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Managed Pension Funds Limited
Registered No. 04486031
M ANAGED P ENSION F UNDS L IMITED
Report and Financial Statements
For the year ended 31 December 2025
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Managed Pension Funds Limited
Registered No. 04486031
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DIRECTORS I Armfield R Bridger T Coghlan (appointed 2 January 2026) B Healy (appointed 2 January 2026) Lim Lam Thuon Mine (appointed 2 January 2026) E Linnane (appointed 2 January 2026) S Sanderson (resigned 2 January 2026) C O’Connor (resigned 2 January 2026) N Wightman (resigned 2 January 2026)
INDEPENDENT ACTUARIAL FUNCTION HOLDER N Chapman WTW Watson House Reigate Surrey United Kingdom RH2 9PQ
COMPANY SECRETARY L Bordessa (appointed 25 February 2026) V Sullivan (resigned 25 February 2026)
AUDITOR PKF Littlejohn LLP 12 King Street Leeds United Kingdom LS1 2HL
REGISTERED OFFICE 20 Churchill Place London United Kingdom E14 5HJ
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Managed Pension Funds Limited
STRATEGIC REPORT For the year ended 31 December 2025
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The directors of Managed Pension Funds Limited (“MPFL” and “the Company”) present the Strategic Report of the Company for the year ended 31 December 2025 and have complied with s414c of the Companies Act 2006 in preparing the report.
REVIEW OF THE BUSINESS
Principal Activities
The Company is a UK-based insurance company authorised by the Prudential Regulatory Authority (“PRA”) and regulated by the Financial Conduct Authority (“FCA”) and the PRA. Its principal activity is to provide pooled investment management services to pension schemes and reinsurance platforms under unit-linked life insurance contracts. Business Model The Company operates as an integrated part of the State Street Corporation Group of companies (“the Group”) and has outsourced all client facing, investment management and back-office services to other companies in the Group. State Street Global Advisors Limited (“SSGA”) provides investment management, sales, marketing, administration and support services to the Company. The costs to the Company for the provision of these services are met out of fees charged to policyholders, plus any investment management fees deducted from specific funds, less a retention due to the Company of £750,000 (2024: £750,000). This retention is to enable the Company to meet its direct administrative expenses and to maintain a sufficient capital buffer to meet its regulatory obligations.
Results and Performance
The Directors consider that the Company’s key financial and other performance indicators are as follows:
Net policy outflows of £14.9 billion and investment return on policyholder funds of £3.0 billion resulted in a £11.9 billion year on year decrease in the value of unit-linked liabilities and the assets held to cover these. Inflow to policyholder funds was £5.6 billion (2024: £9.5 billion), whilst the level of outflow was £20.5 billion (2024: £18.6 billion). The driver of net outflows was a trust-based defined contribution workplace pension scheme divesting from passive funds. The investment return of £3.0 billion was driven by passive equity funds. Other technical income comprises fees charged to policyholders based on the assets held to cover unit-linked liabilities. The decrease in this income arose from a decrease in assets under management during 2025. The capital coverage increased in line with an increase in capital resources.
PRINCIPAL RISKS AND UNCERTAINTIES
The directors of the Company (the “Board”) are responsible for identifying and evaluating the key risks facing the business. The Own Risk Solvency Assessment (“ORSA”) process established under the UK Solvency II rules is the process by which the Board considers the Company’s strategy, and the risks faced in pursuing the strategy. The Board ensures there are adequate mitigations for the risks identified and these risks are within the Board’s appetite. The risk profile of the Company is also regularly monitored by the Board using a framework that establishes tolerances. Key risks and other operational reports are also provided to and monitored by the Board on a regular basis.
2025 2024 Change £’000 £’000 %
Value of unit-linked liabilities 21,576,227 33,534,681 (35.7%)
Inflow to policyholder funds 5,579,232 9,482,269 (41.2%) Outflow from policyholder funds (20,515,045) (18,622,125) 10.2% Investment return on policyholder funds (net of all charges) 2,977,359 5,429,695 (45.2%)
Other technical income 8,417 11,441 (26.4%) Direct administrative expenses (454) (407) 11.5%
UK Solvency II capital resource 16,520 15,235 8.4% UK Solvency II capital coverage 418% 309% 35.3%
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Managed Pension Funds Limited
STRATEGIC REPORT (continued) For the year ended 31 December 2025
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PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED) The Company only writes unit-linked investment business that passes investment risk onto policyholders. It offers no guarantees or options to policyholders that could give rise to a loss to the Company. It outsources most of its activities to other Group entities and is indemnified against operating losses arising through the negligence or errors of its outsourced service providers. The Board operates a programme of regular reviews of all outsourced activities. The Company will only be materially impacted by the failure of, or extreme events relating to, its parent company or other Group companies supporting the SSGA outsourcing activities.
Credit and market risks facing the Company are minimal as it does not undertake proprietary trading. The Company’s investment management agreement (the “IMA”) with SSGA ensures that there is no material risk to the fee income retained by the Company. The Company assets that could give rise to credit risk are the cash deposits held with Royal Bank of Scotland (“RBS”), any cash and other assets held within the SSGA Liquidity Plc SSGA GBP Liquidity Fund (also referred to as “SSGA Liquidity Fund”) and policyholder debtors.
The Company has a governance structure in place to minimise the above risks. Details of the governance structure can be found in note 20. As part of the responsibilities delegated by the Board, the MPFL Working Group (the “Working Group”) reviews the performance of outsourced service functions on a quarterly basis to ensure targets are met and issues are appropriately escalated and resolved. The performance of outsourced service functions is also reported to the Board on a quarterly basis. In addition, the Board reviews relevant reports issued by Group Internal Audit on internal audit work carried out on these outsourced service functions.
The Company is subject to the PRA rulebook and the FCA handbook stipulating that sufficient margins of regulatory solvency be maintained and that policyholders are treated fairly. The Company ensures that it meets and exceeds these targets on a regular basis. It also takes an active approach to UK regulatory issues and monitors pronouncements from the PRA to assess and plan for regulatory changes.
In 2025, there were continued ongoing elevated geopolitical risks. The Company has very limited exposure to the regions where these risks are the largest but continues to monitor and assess the wider impacts of these conflicts.
