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Council of Reserve Forces and Cadets Association Pension Scheme: Statement of Investment principles

Updated 31 March 2026

Section 35 of the Pensions Act 1995 (as amended), and Regulation 2 of the Occupational Pension Schemes (Investment) Regulations 2005 require the Trustees to prepare a statement of the principles governing investment decisions for the purposes of the Scheme. This document fulfils that requirement.

In preparing this Statement, the Trustees have consulted the Council and will do so whenever the Trustees intend to revise the Statement. Notwithstanding this consultation, responsibility for maintaining the Statement and deciding investment policy rests solely with the Trustees.

In preparing this Statement, the Trustees have obtained advice from the Scheme’s Actuary (Robert Sweet) and the consultants (Cartwright Group Ltd and Asset Risk Consultants Limited). The Trustees will similarly obtain such advice as appropriate whenever the Statement is reviewed or revised.

The Trustees will review this Statement at least every 3 years, and on such other occasions as may appear to them to be appropriate. Investment Objectives 5. The long term investment objectives of the Scheme are:

• the acquisition of suitable assets of appropriate security and liquidity, which will meet the cost of current and future benefits, which the Scheme provides as set out in the Trust Deed and Rules. The Trustees may also hold assets in a suitable short-term environment as to allow suitable long-term investments to be identified.

• to limit the risk of the assets failing to meet the liabilities over the long-term, measured in terms of the variability of the Employers’ contribution rate and the ongoing funding level.

• to minimise the long-term costs of the Scheme by maximising the return on the assets whilst having regard to the objectives shown above.

Delegation of Investment Discretion

The Trustees have delegated day-to-day investment management to the following fund managers:

Manager	Fund	Date of Management Agreement	Investment Objective
AXA Investment Managers UK Limited	AXA Global Sustainable Managed Fund	25 June 2007	Provide long-term capital growth over a period of 5 years or more
M&G Investments	M&G Episode Allocation Fund	27 June 2007, as amended 5 August 2016	The fund targets income and capital growth of at least 5% a year above the Sterling Overnight Index Average (SONIA), before any charges are taken, over any five-year period
Newton Investment Management Limited	BNY Mellon Real Return Fund	16 September 2011	Aims to outperform SONIA on a rolling 3-year basis and SONIA +4% per annum on a rolling 5-year basis
Ruffer LLP	WS Ruffer Absolute Return Fund	24 November 2010	To seek to achieve positive returns in all market conditions over any 12 month period, after all costs and charges have been taken.
Schroder Pension Management Ltd	Schroder Life Managed Balanced Fund	28 February 2017 (Main Scheme)	The Fund aims to provide capital growth and income through a diversified investment strategy, primarily in equities and fixed income securities
Troy Asset Management Ltd	Trojan Fund	02 December 2010	Achieve growth in capital (net of fees), ahead of inflation (UK Retail Price Index) over the longer-term (5 to 7 years).

Each investment management agreement includes such matters as investment objectives, investment restrictions, custody of assets, fees and charges and the procedure for instructions.

In delegating their investment responsibilities in this way, the Trustees consider that they have the best prospects of achieving their objectives. Delegation of discretion carries with it the imperative for managers to deliver a satisfactory administrative service level, a key element of performance assessment alongside the measurement of return.

Performance Measurement

For portfolio review purposes, the performance of the Scheme is compared to:

• a long-term target rate of return of UK CPI plus 3% per annum,

• a “Balanced Asset” reference index comprising 45% Equities, 42.5% Cash & Fixed Interest and 12.5% Alternatives; and

• the ARC Balanced Asset PCI peer group.

• Risk is compared to a long-term target volatility level of 40%-60% of world equities.

In addition, individual fund manager performance will also be measured against specific target returns, benchmarks and / or peer groups consistent with each manager’s mandate or product literature.

The Trustees recognise that portfolio turnover ratios vary amongst active and passive investment styles. Portfolio turnover within the fund holdings is monitored on an annual basis. The Institute of Business and Finance categorises lower turnover rates at less than 30%, average turnover rates at 40-100% and high turnover rates at greater than 120%. The Trustees consider an aggregated portfolio turnover in the range of 40-100% as acceptable.

