The Pension Board of Sutton Council met on Thursday 16 July 2026 to discuss pension administration performance, ongoing projects, governance and risk, and the pension committee's updates. Key decisions included noting the pension administration performance update, noting the progress on various pension administration projects, and noting the governance and risk update.

Pension Administration Performance Update

Tom Taylor, Head of Pensions Administration, presented an update on the performance of the pensions administration team. He reported a slight increase in outstanding processes, from 604 to 623 as of the end of May, rising to 625 by the end of June. This increase was primarily attributed to the annual return exercise, where employers provide data for member statements. Despite a rise in cases overdue by 1-30 days, the board was reassured that no cases were overdue by more than 31 days, and all priority cases, such as deaths and retirements, were up-to-date. The team's targets are in line with their pensions administration strategy, and many deadlines are significantly shorter than legal requirements. Discussions also touched upon the future structure of the team and resourcing, with the upcoming procurement of a new system contract expected to be a key driver. The potential for expanding the current shared service model beyond Kingston and Sutton was also considered.

Pension Administration Projects Update

Tom Taylor also provided an update on ongoing pension administration projects. The annual returns exercise was nearing completion, with all 76 expected returns received and the majority loaded onto the system, allowing for the issuance of annual statements by the end of August.

Significant progress was reported on the Access and Fairness update, which addresses new legislation aimed at tackling age and gender discrimination within the LGPS. All members were notified of the scheme changes by the deadline, and members in scope were identified. The project involves recalculating survivor pensions and death grants, with a decision to process lump sums manually due to the small number of cases. However, the recalculation of survivor pensions relies on a software release from Civica, with a deadline of spring 2027.

The McLeod Remedy update, addressing age discrimination in LGPS reforms, is also progressing. All required data from employers has been received and validated, with a significant portion loaded onto the system. However, there is a risk of not meeting the 31 August deadline for issuing McLeod-compliant annual benefit statements due to the need for multiple software releases from Civica and the associated testing. The team is working closely with Civica and other LGPS clients to address these challenges.

Governance and Risk Update

Tom Taylor presented the governance and risk update, highlighting one red risk: the administration's reliance on the software provider's ability to deliver compliant software. This risk remains red due to ongoing concerns about the timely delivery of necessary software updates for both the McLeod Remedy and the new Access and Fairness regulations. Several amber risks were discussed, including governance skills and knowledge, particularly in light of recent local elections and changes in board membership. A comprehensive training programme is being developed to address this. The risk regarding uncertainty around the Fit for the Future pension reforms has reduced now that final guidance is available. A change in the SCAPE discount rate was noted, which is expected to reduce early retirement reductions. The report also mentioned that elected members now have access to the LGPS, with over 20 having opted into the scheme.

Work Programme Update

Tom Taylor provided an update on the Pension Board's work programme. It was noted that the programme is likely to change due to the need to update numerous policies as part of the Fit for the Future reforms. Training requirements for board members are also becoming a formal reporting obligation.

Pension Committee Update

Katherine Gray provided an update on the Pension Committee's activities, focusing on investment performance and the Fit for the Future reforms. The fund experienced a difficult quarter with a negative return, underperforming the benchmark. However, three-year returns remain positive. Discussions covered actions being taken by the London CIV to address underperformance in active equity managers, including the launch of a multi-manager equity fund. The committee's role in scrutinising the London CIV's performance was clarified, with strategic asset allocation decisions remaining with the committee. The funding level of the pension fund had reduced, and it is expected to become cash flow negative this year. The fund has complied with the requirement to have all assets managed by the London CIV. The Fit for the Future regulations are now in force, requiring key appointments such as a senior LGPS officer and an independent person by 30 September. The committee's new role in scrutinising the CIV was discussed, particularly in light of new committee members and the need for robust challenge. The asset allocation was reviewed, with a commitment to provide more detailed timings for bringing the portfolio back within strategic ranges. It was confirmed that the fund is likely to become cash flow negative this year, though not significantly.