Further information on risks and uncertainties affecting the Company is detailed in note 20.
STATEMENT OF COMPLIANCE WITH S172(1) OF THE COMPANIES ACT 2006 The directors have acted in a way that they considered, in good faith, to be most likely to promote the success of the Company for the benefit of its parent company, and in doing so had regard, amongst other matters, to:
the likely consequences of any decision in the long term; the need to foster the Company’s business relationships with suppliers, policyholders and others; the impact of the Company’s operations on the community and the environment; and the desirability of the Company maintaining a reputation for high standards of business conduct; In order to promote the success of the Company, the Board directs and supervises the Company’s affairs within a framework of effective controls which enable risk to be assessed and managed. The directors set the Company’s objectives and policies and standards ensuring that its obligations to the State Street Group, its policyholders and others are understood and complied with and that it operates high standards of business conduct.
The Company has outsourced all client facing, investment management and back-office services to SSGA. The directors perform regular oversight of these services through review of operational reports, routine meetings with SSGA management and attendance by SSGA representatives at board meetings.
Through the Company’s own activity and via the activities outsourced to SSGA, the following disclosure describes how the directors have had regard to the matters set out in section 172(1) (a) to (f) and forms the directors’ statement required under section 414CZA of The Companies Act 2006.
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Managed Pension Funds Limited
STRATEGIC REPORT (continued) For the year ended 31 December 2025
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STATEMENT OF COMPLIANCE WITH S172(1) OF THE COMPANIES ACT 2006 (CONTINUED)
Clients / Policyholders The directors monitor policyholder activity through regular review of financial and other reports on premiums and claims and the performance of the funds in which the policyholders are invested.
During the year the directors receive regular reports on how customer outcomes are monitored. The Company follows a standard internal process for the recording, assessment and settlement of policyholders’ grievances and complaints.
SSGA holds various client events and conferences, to include the Company’s policyholders, covering a range of topics and through the normal course of business has regular client engagement, having meetings with policyholders as appropriate. SSGA engages with policyholders with regards to existing and new investment capabilities and discussions have included in particular sustainability and stewardship. SSGA continued to actively engage with policyholders to keep them informed of economic and market developments.
Shareholder As a wholly owned subsidiary it is important for the Company to remain aligned with the parent’s strategy whilst maintaining appropriate governance at the Company level and taking decisions that aim to balance local stakeholder interests with the broader, long-term goals of the parent company.
The Company has engaged with the shareholder via SSGA’s participation in State Street group (“Group”) committees and regular communication and reporting, including reporting the Company’s capital position and material items to the parent.
Suppliers The Company has minimal suppliers in the conventional sense as it has outsourced all client facing, investment management and back-office services to SSGA. However, engagement is important with key suppliers to ensure continuity of service and to maintain awareness of developments and changes on both sides of the relationship. Management undertakes routine meetings with key external advisors and suppliers.
Regulators Management have an open and ongoing dialogue with the FCA and PRA to discuss regulatory priorities and strategic developments, the outcomes of which are regularly reported to the Board.
Group companies As part of a wider group, the Company is both reliant on the group for provision of certain services and is a provider of services to other group companies. The Company has in place a Board-approved outsourced arrangement oversight framework and the Board receives updates from relevant group functions at board meetings, and results from performance reviews.
There has been continued scrutiny of IT and cybersecurity, resulting in more focussed updates from Group IT on issues, as they relate to the Company, and their resolution.
Streamlined Energy and Carbon Reporting (SECR) The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 have implemented the United Kingdoms (“UK”) Government’s policy on Streamlined Energy and Carbon Reporting (“SECR”). This regulation requires large unquoted companies that have consumed in the UK more than 40,000 kilowatt-hours (“kWh”) of energy in the reporting period to include energy and carbon information within their Directors’ Report.
The Company does not fall into scope of this regulation (as per s465 and s466 of the Companies Act 2006) and has elected not to voluntarily disclose company specific energy and carbon information.
The Company has a single shareholder, no employees, and given the outsourced nature of its operations, it has no direct impact on the community. Through its emerging risk and material risks reviews, the Board has considered its specific climate risk and additionally the Board has considered the broader environmental impacts of its activity. The Company has engaged closely with SSGA to understand its environmental position. The Company does not consider its physical and transitional climate risks to be material. The Group publishes an annual ESG report: https://www.statestreet.com/web/about/sustainability/documents/statestreet-sustainability-report-2024.pdf. f.
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Managed Pension Funds Limited
STRATEGIC REPORT (continued) For the year ended 31 December 2025
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ACCOUNTING MATTERS AND SIGNIFICANT AREAS The Board of MPFL have established an audit committee (“the Audit Committee”) that considers the appropriateness of the Company’s accounting policies and agrees the more significant accounting matters in relation to the Company’s annual financial statements.
The accounting matters that were subject to specific consideration were the calculation of fees charged to policyholders for investment management services, which are categorised as other technical income and the valuation of assets held to cover linked liabilities. Other technical income has a risk of being misstated because of, for example, incorrect cut-off of terminating policyholder accounts or incorrect fee rates being applied to policyholder billing. The valuation of assets held to cover linked liabilities could also be misstated as a result of incorrect pricing of units, recognition of expenses and income or incorrect accounting of policyholder premiums and claims.
These were satisfactorily addressed by the Audit Committee through consideration of reports provided by management and internal controls processes adhered to by those Group companies who provide outsourced services for the accurate calculation of fees and the valuation of investments, all of which are held within unit-link funds. If there were to be losses to the Company as a result of errors or negligence, the outsourcing agreements provide indemnity to the Company against such losses.
FUTURE DEVELOPMENTS Through its fellow Group company, SSGA, the Company is actively seeking new business and will continuously review its product offering in line with client expectations and regulatory changes.
By order of the Board
L Bordessa Company Secretary 01 April 2026
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Managed Pension Funds Limited
DIRECTORS’ REPORT For the year ended 31 December 2025
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The directors of the Company present their report and the audited financial statements of the Company for the year ended 31 December 2025.