The Trustees recognise the ongoing charge figure (OCF) as an important measure of the total expenses of running a fund. Annual management charges and OCFs of each of the fund holdings are monitored on an annual basis. The Trustees are then in a position to challenge its managers if costs are deemed excessive.

Investment Beliefs

When considering any investment, the Trustees obtain advice on whether it is satisfactory as regards its suitability for their investment policy.

The portfolios managed by AXA, M&G, Schroder, Ruffer, Troy and Newton provide opportunities for increased returns through exposure to different asset classes on a diversified basis, allowing the managers the opportunity to add value by tactical asset allocation and stock selection. The investments have been spread over a number of managers to reduce the manager specific risk of investment.

The Trustees believe their duty is to act in the best financial interests of the Scheme’s beneficiaries.  In discharging this responsibility, the Trustees have appointed investment managers who have complete discretion over the investments made. The Scheme’s assets and contributions are invested collectively with those of other similar pension schemes in the funds listed above.

The Trustees’ policy is to ensure that the assets invested are sufficiently realisable to enable the Trustees to meet their obligation to provide benefits as they fall due. The Trustees are satisfied that the arrangements in place conform to this policy.

The Trustees will keep the asset allocation under review, and risk measurement forms part of the performance monitoring process. The investment performance of the Scheme will be monitored independently on a quarterly basis.

The Trustees require the Scheme Actuary to review the funding level of the Scheme regularly. The Trustees will have regard to the way in which the Scheme’s assets and liabilities would be valued when establishing the balance between different kinds of investments and considering investment strategy generally.

The Scheme has available facilities with Standard Life, for members who wish to contribute to enhance their retirement benefits. The Trustees believe these to be appropriate facilities for this purpose, but note that the decisions on the level of contributions paid and the funds used rest entirely with the members.

Because the Trustees invest in pooled funds in which the Scheme’s investments are pooled with those of other investors, the Trustees have given the investment managers full discretion in evaluating inter alia ESG factors, including climate change considerations, exercising voting rights, investee capital structure, management of conflicts of interest and other stewardship obligations attributed to the investments, in accordance with their own corporate governance policies and current best practice.

The Scheme’s investment managers are encouraged to align their strategies with the Trustees’ investment policy, make decisions based on assessments about the medium to long term performance of an individual issuer of debt or equity and engage with those issuers to improve performance as follows:

• the Trustees monitor investment performance against the objectives set out in Clause 5. Assessments of performance take account of the achieved level of return against the agreed yardsticks and peer group, alignment with investment policy and quality of service.

• The Trustees call poorly performing managers to account and in the absence of improvement, their mandates may be withdrawn.

• The Trustees ensure that investment manager remuneration remains consistent with the level of achieved return. Inadequate performance may result in termination of mandate.

Environmental, Social and Governance (ESG) factors

The Trustees are ESG aware and believe that Environmental, Social and Governance (ESG) factors may have a material impact on investment returns and risk, particularly given the long-term nature of the Scheme’s liabilities. The extent to which these factors are taken into account by the investment managers in the selection, retention and realisation of investments is considered by the Trustees as part of the process of selecting investment managers with which to invest. As part of their regular review of investment managers, the Trustees consider how ESG factors are integrated into their investment process.

When considering potential investments, it is expected that considerations of responsible investment (RI) will form an integral part of manager’s process and that firms are sufficiently resourced to have achieved this. The Trustees have the requirement that managers are signatories of the UN Principles of Responsible Investment and comply with the UK Stewardship Code. Managers are expected to report at least annually on ESG considerations and engagement activities.

The Trustees do not take into account the views of the members of the Scheme (including their ethical views, their views in relation to social and environmental impact matters, and on future quality of life considerations) in the selection, retention and realisation of investments.

Signed:           __________

Trustee, on behalf of the Trustees of the Council of Reserve Forces and Cadets Associations Pension Scheme

Date                January 2026