The Pensions Advisory Panel was scheduled to meet to discuss the preliminary results of the 2025 actuarial valuation, review the fund's investment strategy, and receive updates on conflict zones, administration strategy, asset allocation, responsible investment, and the pension fund's statement of accounts. The agenda also included updates from the Local Pension Board and Pension Services.

Conflict Zones Update

The panel was scheduled to note progress against four commitments made in September 2025 by the Leader of the Council regarding the fund's approach to investment in conflict zones.

These commitments included:

• Working with fund managers to disclose and divest pension fund investments in companies listed by the United Nations Office of the United Nations High Commissioner for Human Rights ('UN List').
• Calling on the London Collective Investment Vehicle (LCIV) to create a framework that will enable future exclusions of investments linked to conflict, military occupation or genocide, and to develop new investment products which give greater opportunity to divest from particular asset classes within pooled funds.
• Taking action to steer investments in pooled funds that are linked to conflict or military occupation, including reviewing how the pension fund can use pass through voting to give it a stronger say on key issues like climate change in the context of human rights and investments linked to conflict or occupation.
• Becoming the first local authority to build the UN Genocide Convention into its investment framework, so it could choose not to invest in any state found by the International Court of Justice to be in breach of the convention, and developing a plan to implement this initiative with relevant country and sector-specific exclusions.

The report pack noted that the fund has exposure to companies listed in the UN List and additional companies domiciled/incorporated in Israel only through the pooled equity funds with BlackRock and LGIM.

The report pack included an initial proposal for an Exclusions Framework, which the Fund aims to be fit-for-purpose over the long-term by ensuring its applicability across all global conflicts and to not restrict its applicability to only specific current conflicts in the short-term. For this, the Fund is looking at excluding all jurisdictions that have been subject to a successful prosecution of genocide by the International Court of Justice ('ICJ') or International Criminal Court ('ICC'). The Fund is also considering excluding all jurisdictions that are subject to an ongoing case at the ICJ as the 'direct' country that is perpetrating such genocide.

Actuarial Valuation 2025

The Pensions Advisory Panel was scheduled to note the initial results of the actuarial valuation of the London Borough of Southwark Pension Fund as at 31 March 2025.

The initial valuation results presentation summarised:

• The past service liabilities¹ of the Fund as a whole at this valuation.
• The corresponding future service cost (referred to as the primary contribution rate).
• The adjustment to the contributions required to bring the assets back into line with the funding target (referred to as the secondary contribution rate).
• Indicative results for Southwark Council on the agreed funding target.

The report pack noted that the initial valuation results showed that the surplus of £195M in the Fund at the previous valuation had become a surplus of £210M at this valuation.

The main factors which have improved the funding position are:

• The change in the financial assumptions (principally the rise in the discount rate relative to inflation)
• Changes to the longevity assumptions

These have been partially offset by the following main factors:

• Investment returns below the discount rate adopted at the 2022 valuation
• Higher than assumed pay growth on pre-2014 benefits
• Higher than expected inflation (even after allowing for the additional inflation allowance included at the previous valuation)
• Membership experience
• Changes to other demographic assumptions, including the inclusion of an allowance for ill health retirements, which more than offset the reduction in liabilities due to the change in longevity assumptions.

The report pack also noted that the cost of future benefits (as a percentage of Pensionable Pay) on the initial 2025 valuation result has decreased by 3.2% of pay since the previous valuation.

Pension Administration Strategy

The Pensions Advisory Panel was scheduled to approve and sign off the draft updated Pension Administration Strategy of the Southwark Pension Fund.

The overall aim of the Strategy is to ensure both the Administering Authority, Admitted and Scheduled body Employers are fully aware of their roles and legal responsibilities under the Fund.

The Strategy includes the following areas:

• Responsibilities and Administration Objectives
• Engagement and communication
• Risks of non-compliance
• Fining structure

The report pack stated that upon approval and sign off by the Panel, the final version of the 2025 Pension Administration Strategy will be shared with all Employers and key stakeholders (HR, Unions) as part of a wider 4-week consultation process.