RESULTS AND DIVIDENDS The results for the year ended 31 December 2025 are set out on pages 14 and 15 of the financial statements. The Company made a profit before tax of £1,697,000 (2024: £1,387,000). No interim dividend (2024: nil) was paid during the year. The directors have not proposed a final dividend (2024: nil).
DIRECTORS AND DIRECTORS’ INTERESTS The directors who served were as follows: I Armfield (Independent non-executive) R Bridger (CEO) T Coghlan (appointed 2 January 2026) (Chairman and Independent non-executive) B Healy (appointed 2 January 2026) (Independent non-executive) Lim Lam Thuon Mine (appointed 2 January 2026) (Independent non-executive) E Linnane (appointed 2 January 2026) S Sanderson (resigned 2 January 2026) C O’Connor (resigned 2 January 2026) N Wightman (resigned 2 January 2026)
None of the directors, or any of their immediate family members, had any interest in the shares of the Company. No rights to shares or debentures was granted or exercised during the year. DIRECTORS’ INDEMNITIES
The Company has granted an indemnity to its directors against liability in respect of proceedings brought by third parties subject to the conditions set out in section 234 of the Companies Act 2006. Such qualifying third-party indemnity provision remains in force at the date of approving the Directors’ Report.
GOING CONCERN STATEMENT In assessing whether the going concern basis is appropriate, the directors have considered the information contained in the financial statements, the Company’s solvency position and liquidity, and the latest forecasts (up to December 2028). These forecasts have been subject to sensitivity tests and operational resilience review (including continuity of the operations and client delivery). As a result of this review, the directors believe the Company has adequate resources to continue in operational existence over the going concern period assessed up to 31 December 2028. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual report and financial statements.
DISCLOSURE OF INFORMATION TO AUDITORS
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors, each director has taken all the steps that he/she is obliged to take as a director in order to make himself/herself aware of any relevant audit information and to establish that the auditor is aware of that information.
AUDITORS It is the intention of the directors to reappoint PKF Littlejohn LLP as auditors pursuant to s487 of the Companies Act, 2006.
By order of the Board
R Bridger Director 01 April 2026
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Managed Pension Funds Limited
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF FINANCIAL STATEMENTS
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The Directors are responsible for preparing the strategic report, Directors’ report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom accounting standards, including FRS 101 “reduced disclosure framework” (United Kingdom generally accepted accounting practice). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED
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Opinion
We have audited the financial statements of Managed Pension Funds Limited (the ‘Company’) for the year ended 31 December 2025 which comprise the Income Statement, the Statement of Comprehensive Income, the Statement of Changes in Equity, the Statement of Financial Position and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the state of the Company’s affairs as at 31 December 2025 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included:
• Obtaining an understanding of management’s process for going concern assessment, including the forecasting process;
• Challenging the key assumptions made in the assessment;
• Testing the key inputs and mathematical accuracy of the forecasts provided;
• Reviewing the historical accuracy of the forecasts by comparing prior period budgets with actual performance;
• Reviewing the Company’s current capital position and Own Risk and Solvency Assessment (“ORSA”), reports submitted during and post year-end and evaluating the appropriateness of the stress test scenarios and sensitivity analysis applied by management in making this assessment;
• Assessing management’s considerations of the ability of Company’s main outsource provider to continue providing operations and client delivery;
• Reading minutes of meeting of the Board and audit committee;
• Making inquiries with management and those charged with governance; and
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED (continued)
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• Assessing the impact of subsequent events.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
Overall materiality The scope of our audit was determined by our application of materiality. We established quantitative thresholds for materiality and these, together with qualitative considerations, helped us determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statements line items and disclosures in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
We determined the overall materiality of the Company to be £126,000 (2024: £170,000) which represents 1.5% (2024: 1.5%) of other technical income. Other technical income is selected as the most appropriate benchmark as it serves as a key measure of the Company’s performance, as viewed by the users of the financial statements.
Performance materiality
We set performance materiality at a level lower than overall materiality to reduce to an appropriately low level the probability that the aggregate amount of uncorrected and undetected misstatements exceeds overall materiality. This threshold determines the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures and also the determination of our sample sizes. Based on our risk assessment and evaluation of the entity’s control environment, we concluded that performance materiality be set at 75% (2024: 60%) of our overall materiality, being £94,000 (2024: £102,000). Our judgement reflects the risk assessments of the company together with our assessment of the company’s overall control environment.
We recognise that audit differences in respect of assets held to cover linked liabilities and technical provisions for linked liabilities would offset each other with no net impact on the income statement. As a result, we have applied a higher materiality threshold of £539,405,000 (2024: £838,367,000) for our testing of assets held to cover linked liabilities and the related liabilities, which represents 2.5% (2024: 2.5%) of assets held to cover linked liabilities.
Triviality
We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £6,000 (2024: £8,500), as well as differences below this threshold that, in our view, warranted reporting on qualitative grounds. Additionally, we also report on disclosure issues identified when assessing the overall presentation of the financial statements.
Our approach to the audit As part of designing our audit, we determined materiality and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement made by the directors. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED (continued)
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addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Other technical income (‘Revenue’) recognition
Under ISA (UK) 240, there is a rebuttable presumption that revenue recognition is a significant fraud risk. There could be an incentive for management to override controls to recognise revenue in line with management targets. We consider the area of manual journals or adjustments posted to other technical income to be the most susceptible to material misstatements. Revenue recognition is further described in Note 2 in the accounting policies on page 21 and the critical accounting estimates and judgement on page 19. Also refer to Note 5 of the financial statements.
Our audit procedures to address this matter included:
Understanding the entity’s revenue recognition policy and ensuring that it is compliant with the requirements under the applicable accounting reporting framework; Understanding and assessing the design and implementation of key controls in respect of revenue recognition; Obtaining and inspecting service organisation control reports that are relevant to the recognition of revenue, including those relating to the valuation of assets which directly impact management charges and ensuring that the entity is covered by the scope of the controls report and assessing if there are any exceptions or qualification; Obtaining a bridging letter if there are any gap periods in relation to service organisation reports; Performing substantive testing procedures on a sample of management charges to ensure the correct asset valuation has been used, a correct rate has been applied and the calculation has been performed correctly; Performing revenue cut-off procedures to ensure revenue has been recognised in the correct period; Performing substantive procedures in relation to year end accruals; and Performing journal entry testing based on specific risk criteria to identify if any unusual or significant journals impacting revenue have been posted and, if required, testing these to underlying documentation.
