Pension Scheme Implementation Statement

The McCurrach Group Pension Scheme Implementation Statement

Background

The regulatory landscape continues to evolve as ESG becomes increasingly important to regulators and society. The Department for Work and Pensions (‘DWP’) has increased the focus around ESG policies and stewardship activities by issuing further regulatory guidance relating to voting and engagement policies and activities. These regulatory changes recognise the importance of managing ESG factors as part of a Trustee’s fiduciary duty.

Regulations also require that the Trustee details the McCurrach Group Pension Scheme’s (“the Scheme”) policies in its Statement of Investment Principles (SIP) and demonstrates its adherence to these policies in an Implementation Report.

Statement of Investment Principles (SIP)

The SIP can be found online at the web address:
www.mccurrach.co.uk/statement-of-investment-principles/

Changes to the SIP are detailed within this report.

Implementation Report

This Implementation Report is to provide evidence that the Scheme continues to follow and act on the principles outlined in the SIP. This report details:

Actions the Trustee has taken to manage financially material risks and implement the key policies outlined within the Scheme’s SIP;
The Trustee’s current policies and approach to ESG considerations, and the actions taken with each of the Scheme’s investment managers on managing ESG risks;
The extent to which the Trustee has followed policies relating to engagement, covering both their engagement with the Scheme’s investment managers and the engagement activity of each of the investment managers with the companies and counterparties in which they invest; and
The voting behaviour of the Scheme’s investment managers covering the reporting year to 31 December 2025 (noting the Trustee’s delegation of Scheme voting rights to the investment managers through its investment via pooled fund arrangements), including the most significant votes cast on the Scheme’s behalf.

Summary of key actions undertaken over the Scheme’s reporting year

Following the continued rise in gilt yields and the Scheme’s expected funding improvement, given its underhedged position, the Trustee completed a review of the Scheme’s liability hedging strategy over the first half of 2025. The review aimed to increase the level of interest rate and inflation hedging in line with the Scheme’s funding level, to lock in funding gains and reduce funding level volatility.

Based on an updated estimate of the Technical Provisions funding position as at 31 December 2024, the Trustee agreed to increase the target hedge to reflect an estimated funding level of 86%. This analysis was carried out using existing liability cashflows from the
31 December 2021 valuation rather than waiting for updated cashflows from the 2024 valuation.

As part of this change, the Trustee agreed a revised strategic benchmark, increasing the allocation to LDI and making corresponding reductions to growth assets. The increase in the LDI hedge was implemented in August 2025 and funded primarily through a partial redemption from the Absolute Return Bond mandate (c.11%). The new strategic benchmark agreed as part of the implementation of the increased LDI hedge, is as follows: Diversified Growth (20%), Semi- Liquid Credit (17.5%), Absolute Return Bonds (20%), LDI (42.5%).

In addition, a further disinvestment from the Absolute Return Bond mandate was undertaken during the year to meet the Scheme’s ongoing cashflow requirements. Following these transactions, the Scheme’s asset allocation was broadly in line with the revised strategic benchmark.

Looking ahead, the Trustee noted that the 31 December 2024 Actuarial Valuation will fall under the new funding code requirements. As part of this process, the Trustee will consider the Scheme’s journey plan, the point of significant maturity, and the transition towards a low‑dependency investment strategy. The Trustee intends to review the liability hedge further once updated liability cashflows are available.

Implementation Statement

This report demonstrates that the Trustee of the McCurrach Group Pension Scheme has adhered to the Scheme’s investment principles and its policies for managing financially material considerations, including ESG factors and climate change.

Signed

Zahir Fazal
02.06.2026

Trustee

Managing risks and policy actions

Risk / Policy	Definition	Policy	Actions over reporting period
Interest rates and inflation	The risk of mismatch between the value of the Scheme’s assets and present value of the liabilities from changes in interest rates and inflation expectations.	To hedge 86% of the impact of interest rates and inflation expectations on the value of the Scheme’s liabilities (measured on a Technical Provisions basis).	The Trustee reviewed the Scheme’s interest rate and inflation hedging strategy in light of rising gilt yields and the Scheme’s expected funding improvement, given its unhedged position. Following this review, the Trustee agreed to increase the level of hedging broadly in line with the Scheme’s improved funding position (c.86%). The increase in the LDI hedge was implemented in August 2025.
Liquidity	Difficulties in raising sufficient cash when required without adversely impacting the fair market value of the investment.	To maintain a sufficient allocation to liquid assets so that there is a prudent buffer to pay members benefits as they fall due (including transfer values), and to meet regulatory guidance around providing collateral to the LDI manager.	The Trustee monitors the Scheme’s liquidity position as part of the regular performance reporting.
Market	Experiencing losses due to factors that affect the overall performance of the financial markets.	To remain appropriately diversified and hedge any unrewarded risks (e.g. interest rates, inflation), where affordable and practicable.	During the reporting period, the Trustee agreed changes to the Scheme’s investment strategy to reflect the improved funding position and an increased focus on risk management. These changes included a higher strategic allocation to LDI, funded by reductions to the Scheme's growth assets, notably the Absolute Return Bond mandate. These changes were implemented over the reporting period.

