The Pension Board of Kingston upon Thames Council met on Thursday 26 March 2026 to review the performance of pension administration, discuss governance and risk, and consider the fund's financial plans and investment strategy. Key decisions included noting the positive progress in pension administration performance, approving updates to the Responsible Investment Policy, and reviewing the outcomes of the 2024/25 pension fund accounts audit.

Pension Administration Performance Update

The Board received an update on the key administration activities of the Shared Pensions Administration Service. The number of outstanding processes has fallen significantly from 688 to 429, with the historic backlog of cases overdue by more than three months remaining cleared at zero. New Key Performance Indicators (KPIs) have been introduced to monitor overall performance, with targets set for no more than 10% of all cases to be overdue, and no more than 10% of overdue cases to be more than a month overdue. Performance against Service Level Agreements (SLAs) remains positive, with 91% across all service areas. While leaver SLAs were impacted in January by an increase in leaver processes, officers expect performance to return to target levels in the coming quarter. No breaches of law, Internal Dispute Resolution Procedure (IDRP) cases, or complaints have been reported since the last meeting.

Pension Administration Projects Update

An update was provided on key projects within the Shared Pensions Administration Service. The Fund completed its annual scheme return, with Scheme Specific Data scores improving to 95% following targeted data cleansing. The Data Improvement Policy has been updated to align with new regulations and prepare for Pensions Dashboards. The McCloud Remedy project remains on track for completion by 30 June 2026, with over 76% of employer data matched and validated. Other updates included the processing of the annual pensions increase, the issuance of year-end data returns to employers, preparations for the Pensions Dashboard Programme, the issuance of Pensioner P60s, and the ongoing transition of overseas pensioners to digital payslips and P60s.

Governance and Risk Update

The Board reviewed the Fund's governance activities and risk register. The Risk Register has been streamlined to 23 active risks, with a new reporting format focusing on strategic issues. A new training plan for 2026/27 has been designed to support the Panel and Board following the upcoming local elections. Target Professional Services has been appointed as the new tracing and mortality screening provider, restoring important governance controls. A significant review of the Risk Register has reduced the number of active risks from 28 to 23, primarily through consolidation. Risk 21 (Administration) remains rated as red due to the ongoing failure of the software provider, Civica, to deliver fully compliant software. The risk rating for Panel and Board members' skills and knowledge (Risk 10 - Governance) has increased to amber due to potential turnover following local elections. A new risk (Risk 23 - Administration) has been added to track responsibilities associated with the Pensions Dashboard Programme. An updated Training Policy & Strategy was presented, aligning with draft statutory guidance on Fund Governance, which is expected to become a mandatory regulatory requirement.

Pension Fund Business Plan 2026-29 and Budget 2026-27

The draft business plan for 2026-29 and the draft budget for 2026-27 were presented. The business plan introduces a clear distinction between core statutory duties and strategic change, with key priorities including the re-procurement of administration software, the completion of the McCloud Remedy, and the implementation of 'Fit for the Future' governance reforms. The proposed 2026/27 budget is £15.4m, reflecting full transparency on investment management costs and a planned reduction in contribution income following the 2025 Triennial Valuation. The budget increase is primarily driven by administration costs, investment management expenses, and oversight and governance costs, offset by a reduction in contribution income due to the fund's surplus position.

Triennial Valuation and Funding Strategy Statement Update

The final results of the 31 March 2025 triennial valuation confirm a significant improvement in the Fund's overall funding position, with a surplus of £350m and a funding level of 137%. This is an improvement from 111% at the 2022 valuation. The primary contribution rate has increased to 18.9% of pay, but due to the surplus, a negative secondary rate allows for a downward trend in total contributions for many employers. The draft Funding Strategy Statement (FSS) has been reviewed and restructured to align with new guidance, incorporating standardised terminology and an enhanced governance commitment. Following consultation with scheme employers, the final FSS was presented for approval. The report also noted the introduction of new requirements for reporting on the Gender Pension Gap.

Work Programme Update

The proposed programme of work for Pension Board meetings for the 2026-27 Municipal Year was presented. The agenda items for each meeting will be varied should developments necessitate, with the Chair being informed of any proposed changes. Training sessions are scheduled throughout the year, covering topics such as an introduction to the work of the Pension Fund Panel and Board, committee roles and pensions legislation, pensions governance, and cyber risk.

2024-25 Pension Fund Accounts Audit Findings

The external audit of the Pension Fund Annual Report and Accounts for 2024/25 by KPMG has been completed, with an unmodified opinion expected. The audit report noted the lack of a formal two-step system-based authorisation process for journal approvals, a risk initially identified in the 2023/24 audit. Officers have mitigated this risk with a manual approval process, and no inappropriate or unauthorised journal entries were identified. The planned upgrade of the Business World system in 2026/27 will provide a system-enforced journal approval process. Two recommendations from the 2023/24 audit report have been fully addressed: the implementation of a formal process for investigating discrepancies in contribution reconciliations and the adoption of a formal, documented review process for financial statements using the CIPFA checklist.

Pension Fund Panel Update - Investment Strategy and Performance

The Board received a summary of investment-related papers presented to the Pension Fund Panel in March 2026. The market value of the Fund's assets at 31 December 2025 was £1,428m, with a positive return of 2.1% over the quarter, outperforming its benchmark. The three and five-year performance figures were 10.5% and 7.1% respectively, with the three-year return outperforming its benchmark. The revised strategic asset allocation agreed in December 2025 is being implemented. The Work Programme for the year ahead was agreed, including a training session for new members. Updates from the London Collective Investment Vehicle (LCIV) highlighted progress towards Fit for Future reforms, including the rationalisation of its ACS fund range and the development of new global equity offerings. The transition of assets to LCIV funds is ongoing, with a target of 59.2% of assets pooled as of December 2025.

Responsible Investment and Stewardship Update

A revised Responsible Investment (RI) Policy statement was presented, incorporating feedback from a Task and Finish Group and new draft regulations. Key changes include a new section on How we Invest explaining the role of the London CIV, an exclusion on companies involved in controversial weapons, and an updated approach to Human Rights and Conflict Affected High Risk Areas. The Fund's first Annual Stewardship Report was also presented, detailing how the RI policy has been implemented in practice, including engagement activities with companies and voting records. The report highlighted the Fund's commitment to achieving Net Zero by 2050, with interim targets for carbon reduction and investment in climate solutions. Examples of engagement activities by the London CIV, its investment managers, and the Local Authority Pension Fund Forum (LAPFF) were provided, demonstrating efforts to influence corporate behaviour on issues such as biodiversity, human rights, and climate change.

Investment Strategy Implementation Plan

This report sets out the implementation plan for the agreed Investment Strategy, which was reviewed following the 2025 triennial valuation and approved in December 2025. The plan details the actions being taken to realign the portfolio to the new Strategic Asset Allocation (SAA), including the transition of assets to LCIV funds and the management of illiquid investments.