The Sutton Pension Board met on Thursday 19 March 2026 to discuss the fund's business plan and budget for 2026-2029 and 2026-2027 respectively. The board also reviewed updates on pension administration performance and projects, governance and risk, the triennial valuation, and the responsible investment policy.

Business Plan and Budget for 2026-2029 and 2026-2027

The board reviewed the draft business plan for 2026-2029 and the draft budget for 2026-2027. The business plan outlines key priorities across governance, administration and communications, and investments and funding. Key governance priorities include the reprocurement of pensions administration software, implementation of LGPS reforms, and a comprehensive induction programme for new committee and board members following the local elections. Administration priorities include the completion of the McCloud Remedy project and the transition to monthly data collection. Investment priorities focus on the smooth transition of remaining off-pool assets to the London Collective Investment Vehicle (LCIV) and the implementation of the 2025 Triennial Valuation results.

The proposed budget for 2026/27 is £6.727 million, an increase of £258,000 from the previous year. This increase is primarily driven by higher administration costs, including the full cost of the team structure and updated council service charges, as well as new mandatory software costs for the Pensions Dashboard Programme. Oversight and governance costs have also risen due to a reduction in forecast income and the requirement to hire an Independent Advisor for the Committee. Investment management expenses have seen an increase, partially offset by efficiency savings from moving investment advice services to the LCIV.

Pension Administration Performance Update

An update on pension administration performance showed a positive trend, with the total number of outstanding processes falling from 837 to 604 over the quarter. This reduction was primarily due to the clearance of 'Leaver' processes following the end of the academic year. Performance against Service Level Agreements (SLAs) remains positive, with an overall improvement to 91%. Notably, there were zero cases overdue by 31 days or more. The board congratulated the team on their hard work and significant improvements.

Pension Administration Projects Update

The board received an update on pension administration projects, highlighting significant improvements in data quality. Scheme-specific data quality rose to 96%, a 13% increase, attributed to cleansing historical service and salary data. Common data quality remained robust at 96%. The Data Improvement Policy has been updated to align with new regulations, strengthen cyber security, and support strategic projects like the McCloud Remedy and Pensions Dashboards. The McCloud Remedy project remains on track for completion by June 2026, with data collection at 100% and data validation at 82%.

Discussions also covered the potential use of Artificial Intelligence (AI) to streamline administrative tasks, with reassurance that the focus is on AI supporting, not replacing, human work, and that rigorous checking and training are in place. The environmental impact of AI was also raised as a point for consideration.

Governance and Risk Update

The board reviewed the fund's risk register, noting that administration risks are rated amber overall, while funding & investments and governance risks are rated green. A significant 'red' risk remains concerning the failure of the software provider, Civica, to deliver compliant software for the McCloud Remedy. Mitigation efforts are ongoing. Several amber risks were discussed, including operational resource strain from legislative changes, the potential impact of local elections on committee and board knowledge, and the financial impact of climate change. The risk register has been streamlined, with overlapping risks consolidated.

Updates were also provided on the draft Conflict of Interest Policy, which has been restructured for clarity and includes a new declaration form. The Training Policy and Strategy have been updated to align with draft statutory guidance, emphasising annual knowledge assessments and placing equal responsibilities on committee and board members. Consultation outcomes on 'Access and Fairness' and 'Scheme Improvements' were also noted, including changes to survivor benefits, death grants, and elected members' access to the LGPS. The appointment of a new tracing and mortality screening provider, Target Professional Services, was confirmed.

Work Programme Update

The board noted the draft work programme for the upcoming year, which includes standard agenda items and updated training sessions, particularly in light of the upcoming local elections. The availability of online induction training for all board members was highlighted.

Triennial Valuation and Funding Strategy Statement Update

The board received an update on the 2025 Triennial Valuation, confirming a strong funding position with a funding level of 114% and a surplus of £117 million. Employer contribution rates have either remained the same or decreased, with no increases. The Funding Strategy Statement (FSS) has been updated to align with new CIPFA and Scheme Advisory Board guidance, and a consultation with employers and the Department for Education was concluded with minor wording changes made to the FSS. Discussions also touched upon the generational fairness argument for surpluses and comparisons with other LGPS funds.

2024-25 Pension Fund Accounts Audit Findings

The board noted the Annual Auditors Report for the 2024-25 Pension Fund Accounts, which confirmed an unmodified audit opinion. Two recommendations from the previous year's audit have been fully addressed. A control deficiency regarding the lack of a formal system-based authorisation process for journal approvals remains, but has been mitigated by a manual process. A system solution is being implemented for the next financial year. The report was considered a positive outcome, and congratulations were extended to the team for their work.

Pension Committee Update

The board was invited to note the finance and investment papers from the Pension Committee meeting held on 17 March 2026. Key highlights included the fund's investment performance for the quarter ending 31 December 2025, which saw a market value increase to £1.091 billion but underperformed the benchmark. Underperformance was attributed to specific equity and property funds. Updates were provided on the London CIV's progress with Fit for the Future reforms, including the rationalisation of its fund range and the upcoming Investment Management Agreement (IMA). The expansion of the pool to include Buckinghamshire Pension Fund was also noted. Discussions also covered the development of local investment strategies and the role of the LCIV's advisory service.

Responsible Investment Update

The board noted the updated Responsible Investment Policy, which strengthens the fund's commitment to responsible investing through an engagement-led approach. Key changes include a clearer explanation of the LCIV's role, an updated section on exclusions and divestment versus engagement, and a new section on the fund's approach to human rights and conflict-affected high-risk areas. The policy also commits to an annual Stewardship Report detailing the implementation of the policy and its real-world impact. The policy was unanimously approved by the Pension Committee.

The meeting concluded with a motion to exclude the public and press to discuss exempt information related to the Investment Strategy Implementation.