The Pension Board of Sutton Council met on Thursday 19 March 2026 to discuss the Fund's business plan and budget for 2026-2029 and 2026-2027 respectively. The Board also reviewed updates on pension administration performance and projects, governance and risk, the triennial valuation and funding strategy statement, and the Pension Fund accounts audit findings.

Business Plan and Budget for 2026-2029 and 2026-2027

The Board reviewed the draft business plan for 2026-2029 and the draft budget for 2026-2027. The business plan distinguishes between business as usual activities and strategic projects, with key priorities in governance, administration, and investments. The budget for 2026-2027 is £6.727 million, an increase of £258,000 from the previous year, primarily due to increased administration costs and new mandatory software for the Pensions Dashboard Programme. Discussions included the re-procurement of the IT system, with the main costs expected in the 2027-2028 budget, and the need for additional resource for system implementation. The Board also noted the ongoing training plan for committee members, particularly in light of upcoming local elections, and the potential for a wholesale change in committee membership.

Pension Administration Performance Update

Tom, Head of Pensions Administration, presented a positive update on pension administration performance. Outstanding cases have fallen from 837 to 604 over the quarter, with a significant decrease in overdue processes. Performance targets are being met, with 9.4% of cases overdue and zero cases overdue by 31 days or more. Service Level Agreement (SLA) performance has increased to 91%. The team's hard work in clearing backlogs was acknowledged and congratulated.

Pension Administration Projects Update

Tom also provided an update on pension administration projects. Data improvement scores for both common and scheme-specific data are at 96%. The risk rating for processing members' benefits correctly has been downgraded from amber to green due to this improvement. A review of the Data Improvement Policy has been undertaken, with key focus areas including strategic projects like the Pensions Dashboard and data minimisation. The McLeod remedy project remains on track for completion by 30 June 2026, with 100% of data now received and 82% validated. Discussions also covered the potential use of Artificial Intelligence (AI) to streamline administrative tasks, with a council-wide AI usage policy being developed.

Governance and Risk Update

The Board reviewed the Fund's risk register, which has been updated with a reduction in the total number of active risks from 28 to 23 due to consolidation. Administration risks are rated amber overall, while funding, investment, and governance risks are rated green. A key red-rated risk remains concerning the failure of the software provider, Civica, to deliver compliant software for the McCloud Remedy. The Board also discussed the revised Conflict of Interest Policy and the updated Training Policy and Strategy, which now includes an annual review requirement for all board and committee members. Updates on consultations regarding access and fairness, and the gender pensions gap, were also provided, including changes to the buy-back service for shorter absences and a slimline reporting process for the valuation. Elected members will regain access to the LGPS from 11 May 2026 on an opt-in basis.

Work Programme Update

Tom presented the standard work programme for the year ahead, highlighting the updated training programme for meetings, particularly in light of the upcoming elections in May. Training will be available online in July before the first committee meeting.

Triennial Valuation and Funding Strategy Statement Update

Tom provided an update on the Triennial Valuation as at 31 March 2025. The funding level has increased to 114%, with a surplus of £117 million. Importantly, no employer's contribution rates have increased; they have either remained the same or decreased. The increased prudence to 85% protects against market volatility. The report also included an update on the gender pensions gap, with slimline reporting for this year and more in-depth reporting to follow. The draft Funding Strategy Statement has been reviewed and consulted upon, with minor wording changes made regarding the treatment of academies on conversion.

2024-25 Pension Fund Accounts Audit Findings

Catherine Gray, Head of Pensions Investments and Treasury, reported that the external audit of the 2024-25 Pension Fund Accounts by KPMG has been completed, resulting in an unmodified audit opinion. The final accounts were largely identical to the draft version, with one post-balance sheet event noted regarding the liquidation of the Invesco Residential Property Fund due to redemption requests. A system solution for journal approvals is being implemented, which is expected to address a previous audit recommendation.

Pension Committee Update

Catherine Gray provided an update from the Pension Committee meeting held on 17 March 2026. The Fund's market value increased to £1.091 billion over the quarter to 31 December 2025, with a return of 2.0%. However, the Fund slightly underperformed its benchmark over the quarter, one-year, three-year, and five-year periods. Underperformance was attributed to equity and property funds. Discussions also covered the transition to the London Collective Investment Vehicle (LCIV) for asset management, with the Investment Management Agreement (IMA) on track to be signed by the end of March. The LCIV is gradually building capacity and is taking on assets from 33 funds. Concerns were raised about the feedback loop from the LCIV to individual authorities and the efficiency of communication.

Responsible Investment Update

Catherine Gray presented the revised Responsible Investment Policy, which strengthens the Fund's commitment to an engagement-led approach. Divestment is considered a last resort. Key changes include clarifying the roles of the Fund and the London CIV, adding a section on exclusions and engagement, detailing the engagement activity and escalation steps, and outlining the Fund's approach to human rights and conflict-affected high-risk areas. The policy also commits to the annual publication of a Stewardship Report. The policy was unanimously approved by the Committee.

Investment Strategy Implementation

Item 13, Investment Strategy Implementation, was moved to be discussed in a private session due to the likely disclosure of exempt information.

The meeting concluded with the Board noting the various updates and reports presented.