The Sutton Council Pension Committee was scheduled to meet to discuss pension administration, governance, investments and budget monitoring. The committee was also expected to review its work programme for the coming year, and to consider its annual stewardship report.

Investment Strategy Review

The committee was scheduled to review the fund's investment strategy.

Quarterly Investment Performance and LCIV Update

The committee was scheduled to discuss the investment performance of the fund, which had a market value of £1,065.9m as of 30 September 2025. This was an increase of £47.9m over the previous quarter.

The report pack noted that the fund outperformed its benchmark by 0.1% over the quarter, with a return of 5.0% against a benchmark of 4.9%. Over one year, the fund returned 10.1% against a benchmark of 10.3%. The three-year return of 9.7% compared favourably against the benchmark of 9.6%, and the actuary's expected return of 4.3%. The five-year return underperformed by 0.8% (7.2% vs 8.0%).

The report pack stated that the fund's outperformance was driven mostly by manager outperformance from the LCIV MAC Fund (+0.6% outperformance) and Partners Group infrastructure mandates (+4.7% outperformance).

The committee was also scheduled to discuss the fund's asset allocation, and an update on the London Collective Investment Vehicle (LCIV). The report pack noted that Buckinghamshire County Council had confirmed its decision to join LCIV as its new pooling partner, following the national decision regarding the dissolution of the Brunel pool¹. The committee was asked to delegate responsibility to the Strategic Director of Resources, Richard Simpson, to sign the shareholder agreement to allow the Buckinghamshire Pension Fund to join LCIV.

Annual Stewardship Report

The committee was scheduled to consider the draft Stewardship Report 2024/25, which provides an overview of the stewardship activities undertaken by the Pension Fund during 2024/25. The report pack stated that the main purpose of the Stewardship Report is to outline the fund's approach to stewardship, describing the actions taken over the past year that have contributed to the fund's Responsible Investment approach, and provide transparency to members, employers, and other stakeholders.

The report contained nine sections:

• Introduction
• Our Fund and How we Operate
• Our Responsible Investment Policy
• Our Responsible Investment Journey
• Engagement
• Voting
• Climate Change
• Impact Investing
• Glossary

The report pack noted that this was the first Stewardship Report that the Fund has produced and it is expected to be further refined and developed in future years, particularly around the reporting of climate metrics, when the data required for this can be more effectively co-ordinated by London CIV.

Governance and Risk Update

The committee was scheduled to receive an update on key governance activities and to review the fund's risk register. The report pack stated that risk management is the practice of identifying, analysing and controlling in the most effective manner all threats to the achievement of the strategic objectives and operational activities of the Fund.

The Risk Register overview report categorises all risks 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. As at the time of writing this report the administration risks are rated amber overall, with one red and two amber risks. Both the funding and investments group and governance group are rated green.

The report pack stated that there was one red rated risk to bring to the committee's attention:

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

The report pack stated that officers had reviewed this risk and, despite some recent progress, recommended its red rating remains unchanged. As noted in the Pension Administration Projects Update, Civica has delivered initial software patches to address the McCloud Remedy; however, outstanding issues with the software remain, and further patches are still expected. The core risk is that until a fully compliant and tested solution is delivered, the Fund lacks a guaranteed operational system compliant with LGPS regulations, which could lead to the incorrect payment of member benefits.

The report pack also summarised five 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 causing pay increases to increase above valuation assumptions for some employers in the Fund.
• 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.

The committee was also scheduled to discuss the triennial valuation 2025 update, and the LGPS consultation - scheme improvements (access and protections). The report pack stated that the Ministry of Housing, Communities & Local Government (MHCLG) issued a new consultation on 13 October 2025, called Scheme improvements (access and protections). The consultation outlines proposals on four key areas:

• Normal Minimum Pension Age (NMPA)
• New Fair Deal
• Academies
• Access for Councillors and Mayors

The report pack also stated that the fund's incumbent supplier for tracing and mortality screening, Accurate Data Services Limited (ADS), was placed into voluntary liquidation on 7 October 2025. Officers have acted to ensure service continuity and are now undertaking a procurement exercise to appoint a new, long-term supplier.

Budget Monitoring

The committee was scheduled to discuss the Pension Fund's final outturn position against budget for 2024-25 and a mid-year update on the 2025-26 budget. The report pack stated that the final net outturn for 2024-25 came in at £15.090m under the approved 2024-25 net budget. This is largely due to the £12.500m accrual that was made for the Idverde bulk transfer from LB Croydon, along with the receipt of higher contributions than expected.

The report pack also stated that the fund is forecasting total management expenses of £6.114m for 2025-26, compared to the original approved budget of £6.469m. This is a positive variance, primarily due to reduced staffing costs and lower projected fund manager fees.

Pension Administration Performance Update

The committee was scheduled to receive an update on the key administration performance of the Shared Pensions Administration Service. The report pack stated that the total number of outstanding processes has increased slightly from 820 to 837 since the last report, as detailed in the process tracker. This increase was anticipated and is a direct result of the annual additional Leaver processes following the end of the academic year, which grew from 286 to 443 cases over the quarter.

The report pack also stated that officers are monitoring performance against two clear targets to provide enhanced oversight and early warning of potential new backlogs:

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

The report pack noted that the red rating for total cases overdue reflects a temporary backlog driven by the increase in leaver cases, rather than a return of the previous historic backlog which remains cleared. Officers are implementing a recovery plan, to focus on this increased volume of leaver processes and bring this KPI back towards target over the next quarter.

Pension Administration Projects Update

The committee was scheduled to receive an update on the key administration projects of the Shared Pensions Administration Service. The report pack stated that the Pensions Dashboard project was completed on time, and the final Project Closure Report from our Integrated Service Provider (ISP) is included in Appendix A. The Fund successfully connected by the guidance staging date of 31 October 2025. This implementation, managed by Heywood Pension Technologies, was completed £10,517 under budget.

The report pack also provided an update on the McCloud Remedy, and stated that a revised project plan was established with a new target completion date of 30 June 2026, after the Fund missed the statutory implementation deadline. Communications to all 3,544 in-scope members, explaining the delay and revised timeline, were issued in November 2025.

Work Programme Update

The committee was scheduled to note the updated Work Programme for the Committee. The following table shows the proposed indicative agenda items for the committee meetings that are due to take place over the next year.