Budget papers put the Kent Pension Fund’s forecast 2026-27 overspend at £233,260, driven by unexpected IT, printing and pooling costs, while the McCloud remedy programme was flagged as the only amber item in the fund’s business plan.

The Kent Pension Fund is forecasting a net overspend of £233,260 against its 2026-27 budget, according to governance papers considered by the Pension Board when it met on 3 September 2026. The figure is the total of the quarter one budget forecast published as an appendix to the papers; the covering report describes the position more loosely as a “slight overspend” of around £200,000. Officers noted that only three months of actual expenditure had been recorded at the time of the forecast.

Where the overspend arises

The largest single pressure identified was IT expenses, forecast to overspend by £152,644. Officers said annual fees from Heywood, the pensions administration software supplier, came in £50,000 higher than budgeted because of additional requirements for McCloud development work; the remainder of the variance relates to 2025-26 costs paid in the new financial year. A further pressure arose from printing and mailing costs, which are forecast to overspend by £69,648. Officers said a statutory requirement to write to every scheme member explaining regulatory changes relating to Access and Fairness led to a bulk printing exercise costing £71,000 that had not been anticipated at budget-setting.

Pooling costs are forecast to overspend by £37,900, partly because £172,000 of Border to Coast costs relating to 2025-26 fell due at the start of the year when the Fund legally joined the pool on 1 April 2026. This was partially offset by a refund of underspent ACCESS pool costs from 2025-26.

An unbudgeted actuarial fee of £24,500 was incurred so that around 35 bond reviews could be completed in line with the triennial valuation, though officers said the actuary had confirmed this should save the Fund around £50,000 over the next three years.

Pension payroll costs are forecast to overspend by £23,056. Officers attributed around £14,000 of that to the growing workload of the team processing additional payment runs. KCC overhead charges are forecast to be £50,902 higher than budgeted, at an estimated £659,100, because the cost of KCC’s treasury service was not included when the budget was set; the final figure will not be known until year-end as it is based on the total value of the Fund at that point.

Partially offsetting these pressures, administration staffing costs are forecast to underspend by £155,098 because of unfilled vacancies. Officers said recruitment activity was planned throughout the year and the underspend would reduce as posts were filled.

McCloud flagged as key risk

Across the Fund’s business plan for 2026-27, all activity was rated green with the exception of McCloud remedy work, which was rated amber. Officers described the McCloud remedy as technically complex and involving a very high volume of data, and said they would continue to monitor it closely.

A separate service delivery report to the same meeting said an aggregation backlog — linked to a system blackout that began on 9 February 2026 — remained the single largest factor affecting operational key performance indicators and backlog growth. The blackout has prevented normal processing of aggregation actuals and restricted workflow across several administration functions. As reported to the Board in June, outstanding cases had risen to 1,263 A/B aggregation cases, 733 employer change cases, 582 post-2014 concurrent cases and 37 deferred aggregation cases. Officers said urgent cases continued to be prioritised and aggregation estimates generally remained within target. Separately, external support to clear historic overdue cases had completed 5,274 of 23,013 cases in scope, or 22.9%.

Staffing and audit

The Fund made six external appointments over the summer and two internal promotions. Five recruitment campaigns were under way at the time of the meeting, including a search for an Independent Person for the Pension Fund Committee — a post the Fund began seeking as part of work against a governance review checklist drawn up by consultants Barnett Waddingham. Officers also reported that statutory guidance covering fund governance, asset pooling and Investment Strategy Statement preparation was released on 29 June, with the associated regulations coming into effect on 30 June 2026.

The Fund’s external audit of its 2025-26 accounts was continuing, with an Audit Findings Report expected to be sent to officers in early September and taken to KCC’s Governance and Audit Committee on 30 September 2026 for review and sign-off of the audit opinion.

The papers were presented to the Board for information, with officers recommending only that members note them. The council had not published the minutes of the meeting at the time of writing.

Sources

Top image: illustrative, computer-generated. It is not a photograph of any real place, person or object connected to the Kent Pension Fund.