The Kingston upon Thames Council Pension Fund Panel met to discuss fund administration, governance, and investment performance. Councillors noted improvements in pension administration and discussed key projects, including the national Pensions Dashboard and the McCloud Remedy¹. The panel also reviewed the fund's risk register and discussed the government's consultation on access and fairness within the Local Government Pension Scheme (LGPS). They also discussed the fund's investment performance, strategic asset allocation, and the London CIV.

Pension Administration Performance

Tom Taylor, Head of Pensions Administration, presented the Pension Administration Performance Update, noting a reduction in outstanding processes from 1,291 to 786 and a decrease in overdue processes of three months or more from 63 to 9. The aim is to eradicate the backlog of cases by the end of July, in line with the trial evaluation. Councillor Richard Thorpe asked about lessons learned to avoid future backlogs. Tom Taylor explained that delays were usually due to external factors, such as missing data from employers. He said that employer engagement and training exercises were being conducted quarterly to address this.

Pension Administration Projects

Tom Taylor, Head of Pensions Administration, also presented the Pension Administration Projects Update. He reported that all 60 end-of-year returns were received by the agreed deadline, a first since COVID. He also gave an update on the pensions dashboard, a government initiative requiring all pension funds to be connected to a government dashboard by 31 October 2025. Consumer testing has gone well, and the dashboard is expected to be available to members in autumn 2026. He also updated the panel on the McLeod Remedy, stating that the software delivery was expected imminently. Councillor Farshid Sadr-Hashemi asked if the pensions dashboard would make the council's job easier. Tom Taylor clarified the difference between the government portal and the council's in-house portal, explaining that the government portal is just a viewing portal and that the council is reviewing how its own portal can better support its work. Councillor Patrick Hall requested a written update on the McLeod situation before the next meeting in September.

Governance and Risk

Tom Taylor, Head of Pensions Administration, presented the Governance and Risk Update. He said that risk 27, the administration risk regarding software, had been uprated due to delays from the software provider in delivering the McLeod remedy. He also spoke about the Access and Fairness Consultation, a government consultation looking at addressing gender discrimination and age discrimination within the LGPS. Councillor Richard Thorpe expressed concern about the red risk and asked about the implications and how it could be reduced. Tom Taylor said that the council would continue to work with Civica and monitor the situation.

Work Programme

Catherine Gray, Head of Pensions, Investments and Treasury, presented the work programme, outlining planned agenda items for the next municipal year, 2025-2026, as well as training requirements for each quarter.

Pension Fund Accounts Audit Outcomes

Catherine Gray, Head of Pensions, Investments and Treasury, presented the 2023-24 Pension Fund Accounts Audit Outcomes Report. The report presented the annual auditors report for the 2023/24 Pension Fund Accounts. The council received an unmodified audit opinion, but there were three control deficiencies highlighted, one red, one amber, and one green. The red deficiency was around journal entries being posted into the general ledger. Councillor Sade Hashimi asked about the control deficiencies, especially the red one. Catherine Gray explained that there isn't any systems involved, it will have to be a manual process outside of the system.

Investment Performance

Catherine Gray, Head of Pensions, Investments and Treasury, provided an overview of the Pension Fund Investment Performance Report, and Sandy Dickson from Mercer, the investment consultant to the fund, provided more detail. The fund posted negative returns of -1.6% over the quarter, underperforming its benchmark, which returned -0.9%. The one-year returns were 3.9%, and the three-year returns 4.7%, which is above the actuaries expected return of 4.3%. The funding level was 167%. Catherine Gray said that the investment strategy review is going to be really important and that the council needs to decide what allocations it wants going forward and then make sure it aligns its portfolio with the new investment strategy. Sandy Dickson said that the funding level will be pretty strong and that the council is in a good financial position. Councillor Elizabeth Park asked about the prediction for the fund return by the end of March 2025. Sandy Dickson said that they tend to look at very long term expected returns and assumptions and that they're not looking to predict the next three one year. Councillor Sade Hashimi asked if the council was reducing its exposure to cable because it is investing in dollar substantially and if it is hedging that. Sandy Dickson said that the global equity exposure is unhedged in terms of currency and that it is something to consider for the strategic investment review. Councillor Richard Thorpe asked if the cash inflows will be lower than the cash outflows and if that is going to change the council's investment expectations. Catherine Gray said that it will certainly play a big part in the investment design of the investment strategy going forward and that going into investments which provide a regular income stream for the fund to bridge that gap between contributions and the benefits going out will be really important. Councillor Mark Beynon asked if the council has local investments in its own borough. Catherine Gray said that the council is invested in the London Fund, which invests in projects across London, but there isn't anything in the borough currently.

London CIV Update

Catherine Gray, Head of Pensions, Investments and Treasury, provided an update on the London CIV. She said that going forward from September, the council will invite them to come to every meeting given the really important role that they are going to play now going forward. Just under 60% of the assets are in the pool. The London CIV's plan has been given the green light, and they are now working on the plans to implement what is required. She said that the local definition is within the region of the pool, so for Kingston that is London.