Risk / Policy	Definition	Policy	Actions over reporting period
Credit	Default on payments due as part of a financial security contract.	To diversify this risk by investing in a range of credit markets across different geographies and sectors. To appoint investment managers who actively manage this risk by seeking to invest only in debt securities where the yield available sufficiently compensates the Scheme for the risk of default.	As mentioned above, the Trustee implemented a restructuring of the Scheme including a reduced allocation to Absolute Return Bonds (20%) and an increased allocation to Semi-Liquid Credit (17.5%). No other Trustee actions or amendments were implemented over the reporting period in respect of credit risk.
Environmental, Social and Governance (ESG)	Exposure to ESG factors, including but not limited to climate change, which can impact the performance of the Scheme’s investments.	To appoint managers who satisfy the following ESG criteria, unless there is a good reason why the manager does not satisfy each criteria: Responsible Investment (‘RI’) Policy / Framework Implemented via Investment Process A track record of using engagement and any voting rights to manage ESG factors ESG specific reporting UN PRI Signatory The Trustee monitors the managers on an ongoing basis.	No Trustee actions or amendments were implemented over the reporting period in respect of ESG risk/policy. The ESG credentials of the selected managers for the new strategic benchmark allocation was considered throughout the manager selection process.
Currency	The potential for adverse currency movements to have an impact on the Scheme’s investments.	The Scheme’s diversified growth and credit mandates are all invested in GBP hedged share classes.	No Trustee actions or amendments were implemented over the reporting period in respect of currency risk.
Non-financial	Any factor that is not expected to have a financial impact on the Scheme’s investments.	Non-financial matters are not taken into account in the selection, retention or realisation of investments.	No Trustee actions or amendments were implemented over the reporting period in respect of non-financial risks.

Changes to the SIP

There were no changes to the SIP over the 12-month reporting period.

Post-reporting year end, it was agreed that the SIP should be updated to reflect the recent regulatory requirements, strategy and strategic asset allocation changes, and collateral management. This update is currently in progress.

The current SIP was signed in November 2024.

Implementing the current ESG policy and approach

ESG as a financially material risk

The SIP describes the Scheme’s policy with regard to ESG as a financially material risk. The below table outlines the criteria the Trustee uses to assess managers’ ESG policies against and describes how the Scheme monitors and engages with the investment managers regarding the ESG policies. The rest of this statement details our view of the managers, our actions for engagement and an evaluation of the engagement activity.

Implementing the Current ESG Policy

Risk Management	1. Integrating ESG factors, including climate change risk, represents an opportunity to increase the effectiveness of the overall risk management of the Scheme. 2. ESG factors can be financially material and managing these risks forms part of the fiduciary duty of the Trustee.
Approach / Framework	3.The Trustee should understand how asset managers make ESG decisions and will seek to understand how ESG is integrated by each asset manager. 4. ESG factors are relevant to investment decisions in all asset classes. 5.Managers investing in companies’ debt, as well as equity, have a responsibility to engage with management on ESG factors.
Reporting & Monitoring	6. Ongoing monitoring and reporting of how asset managers manage ESG factors is important. 7. ESG factors are dynamic and continually evolving; therefore, the Trustee will receive training as required to develop their knowledge. 8. The role of the Scheme’s asset managers is prevalent in integrating ESG factors; the Trustee will, alongside the investment advisor, monitor ESG in relation to the asset managers’ investment decisions.
Voting & Engagement	9. The Trustee will seek to understand each asset managers’ approach to voting and engagement when reviewing the asset managers’ approach. 10. Engaging is more effective in seeking to initiate change than disinvesting.
Collaboration	11. Asset managers should sign up and comply with common codes and practices such as the UNPRI & Stewardship code. If they do not sign up, they should have a valid reason why. 12. Asset managers should engage with other stakeholders and market participants to encourage best practice on various issues such as board structure, remuneration, sustainability, risk management and debtholder rights.

ESG Summary and engagement

As the Scheme invests via fund managers, the managers provided details of their engagement actions including a summary of the engagements by category for the 12-month period to 31 December 2025.

The Trustee carried out an Impact Assessment review of the Scheme’s investment managers in September 2021.

Investment managers’ engagement activity

As the Scheme invests via pooled funds managed by various investment managers, each manager has provided details on their engagement activities, including a summary of the engagements by category over the Scheme’s reporting year to 31 December 2025.

