The Pension Board met on Thursday, 16 July 2026, to review the performance of the pension administration team, discuss ongoing projects, and consider governance and risk updates. Key decisions included noting the pension administration performance update, which showed a slight increase in outstanding processes but maintained SLA compliance for priority cases, and noting the updates on pension administration projects, including the McCloud Remedy and Access & Fairness initiatives.

Pension Administration Performance Update

The Board received an update on the performance of the pensions administration team. Tom Taylor, Head of Pensions Administration, reported that as of the end of June 2026, there were 625 outstanding processes, a slight increase from the previous quarter. This rise was primarily attributed to the annual return exercise, which involves employers submitting data for member statements. Despite a temporary increase in overdue cases (34.7% as of May 2026), 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 is implementing a recovery plan to address the backlog. The recommendation to note the update was agreed.

Pension Administration Projects Update

Tom Taylor also provided an update on ongoing pension administration projects. The annual returns exercise, which requires employers to submit payroll and contribution data, was on schedule, with all 76 expected returns received and data loading progressing well.

Significant progress was reported on the McCloud Remedy project, which addresses age discrimination in the Local Government Pension Scheme (LGPS). All required data from employers had been collected and validated, with 89.17% of data loaded onto the administration system. While a one-month extension to the project deadline was granted due to software delivery delays from Civica, the revised timeline to 31 July 2026 still allows for the issuance of Annual Benefit Statements (ABS) by the statutory deadline of 31 August 2026. The Board was informed of potential risks related to software releases and the ambitious timeline for testing, but was assured that all members would receive a statement, even if some were slightly undervalued initially.

The Access and Fairness update detailed new legislation aimed at tackling age and gender discrimination within the LGPS. The project involves identifying members in scope for survivor benefit equalisation and death grant changes, with a complex data-matching and recalculation exercise planned. The project is phased, with initial communications and disclosures completed by the 30 June 2026 deadline. System implementation and testing with Civica are scheduled for July 2027, with beneficiary tracing and benefit calculations to follow. The primary risk identified is the difficulty in tracing historical beneficiaries due to the retrospective nature of the regulations.

Updates were also provided on the Pension Dashboard Programme, with the Fund awaiting confirmation of the formal 'Dashboards Available Point', and on FRS/IAS accounting reports for scheme employers. The recommendation to note the updates was agreed.

Governance and Risk Update

Tom Taylor presented the governance and risk update. The Fund currently has one red-rated risk concerning the software provider's ability to deliver systems compliant with LGPS regulations. This risk remains red due to ongoing concerns about further software updates required for the McCloud Remedy and the new Access and Fairness regulations.

Several amber risks were discussed, including:

• Risk 15 (Administration): Potential financial liability and resource strain from retrospective legislative changes.
• Risk 10 (Governance): The need for committee and board members to possess adequate skills and knowledge, particularly following recent local elections and changes in membership. A comprehensive training programme is underway.
• Risk 3 (Governance): Failure to protect the Fund's key information and data from cyber-attacks, with existing IT policies and cyber training in place.
• Risk 16 (Funding & Investments): The financial impact of climate change and biodiversity loss, with the Fund actively implementing its Responsible Investment Policy and conducting climate scenario analysis.
• Risk 4 (Funding & Investments): Adverse market movements due to inflation, interest rates, and geopolitics, with the risk rating remaining amber due to market uncertainty.
• Risk 22 (Funding & Investments): Uncertainty surrounding the Fit for the Future pension reforms and the ability of the Fund and its pool, the London Collective Investment Vehicle (LCIV), to meet new requirements. While the regulations are now in force, detailed guidance is still awaited.

Updates were also provided on governance changes, including the new access to the LGPS for elected members, with over 20 elected members opting into the scheme. A change in the SCAPE discount rate has also been confirmed, leading to a review of scheme factors and a temporary suspension of certain calculations. The Fund is also monitoring administration charges levied to employers for late payments. The recommendation to note the report was agreed.

Work Programme Update

The Board reviewed the draft work programme for upcoming meetings. Key items include training sessions on pensions legislation and governance, regular updates on administration performance and projects, the annual report and accounts, and the Fit for the Future pension reforms. The work programme is subject to change based on evolving priorities and timelines. The recommendation to note the updated work programme was agreed.

Pension Committee Update

Katherine Gray, Head of Pensions Investments and Treasury, provided an update on the Pension Committee's activities. The Fund experienced a difficult quarter for investment performance, with a negative return of -2.3% and underperformance against the benchmark. However, three-year returns remain positive at 8.7%. The underperformance was largely attributed to active equity managers struggling with geopolitical tensions. The LCIV has launched a multi-manager equity fund and is streamlining its product offering to address these concerns. Positive performance was noted at the end of June.

The report detailed the Fund's asset allocation, highlighting areas where it was outside the strategic range, particularly in listed equity. Actions are being taken to realign the portfolio, with private markets expected to take time to return within range. The committee's role has shifted to scrutinising the LCIV's implementation of the investment strategy, while high-level strategic decisions remain with the committee.

The funding level has reduced since the last actuarial valuation, primarily due to increased liabilities driven by lower expected future returns and higher inflation. The Fund is expecting to become cash flow negative this year, making investment income crucial for paying pensions.

The Fund has complied with the Fit for the Future requirement to have all assets managed by the LCIV, having signed the Investment Manager Agreement. The regulations came into force on 30 June 2026, with tight timescales for implementation. Key requirements include appointing a senior LGPS officer and an independent person, with deadlines of 30 September 2026. The committee's role in scrutinising the LCIV's performance, especially with new members, was discussed. The report also noted that the Fund is expected to be marginally cash flow negative this year. The recommendation to note the report was agreed.