The Pension Committee of Sutton Council met on Tuesday, 1 April 2025, to approve the Business Plan for 2025-28 and the Budget for 2025-26. The committee also received updates on pension administration performance and projects, governance and risk, and investment performance.

Business Plan 2025-28 and Budget 2025-26

The committee approved the London Borough of Sutton Pension Fund's draft Business Plan for 2025-28 and its draft Budget for 2025-26. The Business Plan outlines the Fund's ongoing annual and cyclical activities, as well as one-off projects arising from legislative changes, focusing on administration, actuarial and funding, governance, financial and risk management, and investment. The 2025/26 budget includes detailed expenditure on management expenses, with investment management expenses included for the first time. Discussions covered the importance of procurement of administration software, the role of custodian Northern Trust, and the importance of maintaining variety in responsible investment funds. Officers assured members that corporate charges would be brought in line with other authorities and that some overheads previously not charged would now be included.

Pension Administration Performance Update

An update on the key administration performance of the Shared Pensions Administration Service was noted. The committee recognised the positive improvement in the backlog of cases, with a reduction of 176 cases in the last quarter.

Pension Administration Projects Update

The committee received an update on key administration projects. Officers explained that the deadline for connecting to the national Pensions Dashboard is 31 October 2025 for the Local Government Pension Scheme (LGPS), and the Fund is yet to appoint an Integrated Service Provider (ISP). Initial work has begun to identify a provider, with consultation underway with procurement and legal teams. Members discussed compliance risks if sufficient time for testing is not allocated, particularly with the software provider Civica. Officers indicated that the ISP should be finalised within weeks and implemented within eight weeks, with Phase 1 of the provider's plan nearing completion. Queries were raised regarding AVC providers' data supply and further information on the McCloud Remedy, with officers explaining ongoing conversations with providers and data storage.

Governance and Risk Update

The committee noted the update on governance activities and the Fund's risk register. Discussions included the 'Fit for the Future' Programme, which involves reforms to the Pension Sector, including the LGPS, aimed at increasing local investment and improving governance and efficiency. Members discussed potential risks associated with not migrating all data to the designated platform by the 31 March 2026 deadline. Officers indicated that Sutton is well-placed due to strong working relationships and its position within the upper quartile of funds. They also explained that Central Government's consultation proposed substantial changes to Local Government Pensions, the outcome of which is awaited.

Committee Training Plan

The committee approved the draft 12-month training plan for the Pension Committee. Discussions included mandatory training for the Pension Board, which officers confirmed would be completed. Benchmarking of Board members' knowledge against other London or similarly sized funds was also discussed.

Work Programme Update

The committee noted the updated Work Programme for the coming year, which outlines the proposed agenda items for future meetings.

Quarterly Investment Performance

The committee received an update on the Fund's investment performance for the quarter ended 31 December 2024. The market value of the Fund's assets increased to £989m. Members questioned the Fund's overweight position in equities given current volatility, with officers explaining this had been positive for relative performance due to strong equity returns. Positive contributors to outperformance included the LCIV Global Equity Fund and infrastructure manager Partners Group, while the LCIV Diversified Growth Fund and LCIV MAC Fund were negative contributors. Members discussed the underperformance of two funds, with officers confirming the sale of the underperforming fund. Mercer, the investment consultant, explained the challenging nature of the 'cash plus benchmark' for managing high short-term targets and volatility. Questions were raised about mitigating the impact on pensioners by adjusting the investment portfolio, and officers and Mercer responded regarding long-term investment strategy and balancing contributions and diversification. The committee noted the performance, actual asset allocation, and funding level as at 31 December 2024.

Pension Fund Accounts 2023/24 Audit Outcomes Report

The committee noted the Annual Auditors Report for the 2023/24 Pension Fund Accounts. The report from KPMG stated that the audit was complete and an unmodified opinion would be issued. Members discussed private investment valuation, with officers indicating that the £1m adjustment was not significant enough to alter the reading of the accounts.

London Collective Investment Vehicle Update

The committee received an update on the London Collective Investment Vehicle (LCIV). Key developments included the appointment of a new Chief Investment Officer, Jenny Buck, and the addition of Tim Mpofu and Sian Kunert to the Commercial team. The LCIV submitted its response to the government's consultation on the future of the LGPS, focusing on reforms to asset pools, boosting local investment, and strengthening governance. Pooled assets stood at £34.2 billion as of 31 December 2024, with £19 billion managed by London CIV. The Sutton Fund had £623.1m directly invested in LCIV funds and £211.4m indirectly, representing 84.4% of its total investments in pooled assets. The LCIV continued to expand its product range, launching new funds and enhancing the sustainability credentials of existing strategies. The LCIV is also refining its fund and investment manager monitoring framework, introducing a new scoring system for 'Skills' and 'Value'.

The meeting concluded with the exclusion of the public and press for the discussion of exempt information related to the London Collective Investment Vehicle update.