The London Borough of Southwark Pension Fund’s Annual Report and Statement of Accounts 2024-2025, recently published in November 2025, details key investment activities and future intentions.
Strategic Rebalancing Shifts Allocation to Index-Linked Gilts
During fiscal year 2024-2025, the Fund undertook an investment rebalancing to adjust its asset allocation. This involved reducing the allocation to equities, which had grown in absolute terms and remained the largest allocation, to bring it closer to the target. The proceeds from this reduction were then used to increase the Fund’s allocation to Index-Linked Gilts. The rationale for this shift was to enhance exposure to a lower-risk asset with inflation-linked characteristics, which are considered a suitable match for the Fund’s inflation-linked benefit payments over the long term. Specifically, in January 2025, £70 million was redeemed from the Newton (global equity) mandate and invested into the LGIM index-linked gilts fund. This action brought the allocation to index-linked gilts broadly in line with its 10% benchmark allocation. (Source: Annual Report and Statement of Accounts 2024-2025, page 2, 16)
Custodian Appointment Finalized
For fiscal year 2024-2025, the Fund completed a procurement exercise to appoint a new global custodian. Northern Trust was selected for this role, with the appointment becoming effective on April 1, 2025. The purpose of this appointment is to ensure the continued safekeeping of the Fund’s assets and to facilitate enhanced reporting on the Fund’s performance. (Source: Annual Report and Statement of Accounts 2024-2025, page 3)
Full Investment Strategy Review Planned for Late 2025
A comprehensive review of the Fund’s investment strategy is scheduled for late 2025. This review will occur after the results of the 2025 actuarial valuation have been received, which will determine employer contribution rates from April 1, 2026. The review will monitor the appropriateness of the current investment strategy and the potential for utilizing more defensive assets to manage portfolio volatility and cash flow. (Source: Annual Report and Statement of Accounts 2024-2025, page 2-3)
Transition to London CIV Pool by March 2026 Deadline
The Fund is actively working to transition all its assets to the London Collective Investment Vehicle (LCIV) Pool by the mandated deadline of March 31, 2026. This includes both public and private market assets. The Investment Strategy Statement (ISS) will be updated prior to this deadline to ensure full alignment with the pooling mandate. The Fund aims to leverage LCIV to achieve economies of scale and reduce costs, and officers are engaging with LCIV to ensure the Fund’s 2030 net-zero target is considered in the development of available investment products. (Source: Annual Report and Statement of Accounts 2024-2025, page 13, 18-19)
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