Agenda item

The Head of Pensions introduced the report to the Board and highlighted the following areas from within it.

·  The Fund already implements a responsible investment policy, aligned with UN Principles on Human Rights. The question was whether the Fund should go further and whether Aerospace & Defence (A&D) companies should play any role in the Funds’ investments.

·  As A&D divestment would be a non-financial decision, it would require evidence that a ‘broad consensus’ (60%+) of members are in favour. Hence the Fund undertook an online survey of a sample of members which was live during 4-22 September 2025.

Survey methodology

·  The survey was conducted online only, a tried & tested methodology – the default method for research surveys. In the case of Avon Pension Fund, there is a close match between the demographic profile, specifically gender and age,of members for whom APF holds email addresses and the total membership.

·  Prevision Research provided the structure of the survey and the analysis of the responses.

Sampling

·  26,360 emailed invitations, 2,500 completed the survey. This is a 9.5% response rate which is very high vs similar surveys (4-5%), yielding a statistically significant confidence level exceeding 98%.

·  A stratified sample by age and gender yields findings that are statistically significant with a margin of error of +/- 1.5%.

·  Prevision weighted the findings to ensure that the demographic profile of responses matches the overall member profile.

The Chair of the Board asked for further information on the selection of Prevision Research to carry out their role.

The Head of Pensions replied that four agencies had been considered and that Prevision Research had been selected as a result of their public and private sector experience and effective data collection procedures.

Alison Wyatt asked that, whilst accepting there had been a good response rate, why had only a sample been selected to take part in the survey.

The Head of Pensions replied that by surveying a sample of members this yields findings that are statistically robust and representative of the membership. He added that an increase in the sample size yields diminishing returns in terms of a smaller margin of error.

Summary of research findings

·  Overall, should investment in A&D sector continue or cease?

Continue: 47.1% / Cease: 42.3%

Demographic analysis of whether investment in A&D sector should continue or cease

·  Percentage agreeing that the Fund should CONTINUE investing in A&D sector was 47% including a high proportion of males and members over the age of 55.

·  Percentage agreeing that the Fund should CEASE investing in A&D sector: 42% including a high proportion of females and members under the age of 45.

Stuart Pearson said that he had spoken with colleagues about the process and that while surprised by the outcome were happy with how it had been carried out. He asked if the sector in question regularly outperforms markets or provides higher returns.

The Head of Pensions replied that a decision is not based on the level of returns. He added that advice to the Committee has been clear that you could not say that divestment would equate to lower returns. He said that A&D assets have performed well in the past five years, but no prediction could be made as to future years.

Alison Wyatt asked if other Funds were being asked to consider taking a similar decision.

The Head of Pensions replied that other Funds were under some pressure to consider their position, but that the APF were the first to carry out a member survey.

Pooling

·  LPPI discussions going well with the aim to sign a shareholder agreement before April 1^st 2026.

·  Working on transitional arrangements to minimise frictional costs.

·  Assets to move to LPPI as are and over the proceeding 18 months a reorganisation of portfolios will likely take place.

The Board RESOLVED to note the methodology and survey results and acknowledged that the Pension Committee, as the strategic decision making body of the Fund, would make its final decision on Aerospace & Defence investments at its next meeting on 12th December 2025.