The Sutton Pension Board met on Thursday, 08 January 2026, to review the fund's administration performance, project updates, budget monitoring, governance and risk, and investment strategies. Key decisions included noting the positive performance of the pension administration team, approving the budget monitoring report, and reviewing the annual stewardship report.

Pension Administration Performance Update

The board received an update on the performance of the Shared Pensions Administration Service. While the total number of outstanding processes had slightly increased to 837, this was attributed to the anticipated end-of-year leaver processes following the academic year. The administration team had successfully processed 97 of these leaver cases. The board was informed that performance against Service Level Agreements (SLAs) remained positive, particularly for high-priority cases such as deaths and retirements, with transfer-in quotation performance showing strong improvement. An action plan was in place to address the temporary backlog caused by the increased volume of leaver processes. No breaches of law or new IDRP cases had been reported.

Pension Administration Projects Update

Updates were provided on several key projects. The Pensions Dashboard project was completed on time and under budget, with the fund successfully connecting by the statutory deadline of 31 October 2025. The Pensions Dashboards Programme has not yet confirmed the date for the Dashboards Available Point (DAP), but the estimated timeline is Autumn 2026.

Regarding the McCloud Remedy, a revised project plan with a completion date of 30 June 2026 was in place, and officers reported that the project remained on track. Communications to affected members had been issued, and progress had been made on the software dependency with Civica, although further patches were still expected. Manual processes were in place to ensure accurate benefit calculations for retiring or leaving members. The primary risk identified was the timely delivery of software patches from Civica.

Other updates included the successful issuance of Pension Savings Statements ahead of the statutory deadline and the ongoing annual life certificate exercise for overseas pensioners. An initiative to transition overseas pensioners to digital payslips and P60s was also progressing. The annual pensions increase was scheduled to be processed by the April 2026 payroll deadline, with an expected increase of 3.8% in line with the Consumer Price Index.

Budget Monitoring - 2025-26 Six Month Update & 2024-25 Outturn vs Budget

The board noted the Pension Fund's final outturn position against budget for the 2024-25 financial year and received a mid-year update on the 2025-26 budget. For 2024-25, the fund's net outturn was £15.090 million under budget, largely due to a £12.5 million accrual for a bulk transfer from London Borough of Croydon related to Idverde, and higher than expected contributions.

For the 2025-26 financial year, the fund was forecasting total management expenses of £5.989 million, which was £480,000 under the approved budget of £6.469 million. This underspend was primarily due to lower projected fund manager fees and reduced staffing costs, with two vacancies in the Pension Investments and Treasury Team not being filled this financial year while future resourcing levels are assessed. Corporate charges were forecast to be higher than budgeted due to a move to full cost recovery for services such as office space, HR, and IT support.

Governance and Risk Update

The board reviewed the fund's risk register, which categorised risks under Administration, Funding & Investments, and Governance. The overall rating for Administration risks was Amber, with one Red risk (Risk 27: Failure by software provider Civica to provide compliant software) and two Amber risks. Funding & Investments and Governance risks were rated Green overall.

Risk 27 remains Red due to ongoing issues with Civica's software, impacting the fund's ability to comply with LGPS regulations and potentially leading to incorrect benefit payments. Mitigations include direct dialogue with Civica and collective pressure through the Civica Client User Group.

The Amber risks included incomplete or inaccurate member data (Risk 1), the impact and cost of changes to LGPS regulations (Risk 20), unfavourable trends in pay and price inflation (Risk 5), and the failure to protect key information from cyber-attacks (Risk 3).

An update was provided on the Triennial Valuation 2025, with the consultation on the draft Funding Strategy Statement and individual employer contribution rates underway until 31 January 2026. An Employer Forum was scheduled for January to discuss fund-wide results.

The board was also updated on the LGPS Consultation - Scheme Improvements (Access and Protections), which covered proposals on the Normal Minimum Pension Age, New Fair Deal for outsourced staff, changes for Academies, and the reinstatement of LGPS access for Councillors and Mayors. The LGA's response to the consultation was reviewed, and the Fund determined a separate response was not required.

Finally, the board was informed that the fund's tracing and mortality screening provider, Accurate Data Services Limited, had gone into liquidation. A new supplier was being procured through the National LGPS Framework, with a new contract expected within 10 days.

Work Programme Update

The board reviewed the indicative work programme for the upcoming year, with key items for the March 2026 meeting including the Business Plan and Budget update, the Triennial Valuation and Funding Strategy Statement, and the 2024-25 Pension Fund Accounts Audit Findings report.

Review of Pension Committee Papers

The board was invited to note the finance and investment papers from the Pension Committee meeting held on 09 December 2025. The Fund's total market value had increased to £1,065.9 million as at 30 September 2025. The Fund outperformed its benchmark by 0.1% over the quarter, returning 5.0%, and achieved a three-year return of 9.7% per annum. The performance was primarily driven by manager outperformance in the LCIV MAC Fund and Partners Group infrastructure mandates.

The report highlighted that the Fund's actual asset allocation was marginally outside strategic ranges in Infrastructure and Private Debt, and more substantially outside in Global Equity, Property, Impact, and Cash. A revised Strategic Asset Allocation was agreed at the December committee meeting, and action would be taken to align the portfolio accordingly.

An update from the London CIV detailed progress on asset pooling, with 83.7% of the Fund's assets pooled as at 30 September 2025. Developments included the transition of the LCIV Emerging Market Equity Fund to a multi-manager structure and the advanced stage of other multi-manager equity strategies. Preparations for the Fit for the Future initiative were ongoing, and Buckinghamshire County Council was confirmed to be joining LCIV, increasing the pool's assets under management. Mercer had been appointed as the strategic asset allocation advisor.

Annual Stewardship Report

The board was invited to note the Annual Stewardship Report for 2024/25. This report outlines the Fund's approach to responsible investment and stewardship, detailing engagement activities, voting records, climate change metrics, and impact investing. It was noted that this was the first such report produced by the Fund and that it would be further refined in future years. The report highlights the Fund's commitment to responsible ownership, its collaboration with the London CIV and LAPFF, and its progress towards Net Zero by 2050.

Investment Strategy Review

The board reviewed the Investment Strategy Review papers. The Fund's investments had seen strong returns, with a 5% increase over the quarter and a 10% return over the past year, outperforming the actuary's expected return. This performance was largely attributed to strong equity performance, particularly in AI tech stocks. The report noted that the Fund was overweight in cash and equities and underweight in property and impact investments, pending drawdowns into commitments made in these areas. The London CIV's pooling position was strong, with nearly 84% of assets pooled, and the fund was on track to meet the 31 March deadline for all assets to be managed by the pool. The report also discussed the ongoing work of the London CIV in developing new funds and improving existing ones, moving towards a multi-manager structure. Concerns were raised regarding geopolitical risks and potential investments in AI, with assurances given that these were being closely monitored by investment consultants, actuaries, and fund managers. The report also detailed the Fund's voting records and engagement activities, including specific examples of engagements with companies like Apple, GSK, and Unilever. The Fund's commitment to Net Zero by 2050 was reiterated, with interim targets for carbon reduction and investment in climate solutions. The report also detailed the Fund's impact investing activities, including investments in affordable housing, renewable infrastructure, and sustainable real estate developments.

The meeting concluded with the exclusion of the press and public to discuss exempt information.