024-25 financial year, the fund achieved a surplus of £17.12 million, significantly exceeding the expected surplus of just over £2 million. This was largely driven by higher-than-expected transfers in, including a bulk transfer of £12.5 million from ID Verdi.

For the 2025-26 financial year, the fund was forecasting total management expenses of £5.989 million, which was under the approved budget of £6.469 million. This underspend was primarily due to lower projected fund manager fees and reduced staffing costs, with two vacancies in the Pension Investments and Treasury Team not being filled this financial year as future resourcing levels were assessed. Corporate charges were forecast to be higher than budgeted due to a move to full cost recovery, with the pension fund being recharged for office space, HR, committee services, and IT support.

Governance and Risk Update

The board received an update on the fund's governance and risk management. The risk register identified one red-rated risk: Risk 27, concerning the failure by software provider Civica to provide software compliant with LGPS Regulations. This risk remained unchanged due to ongoing issues with software patches for the McCloud Remedy, impacting the fund's ability to guarantee a compliant operational system. Mitigations included direct dialogue with Civica and collective pressure through the Civica Client User Group.

Five amber risks were also discussed:

• Risk 1 (Administration): Incomplete or inaccurate member data, being mitigated by the Data Improvement Plan and employer engagement.
• Risk 20 (Administration): The impact and cost of changes to LGPS Regulations, which is largely outside the fund's control but is being monitored.
• Risk 5 (Funding & Investments): Unfavourable trends in pay and price inflation exceeding actuarial assumptions, with the likelihood increased but the impact decreased due to increased prudence in the fund's latest valuation.
• Risk 3 (Governance): Failure to protect key information and data from cyber-attacks, with existing IT policies and staff training in place.
• Risk 28 (Investments): Uncertainty surrounding the fit for the future pension reforms consultation and the ability of the fund and its pool, London Collective Investment Vehicle (LCIV), to meet new requirements.

The triennial valuation process was progressing, with the draft Funding Strategy Statement (FSS) out for consultation with employers until 31 January 2026. An employer forum was scheduled for 21 January to discuss fund-wide results.

The LGPS Consultation on Scheme Improvements (Access and Protections) had closed, with proposals covering the Normal Minimum Pension Age, New Fair Deal, Academies, and access for Councillors and Mayors. The fund's response, aligned with the Local Government Association's (LGA) submission, did not require a separate fund response.

The fund's tracing and mortality screening provider, Accurate Data Services Limited, had gone into liquidation. Officers had taken immediate action to terminate the contract and ensure data destruction, receiving a certificate confirming this. A procurement exercise was underway to appoint a new supplier via the National LGPS Framework.

A change in the ministerial team at the Ministry of Housing, Communities & Local Government (MHCLG) was noted, with Alison McGovern MP appointed as the new Minister of State for Local Government and Homelessness, with responsibility for the LGPS.

Administration charges levied against employers for late submissions were also reviewed, with outstanding invoices to be pursued.

Work Programme Update

The board reviewed the proposed work programme for the upcoming year. Key items for the March 2026 meeting included the Business Plan and Budget update, the Triennial Valuation and Funding Strategy Statement, the 2024-25 Pension Fund Accounts Audit Findings report, and updates on Pension Administration Performance and Projects, Governance and Risk, and the Pension Committee.

Review of Pension Committee Papers

The board was invited to note the finance and investment papers from the Pension Committee meeting held on 9 December 2025. The fund's total market value had increased to £1,065.9 million by 30 September 2025. The fund outperformed its benchmark by 0.1% over the quarter, returning 5.0%, and had a one-year return of 10.1% against a benchmark of 10.3%. Three-year returns were 9.7% per annum, outperforming the benchmark of 9.6%. The outperformance was attributed to manager performance in the LCIV MAC Fund and Partners Group infrastructure mandates.

The fund's actual asset allocation was marginally outside strategic ranges in Infrastructure and Private Debt, and more substantially outside in Global Equity, Property, Impact, and Cash. A revised Strategic Asset Allocation (SAA) was agreed at the December committee meeting, with action to follow to align the portfolio.

The London CIV pooling position was strong, with 83.7% of the fund's assets pooled. Developments included the transition of the LCIV Emerging Market Equity Fund to a multi-manager structure and the advanced stage of other multi-manager equity strategies. Reviews of various LCIV funds were planned. Preparations for the Fit for Future initiative were ongoing, with Buckinghamshire County Council set to join LCIV, increasing the pool's assets. The Investment Management Agreement (IMA), Letter of Engagement (LoE), and Service Level Description (SLD) were progressing. Mercer had been appointed as the strategic asset allocation advisor for LCIV.

Annual Stewardship Report

The board was invited to note the Annual Stewardship Report for 2024/25. This report outlines the fund's approach to responsible investment and stewardship, detailing engagement activities, voting records, climate change metrics, and impact investments. It highlights the fund's commitment to responsible ownership, working with the London CIV and the Local Authority Pension Fund Forum (LAPFF) to encourage positive corporate behaviour. The report details engagement examples with companies like Bayer, GlaxoSmithKline (GSK), Apple, Amazon, and PepsiCo, focusing on issues such as gender diversity, AI ethics, freedom of association, deforestation, and sustainable packaging. The fund's progress towards its Net Zero by 2050 target was also presented, showing a reduction in weighted average carbon intensity and an increase in investments in climate solutions. The report also detailed impact investments in affordable housing, renewable infrastructure, and sustainable real estate developments.

Investment Strategy Review

The board was presented with papers from the Pension Committee's review of the investment strategy. The fund's investments had seen strong returns, with a 5% increase over the quarter, outperforming the benchmark. The one-year performance was 10%, and three-year returns were 9.7% per annum. These returns were largely driven by strong equity performance, particularly in AI tech stocks. The fund's asset allocation was noted to be outside strategic ranges in several areas, including Global Equity, Property, Impact, and Cash. The Pension Committee had agreed a new strategic asset allocation in December 2025, and the fund was working to align its portfolio accordingly. The London CIV's pooling position was reported as strong, with 83.7% of assets pooled. The report also detailed various manager engagements and performance, including those of Newton, RBC, L&G, and BlackRock. Concerns were raised regarding geopolitical risks and potential investments in AI, with assurances given that these were being closely monitored by investment consultants and fund managers. The report also highlighted the fund's commitment to responsible investment and its progress towards Net Zero targets.

The meeting concluded at 11:54 am.