Key observations Based on our audit procedures performed and evidence obtained, we consider the amount of other technical income recognised in the financial statements to be appropriate.
Other information
The other information comprises the information included in the report and financial statements, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the report and financial statements. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED (continued)
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statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
• the financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities in respect of financial statements, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
• We obtained an understanding of the Company and the sector in which it operates to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED (continued)
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our understanding in this regard through discussions with management, industry research and application of cumulative audit knowledge and experience of the sector. • We determined the principal laws and regulations relevant to the Company in this regard to be those arising from the Companies Act 2006, permission and supervisory requirements of the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the Company with those laws and regulations. These procedures included, but were not limited to: enquiries of management, review of board and audit committee meeting minutes and review of relevant legal and regulatory correspondence.
• We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, the potential for management bias in relation to revenue recognition, and our procedures in this respect was set out in the key audit matter section above.
• As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included, but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters which we are required to address We were appointed by the Audit Committee on 13 October 2023 to audit the financial statements for the period ended 31 December 2024 and subsequent financial periods. Our total uninterrupted period of engagement is two years, covering the periods ended 31 December 2024 and 31 December 2025. The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Company and we remain independent of the Company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
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Managed Pension Funds Limited
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MANAGED PENSION FUNDS LIMITED (continued)
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James Wilkinson (Senior Statutory Auditor) For and on behalf of PKF Littlejohn LLP Statutory Auditor 12 King Street Leeds LS1 2HL
Date:
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Managed Pension Funds Limited
INCOME STATEMENT For the year ended 31 December 2025
Technical account – Long-term business
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The accompanying notes 1 to 21 on pages 18 to 35 form an integral part of these financial statements.
2025 2024
Notes £’000 £’000
Investment income 4 542,985 7,166,203 Unrealised gains / (losses) on investments 4 4,916,630 (1,697,908) Other technical income 5 8,417 11,441
TO TAL TECHNICAL INCO ME 5,468,032 5,479,736
Technical provisions for linked liabilities 3 (2,977,359) (5,429,695) Net operating expenses 5 (8,121) (11,098) Investment expenses and charges 4 (2,420,598) (9,462) Tax attributable to the long-term business 7(a) (60,938) (28,729)
CHANGE IN TECHNICAL PRO VISIONS AND EXPENSES (5,467,016) (5,478,984)
BALANCE ON THE TECHNICAL ACCOUNT – LONG-TERM BUSINESS 1,016 752
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Managed Pension Funds Limited
INCOME STATEMENT For the year ended 31 December 2025
Non-Technical account
15
All of the amounts above are in respect of continuing operations.
STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2025
There was no other income or expense for the period other than the profit in respect of continuing operations shown within the income statement.
The accompanying notes 1 to 21 on pages 18 to 35 form an integral part of these financial statements.
2025 2024 Notes £’000 £’000
BALANCE ON THE TECHNICAL ACCOUNT – LONG-TERM BUSINESS 1,016 752 Tax credit attributable to balance on the long-term business technical account 7(a) 345 251
SHAREHO LDERS’ PRE-TAX PRO FIT FRO M LO NG-TERM BUSINESS 1,361 1,003
Investment income 4 336 384
PRO FIT BEFORE TAX 1,697 1,387
Tax expense on profit 7(a) (429) (347)
PRO FIT FO R THE FINANCIAL YEAR 1,268 1,040
2025 2024 Notes £’000 £’000
PRO FIT FO R THE FINANCIAL YEAR 1,268 1,040
TO TAL COMPREHENSIVE INCO ME FOR THE YEAR 1,268 1,040
Page 17
Managed Pension Funds Limited
STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2025
16
The accompanying notes 1 to 21 on pages 18 to 35 form an integral part of these financial statements.
Called up Profit share Capital and loss capital contribution account Total £’000 £’000 £’000 £’000
Balance at 1 January 5,000 3,600 5,669 14,269
Total comprehensive income for the year - - 1,040 1,040
Balance at 31 December 5,000 3,600 6,709 15,309
Called up Profit share Capital and loss capital contribution account Total £’000 £’000 £’000 £’000
Balance at 1 January 5,000 3,600 6,709 15,309
Total comprehensive income for the year - - 1,268 1,268
Balance at 31 December 5,000 3,600 7,977 16,577
2024
2025
Page 18
Managed Pension Funds Limited
STATEMENT OF FINANCIAL POSITION As at 31 December 2025
17
The financial statements on pages 14 to 35 were approved by the Board of Directors and signed on its behalf by:
R Bridger Director Company Registered No. 04486031 01 April 2026
The accompanying notes 1 to 21 on pages 18 to 35 form an integral part of these financial statements.
2025 2024 Notes £’000 £’000 ASSETS
INVESTMENTS Other financial investments 9 13,513 12,927
ASSETS HELD TO COVER LINKED LIABILITIES 10 21,576,227 33,534,681
DEBTO RS Debtors arising out of direct insurance operations - policyholders 11 2,265 3,266 Other debtors 12 - 21
O THER ASSETS Cash at bank and in hand 13 15,896 9,687
TO TAL ASSETS 21,607,901 33,560,582
EQ UITY AND LIABILITIES
CAPITAL AND RESERVES Called up share capital 14 5,000 5,000 Capital contribution 14 3,600 3,600 Profit and loss account 7,977 6,709
TO TAL CAPITAL AND RESERVES 15(b) 16,577 15,309
TECHNICAL PRO VISIONS FO R LINKED LIABILITIES 16 21,576,227 33,534,681
CREDITO RS Other creditors 17 14,919 10,423
ACCRUALS AND DEFERRED INCOME 178 169
TO TAL LIABILITIES 21,591,324 33,545,273
TO TAL SHAREHO LDERS' EQ UITY AND LIABILITIES 21,607,901 33,560,582
Page 19
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS at 31 December 2025
18
1. AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH FRS 101
The financial statements of Managed Pension Funds Limited for the year ended 31 December 2025 were authorised for issue by the Board of Directors on 01 April 2026 and the balance sheet was signed on the Board’s behalf by R Bridger.
