The Pensions Advisory Panel is scheduled to meet to discuss the actuarial valuation, investment strategy and responsible investment, as well as updates from the Local Pension Board and Pension Services. The meeting will cover preliminary results from the 2025 actuarial valuation, a review of investment strategy, and an update on the fund's approach to investments in conflict zones.

Conflict Zones Update

The Pensions Advisory Panel is scheduled to receive an update on the Southwark Pension Fund's approach to investments in conflict zones, following a statement from the Leader of the Council in September 2025. The report pack states that the council has committed to four actions:

• Work 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')¹.
• Call 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.
• Take action to steer investments in pooled funds that are linked to conflict or military occupation, using pass through voting .
• Incorporate the UN Genocide Convention² into the investment framework.

The report pack notes that the fund has exposure to companies on the UN list through pooled equity funds with BlackRock and LGIM. It also notes challenges in implementing exclusions due to low financial materiality, lack of international consensus, and lack of consensus across fund managers' global client base.

The report pack states that officers have been developing an Exclusions Framework, and have shared an initial proposal with the LCIV for feedback.

Actuarial Valuation 2025 - Preliminary Results

The report pack includes a presentation of the preliminary results of the actuarial valuation of the London Borough of Southwark Pension Fund as at 31 March 2025, prepared by Laura Caudwell FIA C.Act and Youyang Zhao. The initial valuation results show the fund's assets at £2,261.2 million and past service liabilities at £2,051.5 million, resulting in a funding ratio of 110%. The initial primary contribution rate is 17.2% of pay. The report pack notes that scheme employers will have the opportunity to provide feedback on the amended funding strategy statement via a consultation.

The report pack states that 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
• Membership experience

Investment Strategy Review

The Pensions Advisory Panel is scheduled to note that a full report on the Fund's revised Strategic Asset Allocation will be tabled at the 9 March 2026 PAP meeting. The report pack notes that the investment strategy is developed as part of a three-year cycle, involving the triennial actuarial valuation and a formal review of investment strategy. The review will incorporate the findings of the Fit for the Future reforms to the management of the Local Government Pension Scheme and the requirement that, from 1 April 2026, the Pension Fund's assets are to be managed by the London Collective Investment Vehicle (LCIV).

Asset Allocation Update

The Pensions Advisory Panel is scheduled to note the Fund's asset allocation at 30 September 2025. The report pack includes a table that shows 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 report pack states that 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 report pack also includes a table that identifies the estimated value of the Fund's UK based assets as at quarter end (30 September 2025), shown in the same format as for the annual report requirements.

Advisers' Updates

The Pensions Advisory Panel is scheduled to note investment reports from David Cullinan and Aon. David Cullinan's investment report notes that the Fund returned 4.3% for the quarter, but fell 1% short of the benchmark. Aon's quarterly investment dashboard notes that the 30 June 2025 expected return for the portfolio is 7.4% compared to the strategic asset allocation expected return of 7.1%.

Responsible Investment Update

The Pensions Advisory Panel is 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 report pack states that the results for quarter ended 30 September 2025 show an increase in Weighted Carbon Intensity ('WCI')³ (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%.

The report pack includes selected case studies from engagement and voting activity undertaken by fund managers with various companies in their respective portfolios during the quarter ended 30 September 2025.

Pension Fund Statement of Accounts and Audit Findings Report

The Pensions Advisory Panel is scheduled to note an update regarding the audit of the pension fund statement of accounts, and the ISA 260 report as issued by KPMG. The report pack states that KPMG have confirmed their intention to issue an unqualified opinion on the council and pension fund statement of accounts for 2024-25. The report pack also includes a table that sets out recommendations to management regarding the financial statements.

Local Pension Board Update

The Pensions Advisory Panel is scheduled to note an update from the Local Pension Board (LPB) meeting of 8 October 2025. The report pack states that the voting members unanimously agreed to re-appoint Mike Ellsmore as the Chair of the Local Pension Board for a further year.

Pensions Services Update

The Pensions Advisory Panel is scheduled to note an update on the pensions administration and operational function. The report pack states that the 2025 Annual Benefit Statements were sent out by the end of August 2025 deadline. The report pack also includes admin/ops performance metrics for September, October and November 2025.