The Pensions Advisory Panel met on Thursday 5 March 2026 to discuss the Southwark Pension Fund's investment performance, strategy, and responsible investment policies. Key topics included updates on asset allocation, quarterly investment performance, the actuarial valuation, and the fund's responsible investment approach.

Asset Allocation Update

The panel was scheduled to receive an update on the Southwark Pension Fund's asset allocation as of 31 December 2025. This included a review of the market value of the fund, which had increased by £60.3m during the quarter to £2,486.1m. The report detailed the breakdown of the fund's market valuation by asset class and manager, comparing it against the target asset allocation. It was noted that most changes in over and underweight positions were linked to market movements, with equities experiencing a strong quarter. The report also provided details on fund manager activity, including redemptions from equity funds to support day-to-day liquidity. Specific breakdowns were provided for property holdings, including direct and indirect fund holdings, and ESG priority allocations. The update also included information on UK holdings, detailing the proportion of the total portfolio allocated to UK assets and how much of this is pooled. Finally, the report presented the total fund returns for the quarter and longer-term assessment periods, showing a 2.7% return for the quarter, matching the benchmark, but a year-to-date return of 7.6%, which was below the benchmark of 10.4%.

Quarterly Investment Update

An update on the fund's quarterly investments was scheduled, with reports from David Cullinan and Aon. This update was expected to provide further information on the performance of underlying managers.

Investment Strategy Review

The panel was set to review the fund's investment strategy. This review was informed by the triennial actuarial valuation and aimed to ensure that asset class allocations would best capture investment opportunities with an optimal level of risk exposure to meet future pension payments. The review, conducted in conjunction with Aon, assessed the current investment portfolio against overall investment return requirements and specific risk exposures. Key outcomes from the analysis and Aon's recommendations were to be presented, including a proposal to reduce the overall allocation to equity by 5% in favour of credit assets to significantly reduce overall volatility. The report also addressed the fund's expected cashflow position and the uncertainty surrounding the government's definition of local investment. A revised allocation to various asset classes was proposed as part of the updated investment strategy.

Actuarial Valuation 2025 – Funding Strategy Statement

The panel was scheduled to review the updated Funding Strategy Statement (FSS) as part of the 2025 actuarial valuation process. The preliminary results of the 2025 triennial actuarial valuation indicated a funding level of 110%, with an expected reduction in the employer contribution rate for Southwark council from 20.5% to 17.3% from April 2026. The FSS had been updated to reflect changes in the funding strategy and had been shared with scheme employers for consultation.

Responsible Investment Policy and Update

An update on the fund's Responsible Investment (RI) Policy was scheduled, including a review and agreement of the revised standalone policy. This policy, first implemented in September 2023, outlines the fund's approach to managing Environmental, Social, and Governance (ESG) issues. The update was expected to incorporate an Exclusions Framework developed to address investments in conflict zones, aligning with the principles of the United Nations Genocide Convention. The report also included an update on the fund's carbon footprint as at 31 December 2025, showing an increase in Weighted Carbon Intensity (WCI) of 1% compared to the previous quarter, but an overall reduction of approximately 81% since the September 2017 baseline. Details of engagement and voting activity undertaken during the quarter ended 31 December 2025 were also to be presented, including case studies highlighting tangible outcomes and the effectiveness of stewardship activities.

LGPS Pooling – Verbal Update

A verbal update was scheduled on Local Government Pension Scheme (LGPS) pooling. This update was expected to cover the requirement for an independent governance review every three years and the appointment of an independent advisor to the Pensions Advisory Panel by October 2026.

Local Pension Board Update

An update from the Local Pension Board (LPB) meeting of 4 February 2026 was to be presented. Key areas of discussion were expected to include a training session on the Good Governance Project under the upcoming Fit for Future regulations, covering aspects such as the role of the LPB, upcoming governance mandates, and the Pensions Dashboard. The update was also to cover progress on the Action Tracker, the Annual Benefit Statement debrief, and the Pension Services report.

Pensions Services Update

An update on the pensions administration and operational function was scheduled. This was to include information on recruitment within Pension Services, IT and systems development, including a blueprint for Member Self-Service, and progress on the National Dashboard Programme. The update was also to cover communication initiatives, including planning for the 2026 Annual Benefit Statement and the development of an Engagement Strategy. Information on the Access and Fairness Consultation and complaint management was also to be provided.