Managed Pension Funds Limited is incorporated, domiciled in England and limited by shares.
The financial statements have been prepared in compliance with United Kingdom Accounting Standards, including Financial Reporting Standard 101, ‘Reduced Disclosure Framework’ (FRS 101), the Companies Act 2006 and the provisions of Schedule 3 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 relating to insurance companies.
The Company’s financial statements are presented in sterling and all values are rounded to the nearest thousand pounds (£000) except when otherwise indicated.
The principal accounting policies adopted by the Company are set out in note 2.
2. ACCOUNTING POLICIES
Basis of preparation
The Company remains a qualifying entity and hence continues to apply FRS 101 in preparation of the financial statements.
The Company has taken advantage of the following disclosure exemptions under FRS 101:
(a) IAS 1 paragraph 111 – cash flow statement information,
(b) IAS 7 – statement of cash flow,
(c) IAS 8 paragraph 30-31 – new accounting standards that have been issued but are not yet effective,
(d) FRS 101 provides exemptions from the extensive disclosure requirements of IFRS 15. The paragraphs of IFRS 15 concerning disclosure requirements, from which FRS 101 reporters can be exempt, include paragraphs 113(a), 114, 115, 118, 119(a)–(c), 120–127 and 129.
(e) The requirements of paragraph 16 of IAS 1.
In preparing these financial statements the directors have considered the impact of the physical and transition risks of climate change and identified this as an emerging risk, but have concluded that it does not have a material impact on the recognition and measurement of the assets and liabilities in these financial statements as at 31 December 2025. This is because the assets are reported at fair value under IFRS and as set out in note 10, therefore utilise market prices at the period end. These market prices will include the current expectations of the impact of climate change on these investments. However, we recognise that government and societal responses to climate change risks are still developing and the future impact cannot be predicted. Future valuations of assets may therefore differ as the market responds to these changing impacts or assesses the impact of current requirements differently.
Going concern In assessing whether the going concern basis is appropriate, the directors have considered the information contained in the financial statements, the Company’s financial position and liquidity, and the latest forecasts (up to December 2028). These forecasts have been subject to sensitivity tests and operational resilience review (including continuity of the operations and client delivery). As a result of this review, the directors believe the Company has adequate resources to continue in operational existence over the going concern period assessed up
Page 20
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
19
2. ACCOUNTING POLICIES (CONTINUED)
Going concern (continued) to 31 December 2028. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual report and financial statements.
Critical accounting estimates and judgements Our accounting policies by their nature require management to make judgments, involving estimates and assumptions. These estimates and assumptions are based on information available as of the date of the financial statements, and changes in this information over time could materially affect the amounts of assets, liabilities, equity, revenue and expenses reported in subsequent financial statements. The management estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances.
The financial statements are prepared under the historical cost convention, modified to include financial instruments at fair value through profit or loss and in accordance with applicable accounting standards. All investment management fees are determined by the value of assets under management and the consideration specified in contracts with its policyholders. The Company will accrue for unbilled investment management fees by taking the assets under management as of a fixed date and the consideration specified in contracts.
Financial assets and liabilities
Measurement methods
Initial recognition and measurement Financial assets and liabilities are recognised when the entity becomes party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognised on trade date, the date on which the Company commits to purchase or sell the asset. At initial recognition, the Company measures a financial asset or financial liability at its fair value plus or minus transaction costs that are incremental and directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss are expensed in the income statement. Immediately after recognition, an expected credit loss (“ECL”) is recognised in the income statement for financial assets measured at amortised cost and investment securities measured at fair value through other comprehensive income, which may result in an accounting loss being recognised when an asset is newly originated.
Financial assets – classification and subsequent measurement The Company classifies financial assets in the following measurement categories:
• Amortised cost; • Fair value through other comprehensive income (FVOCI); or • Fair value through profit or loss (FVTPL).
Investments – Other Financial Investments Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective, such as loans, bonds and trade receivables. The classification and subsequent measurement of debt instruments depend on: (i) The Company’s business model for managing the assets Factors considered by the Company in determining the business model for a group of assets include past experience of how the cash flows for these assets were collected and how risks are assessed and managed. The liquidity portfolio assets are held by the Company as part of liquidity management and are generally classified within the hold to collect and sale business model; collecting contractual cash flows and sales are integral to achieving the objectives of the business model.
Page 21
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
20
2. ACCOUNTING POLICIES (CONTINUED)
Investments – Other Financial Investments (continued) (ii) The cash flow characteristic of the assets The Company assesses whether the financial instruments’ cash flows represent solely payments of principal and interest (“SPPI”). In making this assessment, the Company considers whether the contractual cash flows are consistent with a basic lending arrangement i.e., interest includes only consideration for the time value of money, credit risk, other lending risk and a profit margin that is consistent with a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial assets are classified and measured at FVTPL.
Based on these factors, the Company classifies its debt instruments into one of the following measurement categories. • Amortised cost: assets that are hold for collection of contractual cash flows were those cash flows represent SPPI, and that are not designated at FVTPL. The carrying amount of these assets is adjusted by any expected credit loss allowance recognised. • Fair value through other comprehensive income: financial assets that are hold for collection of contractual cash flows and for selling the assets, where the assets’ cash flows represent SPPI and are not designated as FVTPL. Movements in fair value are taken through other comprehensive income, except for the recognition of impairment gains or losses, interest income and foreign exchanges gains and losses on the instrument’s amortised cost which are recognised in profit or loss. • Fair value through profit or loss: assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. Other financial investments are carried at FVTPL. After initial recognition, assets held at amortised cost are measured using the effective interest rate adjusted for credit losses.
Cash and cash equivalents Cash and cash equivalents comprise cash balances and 30 days term deposits that are repayable on demand.
Valuation of investments and assets held to cover linked liabilities Assets held to cover linked liabilities are held at fair value through profit or loss to back the underlying liabilities to which these relate. Fair value of quoted investments and holdings in collective investment schemes are based on bid price.
Derivative contracts are valued at market rates where available, or using independently verified model generated rates, and the gain or loss on these contracts is brought into the technical account.
