The Sutton Council Pension Board met on 23 October 2025, to discuss the triennial valuation and funding strategy statement, pension administration performance and projects, annual reports and accounts, governance and risk, the work programme, and a review of the pension committee papers. The board noted the reports and updates provided.

Triennial Valuation and Funding Strategy Statement

The Pension Board received an update on the triennial valuation as of 31 March 2025, and the resulting draft Funding Strategy Statement (FSS) from Victoria Goddard, Director of Finance. Every three years, each Local Government Pension Scheme (LGPS) administering authority has a statutory obligation to conduct an actuarial valuation of the pension scheme. The aim of the valuation is to set employer contribution rates for a three-year period.

Key aspects of the valuation include:

• Discount Rate: The discount rate, which is the assumed future investment return, is a critical factor. Officers recommended increasing the prudence level from 70% to 85% at the 2025 valuation, resulting in a discount rate of 5.3% per annum.
• CPI Inflation: Officers recommended continuing to adopt the median projection for CPI inflation using the Economic Scenario Service (ESS) model, resulting in an assumption of 2.3% per annum.
• Longevity: The board were told that longevity assumptions are based on two components: baseline and future improvements. Officers concluded that there was not significant evidence to depart from the current assumption on future improvements.
• Funding Strategy Statement (FSS): The FSS is a statutory document that sets out the Fund's approach to ensuring it can meet its long-term pension liabilities. The main reason for the update has been to align the document with new guidance issued by the Chartered Institute of Public Finance and Accountancy (CIPFA) and the Scheme Advisory Board (SAB).
• Initial Whole Fund Results: The initial results of the valuation showed an improvement in the Fund's funding position, with a strong surplus due to changes in long-term economic assumptions, particularly higher expected future investment returns.

The next step is to carry out a formal consultation on the draft FSS with all scheme employers.

Pension Administration Performance Update

The Pension Board received an update on the key administration performance of the Shared Pensions Administration Service. The number of outstanding processes has seen a significant reduction, falling from 962 to 820 since the last report. The number of cases overdue by more than three months fell from 18 to 0 at the end of August.

As the backlog is now cleared the temporary staffing structure put in place to address the historic backlog is being reviewed to transition to a permanent structure. Officers have developed two new Key Performance Indicators (KPIs) to help provide oversight over the overall performance of the team in managing casework:

• No more than 10% of all cases will be overdue
• No more than 10% of overdue cases will be more than a month overdue

If performance reaches the backlog threshold, this will be considered a backlog of cases that requires a dedicated recovery plan to be implemented to bring performance back into line with the performance targets.

One breach of law has been reported relating to the McCloud Remedy¹. This has also been reported to the Pension Regulator².

Pension Administration Projects Update

The Pension Board received an update on the key administration projects of the Shared Pensions Administration Service.

• Annual Benefit Statements (ABS): The production of the 2025 statements is complete. However, the statements for the 2,124 members in scope of the McCloud Remedy are not yet fully compliant with the new requirements. A decision has been made to issue the statements with the data currently available and to re-issue fully compliant statements to all affected members upon completion of the project.
• Pensions Dashboard: The Fund's implementation project is on track to meet the statutory staging date of 31 October 2025. As part of the implementation, the Fund is required to establish a formal Data Matching Policy, a copy of which can be found in the Appendix B - Pension Dashboard Programme - Data Matching Policy.
• McCloud Remedy: The Fund did not meet the statutory implementation deadline of 31 August 2025, due to delays in receiving a functional software solution from Civica³. This breach has been formally reported to the Pensions Regulator. A revised project plan has been established with a new target completion date of 30 June 2026.

Annual Report and Accounts

The Pension Board received a summary of the Pension Fund Annual Report 2024/25 and the Statement of Accounts 2024/25.

The net assets of the Fund rose from £924m to £979m during 2024/25, an increase of £55m. At total fund level, as at March 2025, the Fund returned 3.7% over the year, which was just ahead of the PIRC local authority average one-year return of 3.4% across all LGPS funds.

Total contributions received in 2024/25 were £73,747k, significantly higher than £49,086k in 2023/24. Total benefits increased to £55,051k in 2024/25 from £38,039k in 2023/24.

Overall pension membership numbers increased from 18,528 in 2023/24 to 19,129 in 2024/25. The Fund has increased its proportion of assets pooled with the London CIV to 84% at the end of March 2025. Net savings from pooling increased to £395k in 2024/25 from £286k in 2023/24.

