Sutton Pension Board has flagged a significant risk concerning its software provider, Civica, highlighting potential delays in delivering crucial updates for pension administration. The board noted this risk during its meeting on Thursday, July 16, 2026.
Tom Taylor, Head of Pensions Administration, informed the board that a red
risk has been identified due to ongoing concerns about Civica's ability to deliver compliant software updates. These updates are essential for both the McCloud Remedy project, which addresses age discrimination in pension reforms, and the new Access and Fairness regulations.
The McCloud Remedy project, aimed at rectifying age discrimination in the Local Government Pension Scheme (LGPS) reforms, is facing potential delays. While data collection and validation are complete, only 89.17% of data has been loaded onto the administration system. The board was warned that there is a risk of missing the July 31 deadline for issuing McCloud-compliant Annual Benefit Statements (ABS).
This is due to the need for three software releases from Civica between now and the end of August, with testing and implementation being an ambitious timeline. The delays are compounded by the fact that each Civica client has a different configuration, meaning a release that works for one client may not work for another.
Kirstie Martin, a member of the board, questioned the implications of these potential delays. Mr. Taylor assured the board that all members would still receive an annual statement, and any understatements due to the McCloud Remedy would be rectified later. He added that while a breach of the law could be reported to the regulator, the fund would present a full project plan and summary of actions taken, which is what the regulator expects. In the event of a legal breach, the process involves providing the regulator with a 'full project plan and a summary of what has been done to meet the requirements and what is being done to correct the situation'. The regulator expects openness, honesty, and upfront reporting.
The potential financial impact if the McCloud Remedy deadline is missed is primarily a risk of a fine from the regulator, which can be up to £50,000. However, it is noted that no pension fund has been fined to date for a breach related to the McCloud Remedy. The primary concern is not a direct financial penalty, but rather the administrative effort and potential for issuing statements that are slightly undervalued, which would then need to be rectified later. The amounts involved are not expected to be massive, with one example showing an understatement of around £80 per year.
Similarly, the Access and Fairness project, designed to tackle age and gender discrimination within the LGPS, is also dependent on software releases from Civica. The project plan, which includes a risk register, currently lists administration on system software delays
as an amber risk. However, Mr. Taylor indicated this would likely be upgraded to red given the latest delays.
The Access and Fairness regulations aim to tackle age and gender discrimination within the LGPS. Specific requirements include equalizing survivor benefits retrospectively to December 2005, removing the age 75 limit for death grant eligibility backdated to April 2014, and implementing new pensionable pay definitions for short authorized absences and new Qualifying Additional Pension Arrangements (QAPA) rules for longer unpaid absences. Delays in software updates from Civica are affecting the implementation, particularly for recalculating survivor benefits and death grants. Civica has confirmed they will deliver software to fix this retrospectively and calculate it in bulk, with a target completion date of spring 2027. This delay means that the processing of these benefits will be pushed back.
The board was also updated on the broader governance and risk register. The red
risk concerning the software provider's ability to deliver compliant software remains a key concern. The red
risk concerning Civica's ability to deliver compliant software is expected to remain red until confidence is established that the supplier can deliver the necessary software and the fund is in a healthy position to meet regulations. While a key software update was delivered on May 21, 2026, further upgrades are still needed for McCloud-compliant ABSs and for the Access and Fairness regulations. The risk will likely be downgraded from 'red' to 'amber' when the remaining software is fully tested and verified, and the fund is confident in meeting regulatory deadlines. The report notes that the risk rating will be reviewed and most likely upgraded to 'red' for the Access and Fairness project due to the latest delays.
Several amber
risks were also discussed, including those related to administration, governance (specifically the skills and knowledge of board members following recent local elections), cyber security, and the financial impact of climate change.
Following recent local elections, there has been a change in board membership, resulting in a temporary loss of experience and knowledge. To address this, a comprehensive induction and training program has been delivered to all members. This includes sessions with the fund actuaries, signposting to online training via Lola, and consideration of further in-person training sessions. The National Knowledge Assessment will also be conducted annually to gauge the skills and knowledge levels.
Despite these challenges, the board noted positive progress in other areas. The annual returns exercise is on schedule, with all employer data loaded onto the system. Priority cases, such as deaths and retirements, remain up-to-date, and no cases are overdue by more than 31 days.
The primary contingency plan in place if Civica fails to deliver necessary software updates is to issue Annual Benefit Statements (ABS) to all members, even if some statements are slightly undervalued due to the McCloud Remedy. The board would then rectify these understatements later. The risk of issuing statements that are slightly undervalued is considered less severe than the risk of issuing no statements at all. The plan also involves continuing to apply pressure to Civica for software delivery and working with other Civica clients through forums to collectively address the issues. For the Access and Fairness project, the plan involves manual processing of lump sum death grants due to the small number involved, while awaiting Civica's software release for the larger number of beneficiary recalculations.