To comply with the requirements of FRS 101, other financial investments, investments held to cover linked liabilities, and technical provisions for linked liabilities are further analysed in note 10 using a “Fair Value Hierarchy”: Level 1 Investments - These are investments whose fair value is determined using observable, unadjusted quoted prices in active markets for identical assets. Active markets are markets in which transactions occur for the item to be fair valued with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 Investments - These are investments whose fair value is determined using inputs other than quoted prices included within level 1 inputs that are observable, either directly or indirectly through corroboration with market data. Level 3 Investments - These are investments whose fair value is determined using inputs that are not observable, reflecting assumptions that the market participants may use in pricing an investment.
Financial liabilities – classification and measurement Financial liabilities, other than loan commitments and financial guarantees, are measured at amortised cost or at FVTPL when they are held for trading and derivative instruments or the fair value designation is applied. Financial liabilities are derecognised when they are extinguished.
Page 22
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
21
2. ACCOUNTING POLICIES (CONTINUED)
Impairment of financial assets The Company assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its debt instrument assets carried at amortised costs and FVOCI and with the exposure arising from loan commitments and financial guarantee contracts. The Company recognises a loss allowance for such losses at each reporting date. The Company measures ECL on each balance sheet date according to a three stage ECL impairment model:
• Stage 1 – from initial recognition of the financial asset to the date on which the asset has experience a significant increase in credit risk relative to its initial recognition, a loss allowance is equal to the credit loss expected to result from default occurring over 12 months following the reporting date. • Stage 2 – following a significant increase in credit risk relative to the initial recognition of the financial asset, a loss allowance is recognised equal to the credit losses expected over the remaining lifetime of the asset. • Stage 3 – when the financial asset is considered to be credit impaired, a loss allowance is recognised equal to the credit losses expected over the remaining life of the asset. Interest and revenue is calculated based on the gross carrying amount of the asset, net of the loss allowance.
The measurement of the ECL reflects an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value of money and reasonable and supportable information that is available without undue cost and effort at the reporting date about past events, current conditions and forecasts of future economic conditions. The Company uses the simplified approach when calculating the ECL.
Technical provisions for linked liabilities Linked liabilities are established by reference to the value of the underlying assets that are held to meet those liabilities. There is no reinsurance of linked liabilities. Unit-linked contracts are in effect investment contracts (i.e. do not involve the transfer of significant insurance risk) and are accounted for by using the ‘deposit accounting’ basis. Fees receivable from policyholders on such unit linked investment contracts are recognised as ‘Other technical income’ in the long-term business technical account.
Derecognition of financial assets and liabilities A financial asset or liability is derecognised when the contract that gives rise to it is settled, sold, cancelled or expires. Where an existing financial liability is replaced by another from the same lender at substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability such that the difference in the respective carrying amounts together with any costs or fees are recognised in the long-term business technical account.
Revenue from contracts with policyholders The amount of revenue that the Company recognises is measured based on the consideration specified in contracts with its policyholders, and excludes taxes collected from policyholders subsequently remitted to government authorities. The Company recognises revenue when a performance obligation is satisfied over time as the services are performed or at a point in time depending on the nature of the services provided as further discussed below. Contract durations may vary from short to long term or may be open ended. Termination notice periods are in line with general market practice and typically do not include termination penalties. Therefore, for substantially all of the Company’s revenues, the duration of the contract and the enforceable rights and obligations do not extend beyond the services that are performed daily or at the transaction level. In instances where there are substantive termination penalties, the duration of the contract may extend through the date of substantive termination penalties.
Investment management revenue from contracts with policyholders related to investment management, investment research and investment advisory services provided is recognised over time as policyholders benefit from the services as they are performed. Substantially all of the investment management fees are determined by the value of assets under management and the investment strategies employed. At contract inception, no revenue is estimated as the fees are dependent on assets under management which are susceptible to market factors outside of the Company’s control. Payments made to third party service providers, such as payments to others in unitary fee arrangements, are generally recognised on a gross basis when the Company controls those services and is deemed to be a principal in such transactions.
Page 23
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
22
2. ACCOUNTING POLICIES (CONTINUED)
Investment income Investment income and expenses include dividends, interest, realised gains and losses on investments and related expenses. Dividends are included as investment income on the date that shares become quoted ex-dividend. Overseas dividends are grossed up with the appropriate rate of withholding tax shown within the tax charge. Interest is included on an accruals basis in line with the effective interest rate. Realised gains and losses on investments are calculated as the difference between net sales proceeds and the original cost. Investment income and expenses attributable to long-term business are included in the long-term business technical account. Other investment income and realised gains are included in the non-technical account.
Unrealised gains and losses on investments are calculated as the difference between the carrying value of investments at the balance sheet date and their purchase price, or if these had been earlier fair valued, their respective opening fair value. Movements in unrealised gains and losses recognised in the year comprise the increase/decrease in the accounting period in the value of investments held at the balance sheet date and the reversal of unrealised gains and losses recognised in earlier accounting periods in respect of investment disposals in the current period.
Other technical income, net of reinsurance This represents fees charged to policyholders for investment management services and policy administrations. The fees are recognised net of value added tax and rebates when the related services are provided. Unbilled fees are accrued for and from history deviations of accruals from the actuals are considered immaterial.
Investment and net operating expenses Investment and net operating expenses are recognised on an accruals basis. These expenses are embedded costs and other related expenses that are suffered by policyholders in the unit linked funds. They also include expenses paid to SSGA in relation to the outsourcing of the investment management process. A relatively immaterial portion of these expenses relates to underlying direct administrative expenses.
Foreign currencies The Company’s presentational and functional currency is sterling. Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rate ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate ruling on the balance sheet date. Non-monetary items denominated in a foreign currency, measured at fair value, are translated into the functional currency using the exchange rate ruling at the date when the fair value was determined.
Current tax The taxation charge in the technical account is based on the method for assessing taxation for long-term funds applicable in the United Kingdom. The claims to recover tax incurred in respect of overseas dividend income are considered receivable assets and have been recognised in these financial statements in cases where the outcome of the claims and the potential recoveries are sufficiently certain. The balance transferred from the long-term business technical account is grossed up by the amounts charged to the long-term business technical account in respect of UK corporation tax and deferred tax. The taxation charge in the non-technical account is based on the taxable profits for the year. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Company operates and generates taxable income.