Asset Allocation Update

The Pensions Advisory Panel was scheduled to note the Fund's asset allocation at 30 September 2025, overall performance and other matters considered by the officers and advisers of the Fund during the quarter to the end of June and post quarter end.

The market value of the Fund increased during the quarter from £2,328.6m to £2,425.8m, an increase of £96.2m (+4.1%).

The value of the major asset classes at 30 September compared to 30 June is as follows:

The Fund's Strategic Asset Allocation (SAA) has tolerance, within specific ranges, for deviation from the target allocation for each manager/asset class. All allocations are within the maximum permitted by the SAA. The key overweight position is now in global equity (+3.0%), followed by ESG priority funds (+1.5%). In contrast, the key underweight is in Property (-4.1% excluding cash held by Nuveen).

The Fund made a return of 4.3% in the quarter, behind the benchmark return of 5.4%. The total fund return for the year to the end of September 2025 was 7.4%, which was below the benchmark return of 10.7%.

Advisers' Updates

The pensions advisory panel was scheduled to note investment reports from David Cullinan and Aon.

David Cullinan's investment report noted that the Fund returned a healthy 4.3% over the period, but lagged its benchmark by 0.9%. The Fund returned a solid 7.4% over the full year but remained some way behind the benchmark.

Aon's quarterly investment dashboard noted that the Fund's absolute performance was positive (+4.3%), resulting in a c£96m gain, primarily driven by the rise in global equity markets. The Fund's relative underperformance is primarily due to Comgest and Newton Investment Management mandates which had absolute positive returns but underperformed their respective benchmarks, and the Property allocation which had overall negative returns over the quarter.

Responsible Investment Update

The Pensions Advisory Panel was scheduled to note the fund's carbon footprint as at 30 September 2025, and engagement and voting activity during the quarter ended 30 September 2025.

The results for quarter ended 30 September 2025 show an increase in Weighted Carbon Intensity ('WCI') (Scope 1 and Scope 2) of the Fund by 1% compared to the previous quarter (30 June 2025). On an aggregate basis, since September 2017 baseline, the Fund has reduced its WCI by ~81%.

During the quarter ended 30 September 2025, the key ESG focused engagement and voting themes for the listed assets are outlined below:

• Environment-focused themes:
  • Climate risk & mitigation
  • Deforestation
  • Water management
• Social themes:
  • Human rights
• Governance-related themes:
  • Board effectiveness
  • Corporate Strategy
  • Compensation & remuneration.

Pension Fund Statement of Accounts 2024-25

The pensions advisory panel was scheduled to note an update regarding the audit of the pension fund statement of accounts and the ISA 260 report as issued by KPMG.

KPMG confirmed their intention to issue an unqualified opinion on the council and pension fund statement of accounts for 2024-25.

The control deficiencies section of the ISA 260 report set out recommendations to management regarding the financial statements. There were no new recommendations resulting from the 2024-25 audit work and this section therefore provided an update from KPMG on progress against the recommendations arising from the previous year's audit.

Local Pension Board Update

The Pensions Advisory Panel was scheduled to note the update from the Local Pension Board (LPB or the Board) meeting of 8 October 2025.

Key areas of discussion at the Local Pension Board meeting included:

• A training session on Local Pension Board Roles and Responsibility and other initiatives
• Action Tracker
• Pension Services
• Pensions Administration Strategy
• Risk Management Policy
• The General Code – Action Plan
• Update on Current LGPS issues
• Re-appointment of Local Pension Board Chair

Pension Services Update

The Pensions Advisory Panel was scheduled to note an update on the pensions administration and operational function.

The update included information on:

• Recruitment
• IT/Systems
• National Dashboard Programme
• Communication initiatives
• Complaint Management
• Admin Performance Monitoring
• Future work planning