Manager and Fund	Engagement summary	Commentary
LGIM Diversified Fund	Total Engagements: 3,088 Environmental: 2,674 Social: 48 Governance: 263 Other: 103 *One engagement can comprise of more than one topic across each company	L&G leverage the wider capabilities of the global firm to engage with companies. The team also regularly engage with regulators, governments and other industry participants to address long term structural issues, aiming to stay ahead of regulatory changes and adopt best practice. L&G’s Investment Stewardship team are responsible for engagement activities across all funds. L&G share their finalised ESG scorecards with portfolio companies and the metrics on which they are based. L&G currently do not provide examples of specific engagement activities at Fund level.
Apollo Total Return Fund	Total Engagements: 182 Environmental: 180 Social: 180 Governance: 182	Apollo have a clear due diligence and engagement framework. The team continually engage with portfolio companies through discussion with management, and these engagements have been a key driver for the production for formal company ESG reports and Key Performance Indicators. As bond investors, Apollo’s voting rights are limited, making it more difficult to engage with portfolio companies in comparison to equity investors. Examples of significant engagements are: Clean Harbors, Inc. - Apollo engaged with the Company to discuss progress and challenges in reducing greenhouse gas emissions (“GHG”), waste management and workforce practices. Discussions highlighted operational improvements, including fleet optimisation, vehicle refurbishment and high air‑quality standards at new facilities, alongside challenges from business growth and a focus on emissions intensity. Clean Harbors outlined its primary focus on Scope 1 and 2 emissions, while recognising increasing demand for Scope 3 data and investment in improved reporting. Engagement also covered compliance, safety performance, community relations and human capital management, with strong outcomes on employee engagement, retention and safety metrics. Apollo will continue to monitor the efforts to improve transparency and recognition of environmental benefits. TransCanada PipeLines Ltd. - Apollo engaged with the Company to discuss its long‑term decarbonisation strategy, with a primary focus on methane mitigation and electrification, which has progressed more effectively in Canada due to regulatory incentives and carbon pricing. The Company reiterated its commitment to long‑term, 50‑year planning, independent of political changes. Discussions also covered emerging capital opportunities linked to demand from data centres and enhanced aviation safety governance following an incident in Mexico.
L&G Unconstrained Bond Fund	Total Engagements: 417 Environmental: 283 Social: 8 Governance: 75 Other: 51 *One engagement can comprise of more than one topic across each company	L&G leverage the wider capabilities of the global firm to engage with companies. The team also regularly engage with regulators, governments and other industry participants to address long term structural issues, aiming to stay ahead of regulatory changes and adopt best practice. L&G’s Investment Stewardship team are responsible for engagement activities across all funds. L&G share their finalised ESG scorecards with portfolio companies and the metrics on which they are based. L&G currently do not provide examples of specific engagement activities at Fund level.
LGIM LDI and Gilts	-	LGIM currently do not provide a breakdown of engagement activities for LDI Funds.

Notes: ¹For some managers, total engagements do not sum up, as a number of engagements are related to a combination of E,S and G issues.

Voting (for equity/multi asset funds only)

The Trustee has acknowledged responsibility for the voting policies that are implemented by the Scheme’s investment managers on their behalf.

The Scheme’s fund managers have provided details on their voting actions including a summary of the activity covering the reporting year up to 31 December 2025. The Trustee has adopted the managers definition of significant votes and has not set stewardship priorities. The managers have provided examples of votes they deem to be significant, and the Trustee has shown the votes relating to the greatest exposure within the Scheme’s investment. When requesting data annually, via their investment consultant, the Trustee informs their managers what they deem most significant.

Fund name

Engagement summary

Examples of significant votes

Commentary

LGIM Diversified Fund

Meetings eligible to vote for: 9,539

Resolutions eligible to vote for: 100,740

Resolutions voted for: 99.9%

Resolutions voted with management: 75.8%

Resolutions voted against management: 23.0%

Resolutions abstained from: 1.2%

Microsoft Corporation Date: 05/12/2025
Percentage of portfolio: 0.4%

L&G voted against the re‑election of Satya Nadella as a director as L&G expect companies to separate the roles of Chair and CEO due to board oversight and risk management concerns. The resolution nevertheless passed with 94% shareholder support. L&G considers this vote to be significant as it is an example of an escalation of their voting policy regarding the topic of the combination of the board chair and CEO. L&G will continue to engage with the company, publicly advocate for role separation, and monitor progress at both company and market level.

Shell Plc . - Date: 20/05/2025
Percentage of portfolio: 0.3%
L&G voted against the enhanced disclosure of whether Shell’s liquefied natural gas (“LNG”) demand forecasts, production targets, and capital expenditure, are in alignment with Shell’s climate commitments. While recognising the resolution’s intent, L&G considered its objectives were being addressed through ongoing, constructive engagement with Shell leadership and improved company disclosures on stranded asset risk and financial resilience. The resolution failed to pass, receiving 20.6% support. L&G will continue to engage with Shell and to publicly advocate their position and monitor company progress.

L&G’s Investment Stewardship team are responsible for managing voting activities across all funds. The team uses Institutional Shareholder Services’ (“ISS”) ‘ProxyExchange’ electronic voting platform to electronically vote clients’ shares.
All voting decisions are made by L&G and they do not outsource any part of the strategic decisions.

To ensure their proxy provider votes in accordance with their position on ESG, L&G have put in place a custom voting policy with specific instructions.
L&G’s use of ISS’ recommendation is purely to augment their research and proprietary ESG assessment tools.