Deferred tax Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the balance sheet date and are recognised only to the extent that it is considered more likely than not that there will be suitable taxable profits in the future against which the asset can be offset. Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the temporary differences reverse.
Page 24
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
23
2. ACCOUNTING POLICIES (CONTINUED)
Amendments to IAS 12 - Income Taxes - International Tax Reform - Pillar Two Model Rules In May 2023, the International Accounting Standards Board issued amendments to address Pillar Two income taxes. The amendments provide a mandatory temporary exception from the recognition and disclosure of deferred taxes arising from the implementation of the Organisation for Economic Co-operation and Development’s (“OECD”) Pillar Two Model Rules and require a new disclosure about the Pillar Two exposure. As required by IAS 12 Income Taxes, Managed Pension Funds Limited applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. The Company is not expected to have any related current tax expense associated with Pillar Two. The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (“BEPS”) addresses the tax challenges arising from the digitalisation of the global economy. The Pillar Two Global anti-Base Erosion rules (“GloBE Rules”) propose four new taxing mechanisms under which multinational enterprises (“MNEs”) would pay a minimum level of tax (“Minimum Tax”): • The Income Inclusion Rule (“IIR”); • The Under Taxed Payments Rule (“UTPR”); • The Qualified Domestic Minimum Top-up Tax (“QDMTT”); and • The Subject to Tax Rule (“STTR”) Collectively, the IIR, UTPR and QDMTT seek to ensure a Minimum Tax of 15% on the income arising in each jurisdiction in which an MNE operates. The STTR is a tax treaty-based rule that generally proposes a Minimum Tax on certain cross-border intercompany transactions that otherwise are not subject to a minimum level of tax. Finance (No.2) Act 2023 which contains legislation to implement the GloBE Rules in the UK was substantively enacted on 20 June 2023. The legislation introduces a global minimum effective tax rate of 15% and implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. The Group has undertaken an assessment of the impact of the GloBE rules and consider Managed Pension Funds Limited to be not in scope of multinational top-up tax on the basis the Company is an excluded pension service entity and does not have subsidiaries in foreign jurisdictions.
Equity Interim dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the directors. Final dividends are deducted from equity when they are approved by written resolution passed by the shareholders. Equity that is distributable comprises accumulated realised profits and the capital contribution reserve. Capital contribution is recognised as a non-reciprocal transfer by the parent to the Company. Called up share capital is authorised, allotted and fully paid for 5,000,000 ordinary shares of £1 each paid by the parent to the Company.
Securities lending and collateral accepted The Company is a party to securities lending arrangements under which securities are loaned to third-party financial institutions. The loaned securities are not removed from the Company’s Statement of Financial Position but continue to be recognised within the assets held to cover linked liabilities. The income from this arrangement attributable to policyholders are recognised as investment income in the Income Statement. The Company’s policy is that collateral assets of a quality equivalent to FRS 101 Level 1 or 2 are required. These collateral assets are to be at least 102% of the fair value of securities loaned and held off balance sheet (note 20).
Page 25
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
24
3. RECONCILIATION TO MOVEMENT IN ASSETS HELD TO COVER LINKED LIABILITIES
4. NET INVESTMENT RETURN
Current year investment expenses and charges are inclusive of realised losses on investments of £2,412,046,000 (2024: £nil) with the remainder relating to other investment expenses and charges of £8,552,000 (2024: £9,462,000).
5. NET OPERATING EXPENSES
Management expenses paid to SSGA comprises fees, exclusive of value added tax, charged to policyholders of £8,417,000 (2023: £11,441,000) less fee retention of £750,000 (2024: £750,000). Irrecoverable VAT on the expenses charged for the audit of the financial statements is included in Other administrative expenses.
2025 2024 £’000 £’000 Policyholder inflows Contributions 5,579,232 9,482,269 Policyholder outflows Redemptions (20,515,045) (18,622,125)
Net (outflow)/inflow of policyholder funds (14,935,813) (9,139,856) Investment return on policyholder funds (net of all charges) 2,977,359 5,429,695
Changes in the value of assets held to cover linked liabilities (11,958,454) (3,710,161)
2025 2024 £’000 £’000 Technical account Other investment income 542,985 1,002,185 Realised gains on investments - 6,164,018 Investment income 542,985 7,166,203 Unrealised gains / (losses) on investments 4,916,630 (1,697,908) Investment expenses and charges (2,420,598) (9,462)
Net investment return 3,039,017 5,458,833
Non-technical account Investment income 336 384 Net investment return 336 384
2025 2024 £’000 £’000 Auditors’ remuneration: Audit of the financial statements 95 95 Other administrative expenses 359 312 Direct administrative expenses 454 407 Management expenses paid to SSGA 7,667 10,691
Net operating expenses 8,121 11,098
Page 26
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
25
6. STAFF COSTS AND DIRECTORS’ REMUNERATION
The Company had no employees during the year. Fees are payable to two (2024: two) non-executive directors who served during the year. No other director is remunerated for their services as a director of the Company and no apportionment of remuneration has been made to the Company. Non-executive directors’ remuneration was as follows:
7. TAXATION ON PROFIT
2025 2024 £’000 £’000
Aggregate remuneration in respect of qualifying services 95 95
(a) Analysis of expense in the period 2025 2024 £’000 £’000 Technical account UK corporation tax on profits of the period at 25% 341 251 Overseas tax suffered 60,593 28,478 Adjustments in respect of previous periods 4 -
Tax attributable to the Long-term business 60,938 28,729
Non-technical account UK corporation tax on profits of the period at 25% 84 96 Tax expense attributable to the balance on long-term business technical account 345 251 Tax expense on profit 429 347
Page 27
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
26
7. TAXATION ON PROFIT (CONTINUED)
8. DIVIDENDS
The directors have not proposed a final dividend.