Work on the 2025 triennial valuation began during the year and is nearing final stages, with the Fund expecting to report a stronger funding position than the 101% achieved in 2022.

Governance and Risk Update

The Pension Board received an update on key governance activities and reviewed the Fund's risk register.

All risks have been categorised under one of three main themes - Administration, Funding and Investments, and Governance. Each individual risk is assessed as red (high risk), amber (medium risk) or green (low risk) and these are summarised into an overall rating for that group. At the time of writing this report the Administration risks are rated Amber overall, with one red and two amber risks. Both Funding and Investments and Governance categories are rated green.

There is currently one red rated risk:

• Risk 27 (Administration) Failure by software provider (Civica) to provide software compliant with LGPS Regulations.

Officers have also reviewed the existing 5 amber risks:

• Risk 1 (Administration) Incomplete or inaccurate member data.
• Risk 20 (Administration) This risk relates to the impact and cost of changes to the LGPS Regulations.
• Risk 5 (Funding & Investments) Unfavourable trend in pay and/or price inflation.
• Risk 3 (Governance) Failure to protect the Fund's key information and data as a result of malicious cyber-attack.
• Risk 28 (Investments) This risk is regarding the uncertainty around the outcome of the fit for the future pension reforms consultation and the ability of the Fund and its chosen pool London Collective Investment Vehicle (LCIV) to meet the new requirements once they have been confirmed.

On 15 May 2025 the Ministry of Housing, Communities & Local Government (MHCLG) issued a new consultation on Access and Fairness within the Local Government Pension Scheme. The response is broadly supportive of most of the proposals. However, it expresses concerns about the administrative workload required to implement some of the proposals, particularly those involving the backdating of survivor pensions.

The Fund's contract for Actuarial Services with its provider, Hymans Robertson, was due to expire on 30 September 2025. Officers have approved a two-year extension to this contract.

The Government has confirmed that it will bring forward legislation to deal with issues arising from the Virgin Media v NTL Pension Trustees judgment.

On 21 July 2025, the Government launched the third review of the State Pension Age (SPa).

Work Programme Update

The Pension Board noted the proposed work programme, which included:

December 2025 meeting

• Actuarial methods, Standards and Practices (Module 8)
• Pension Administration Performance Update
• Pension Administration Projects Update
• Budget Monitoring - 2025-26 Six Month Update & 2024-25 Outturn vs Budget Update
• Governance and Risk Update
• Work Programme Update
• 2024-25 Pension Fund Accounts Audit Findings
• Pension Committee Update (inc. Responsible Investment Update)
• Investment Strategy Review (Exempt)

March 2026 meeting

• Pensions Administration (Module 3)
• Business Plan 2026-29 and Budget 2026-27
• Pension Administration Performance Update
• Pension Administration Projects Update
• Governance and Risk Update
• Work Programme Update
• Triennial Valuation and Funding Strategy Statement
• Pension Committee Update
• Responsible Investment Policy

July 2026 meeting

• Pension Administration Performance Update
• Pension Administration Projects Update
• Governance and Risk Update
• Work Programme Update
• Pension Committee Update

October 2026 meeting

• Pension Administration Performance Update
• Pension Administration Projects Update
• Annual Report & Accounts 2025-26
• Governance and Risk Update
• Work Programme Update
• Pension Committee Update

Review of Pension Committee Papers

The Pension Board reviewed the finance and investment papers for the Pension Committee meeting which was held on 7 October 2025.

The Fund's total market value increased to £1,018m over the quarter from the end of March 2025 to the end of June 2025. The Fund outperformed the benchmark by 0.8% over the quarter, with a return of 3.9% against a benchmark of 3.1%.

The Fund's outperformance was driven mostly by its high allocation to equities and strong manager performance, mainly from the LCIV Sustainable Equity Fund and the LCIV Global Equity Fund.

The Committee was also updated with the latest developments at the LCIV and the pooling position of the Fund. As of 30 June 2025, total assets deemed pooled by LCIV Client Funds was £35.5bn, of which £19bn are in funds managed by London CIV.

The Fund's actual allocation as at 30 June 2025 is marginally outside of the strategic asset allocation ranges in Global Equity, Infrastructure and Private Debt and more substantially outside the ranges in Property, Impact and Cash.

The funding level as at 30 June 2025 was 150%. This compares favourably to the result of the previous triennial valuation of 31 March 2022, where the funding level was 101%

The cashflow position has changed since the previous update, with the Fund moving into a cashflow negative position for the next 3 years.