The Pension Committee of Sutton Council met on Tuesday, 17 March 2026, to discuss a range of financial and operational matters concerning the Pension Fund. Key topics included updates on responsible investment policies, the business plan and budget for the upcoming years, and performance reports for pension administration and investments. The committee also reviewed the triennial valuation and funding strategy, alongside governance and risk updates.

Responsible Investment Update

The committee was scheduled to review and approve an updated Responsible Investment Policy for the Pension Fund. This policy aims to integrate financially material environmental, social, and governance (ESG) factors into investment decisions to manage risk and generate sustainable, long-term returns. The updated policy includes new sections on how the Fund invests, its approach to exclusions and divestment versus engagement, and its stance on human rights and conflict-affected high-risk areas. It also outlines the Fund's approach to climate change, including targets for reducing carbon emissions and investing in climate solutions, and identifies four key UN Sustainable Development Goals (SDGs) as priority areas: Climate Action, Economic Growth, Good Health and Wellbeing, and Reduced Inequalities. The policy also commits to annual reporting on its implementation through the Annual Stewardship Report.

Business Plan 2026-29 and Budget 2026-27

The committee was presented with the draft business plan for the London Borough of Sutton Pension Fund for 2026-29 and a draft budget for 2026-27. The business plan distinguishes between Business as Usual statutory obligations and strategic medium-term priorities. Key themes for the business plan include Governance, focusing on compliance with the Pensions Regulator's General Code of Practice, system reprocurement, and implementing changes arising from LGPS reforms. Administration and Communication priorities include the completion of the McCloud Remedy project and establishing a Business as Usual operating model for Pensions Dashboards. Investments and Funding priorities centre on ensuring the London Collective Investment Vehicle (LCIV) implements the Fund's investment strategy and continuing the transition to pooled assets. The proposed Pension Fund Budget for 2026/27 is £6.727 million, representing a net increase of £258,000 against the approved 2025/26 budget, primarily driven by administration costs and oversight and governance expenses, partially offset by a reduction in forecasted investment management fees.

Pension Administration Performance Update

An update was scheduled on the key administration performance of the Shared Pensions Administration Service. The report indicated a reduction in the total number of outstanding processes, primarily due to the clearance of Leaver processes following the academic year end. Performance against Service Level Agreements (SLAs) was noted as positive, with a strong improvement over the last 12 months. The report also stated that no breach of law incidents had been reported, and there were no open Internal Dispute Resolution Procedure (IDRP) cases.

Pension Administration Projects Update

This item was scheduled to provide an update on key administration projects. A significant focus was on Data Improvement, with the report detailing the Fund's data scores for Common Data and Scheme Specific Data, showing a material improvement in Scheme Specific Data. The policy has been updated to align with new regulations, strengthen cyber security, support strategic projects like the McCloud Remedy and Pensions Dashboards, and modernise data collection. An update on the McCloud Remedy project indicated it was on track for completion by 30 June 2026, with data collection and validation progressing well. Other updates included information on the annual pensions increase, year-end data returns, the Pensions Dashboard Programme, pensioner P60s, and the transition to digital payslips and P60s for overseas pensioners.

Governance and Risk Update

The committee was scheduled to review the Fund's risk register and approve a draft Conflict of Interest Policy and a draft Training Policy & Strategy. The Risk Register overview indicated that Administration risks were rated amber overall, while Funding & Investments and Governance risks were rated green. One red-rated risk concerning the software provider Civica's failure to provide compliant software remained unchanged. Several amber risks were also detailed, including operational resource strain from legislative changes, committee and board member skills, cyber security, climate change and biodiversity loss, adverse market movements, and uncertainty around fit for the future pension reforms. The draft Conflict of Interest Policy aimed to clarify definitions, elevate responsibility, expand the gifts and hospitality section, and introduce a new operational procedure. The updated Training Policy & Strategy aligns with draft statutory guidance on Fund Governance, focusing on nine core technical areas and outlining a training plan for the upcoming municipal year.

Work Programme Update

A draft programme of work for Pension Committee meetings over the next year was presented for review. This indicative agenda included items such as training sessions, updates on the Pension Board's work, administration performance and projects, governance and risk, investment performance, and pension reforms.

Triennial Valuation and Funding Strategy Statement Update

The committee was scheduled to review the draft final results of the 31 March 2025 triennial valuation and approve the resulting draft Funding Strategy Statement (FSS). The valuation results indicated a significant improvement in the Fund's financial health, with the funding level increasing to 114% and a surplus of £117 million. This improvement was primarily attributed to revised expectations for future investment returns. The FSS had been updated to align with new guidance from CIPFA and the Scheme Advisory Board, with changes including structural alignment, standardised terminology, and an enhanced governance commitment. A consultation with scheme employers and the Department for Education had been concluded, with feedback considered in the report.

Pension Fund Accounts 2024-25 Audit Outcomes Report

This report presented the Annual Auditors Report for the 2024/25 Pension Fund Accounts, completed by KPMG. The report indicated that the audit was complete and an unmodified opinion was expected. It noted a control deficiency regarding the lack of a formal two-step authorisation process for journal approvals, which had been mitigated by a manual process and was planned to be addressed by a system upgrade. Two recommendations from the 2023/24 audit report had been fully addressed.

Quarterly Investment Performance

The committee was scheduled to review the investment performance of the Fund for the quarter ended 31 December 2025. The market value of the Fund's assets had increased to £1,091.4 million. The report detailed the Fund's performance against its benchmark, noting an underperformance over the quarter and the one, three, and five-year periods. The underperformance was attributed to specific funds, including the LCIV Global Equity Fund and Invesco Property. An update on the London Collective Investment Vehicle (LCIV) was also provided, covering its pooling position, fund development, and the Fit for the Future reforms. The report also included details on asset allocation, manager performance, and market background information for equities, bonds, commodities, and currencies.

Investment Strategy Implementation

This item was scheduled to discuss the implementation of the Fund's investment strategy. The report detailed the revised strategic asset allocation agreed in December 2025 and the actions being taken to realign the portfolio. Updates on the London Collective Investment Vehicle (LCIV) included its pooling position, fund development, and the Fit for the Future reforms, which are expected to formalise the roles and responsibilities between partner funds and LCIV. The report also covered the expansion of the pool to include Buckinghamshire Pension Fund, the contractual relationship with LCIV, and progress on local investment strategies. Governance updates and environmental, social, and governance (ESG) ratings were also included.

The meeting also included agenda items for the exclusion of the public and press for specific exempt information, and a work programme update.