9. OTHER FINANCIAL INVESTMENTS
The above financial investments are classified as “fair value through profit or loss”. Out of the total market value, £12.53 million (2024: £12.01 million) are holdings in SSGA Liquidity Fund and the remaining £0.98 million (2024: £0.92 million) are seed investments in the Company’s unit-linked funds. The holdings in SSGA Liquidity Fund are classified as Level 1 and the holdings in seed investment are classified as Level 2 under the “Fair Value Hierarchy” described in note 2.
(b) Factors affecting tax expense for year 2025 2024 £’000 £’000 Technical account Profit before tax 61,954 29,481
Profit before tax multiplied by the rate of corporation tax in the United Kingdom at 25% 15,489 7,370 Effect of: Benefit of tax relief for overseas tax expensed (15,148) (7,119) Adjustments in respect of prior years 4 Overseas taxes on investment income 60,593 28,478
Tax attributable to the Long-term business 60,938 28,729
2025 2024 £’000 £’000 Non-technical account Profit before tax 1,697 1,387
Profit before tax multiplied by the rate of corporation tax in the United Kingdom at 25% 425 347
Adjustments in respect of prior years 4 -
Tax expense on profit 429 347
2025 2024 £’000 £’000 Market value Investment in SSGA Liquidity Fund and Seed in MPF unit-linked funds 13,513 12,927
Cost Investment in SSGA Liquidity Fund and Seed in MPF unit-linked funds 13,269 12,790
Page 28
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
27
10. ASSETS HELD TO COVER LINKED LIABILITIES
Assets held to cover unit-linked liabilities can be classified at the following levels for investments held under the “Fair Value Hierarchy” described in note 2:
Reconciliation on movement of assets classified as level 3 has not been provided as their value is deemed to be immaterial.
11. DEBTORS ARISING OUT OF DIRECT INSURANCE OPERATIONS
12. OTHER DEBTORS
13. CASH AND CASH EQUIVALENTS
14. AUTHORISED, ALLOTTED, CALLED UP AND FULLY PAID SHARE CAPITAL AND RESERVES
2025 2024 £’000 £’000
Level 1 15,453,699 22,873,532 Level 2 6,005,199 10,567,012 Level 3 1,158 491 Net sundry payable/receivables of the unit-linked funds 116,171 93,646
21,576,227 33,534,681
2025 2024 £’000 £’000
Amounts due from policyholders - fee premiums 2,265 3,266
Debtors arising out of direct insurance operations 2,265 3,266
2025 2024 £’000 £’000 Prepayments - 21
Other Debtors - 21
2025 2024 £’000 £’000
Cash at bank and in hand 15,896 9,687
2025 2024 £’000 £’000 Authorised, allotted and fully paid 5,000,000 ordinary shares of £1 each 5,000 5,000
Capital contribution Non-reciprocal transfers 3,600 3,600
Page 29
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
28
15. CAPITAL STATEMENT
(a) Capital management objectives, policies and approach The Company has established the following capital management objectives, policies and approach to managing the risks that affect its capital position. The capital management objectives are:
To maintain the required level of financial stability of the Company thereby providing a degree of security to policyholders; To allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the requirements of its capital providers and shareholders; To retain financial flexibility by maintaining strong liquidity; and To maintain financial strength to support new business growth and to satisfy the requirements of the policyholders, regulators and stakeholders.
The operations of the Company are also subject to regulatory requirements within the jurisdictions where it operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g. capital adequacy) to minimise the risk of default and inability through insolvency on the part of insurance companies to meet unforeseen liabilities as these arise.
In reporting financial strength, both available capital and capital requirements are measured using the rules implemented as part of the UK Solvency II regime effective from 31 December 2024, as contained in Prudential Regulation Authority (“PRA”) Rulebook. k. The Company’s approach to managing capital involves managing assets, liabilities and risks in a co-ordinated way, assessing differences between reported and required capital levels on a regular basis and taking appropriate actions to influence the capital position of the Company in the light of changes in economic conditions and risk characteristics. The capital requirements are routinely forecasted on a periodic basis and assessed against the forecast available capital. The process is ultimately subject to approval by the Board.
The PRA Rulebook sets out the qualitative and quantitative requirements for the calculation of the technical provisions and SCR using either a standard formula or an internal model developed by an insurance or reinsurance company and approved by the PRA. The Company calculates its SCR using the standard formula. The PRA is able to add a capital add-on to the calculated SCR if it considers it necessary. The Company is not currently subject to any such capital add-on.
The SCR is intended to be the Value-at-Risk of the basic own funds (i.e. the value of assets less liabilities) of an insurance or reinsurance undertaking subject to a confidence level of 99.5% over a one-year period. The PRA will intervene if a firm fails to cover the SCR.
In addition to the SCR, a Minimum Capital Requirement (“MCR”) must be calculated.
The MCR is the Value-at-Risk of the basic own funds of the Company and is intended to represent a confidence level of 85% over a one-year period. The MCR is a function of the SCR, which produces an MCR between 25% and 45% of the SCR including any add-on (per PRA Rulebook Part MCR Chapter 3), but subject to a reviewable monetary minimum set by PRA rules. The SCR must be recalculated at least annually and the MCR at least quarterly and reported to the PRA on a quarterly basis through the Company’s Quantitative Reporting Templates (“QRTs”) submissions. The UK Solvency II rules require management to perform a thorough assessment of the quality of governance, internal controls, and risk management and to produce an ORSA report for the PRA. Management has to assess capital requirement as part of the ORSA process. The Company has developed an ORSA framework under the UK Solvency II rules to identify the risks and quantify their impact on the economic capital.
The Company uses a simplified approach using a short projection period (being the first point at which the Company has the unilateral right to terminate clients’ policies) to calculate its technical provisions for capital adequacy purposes. The Company considers that the use of a short projection period is appropriate and proportionate to its circumstances. This approach has been confirmed by the PRA as an acceptable simplification for the Company to use provided that the conditions of Chapter 27 of the Technical Provisions - Further Requirements part of the PRA Rulebook are met.
Page 30
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
29
15. CAPITAL STATEMENT (CONTINUED)
(a) Capital management objectives, policies and approach (continued) Using a short projection period the cashflows in respect of existing premiums are projected until the point at which the Company has a unilateral right to terminate clients’ policies as compared to the use of a long projection period. The technical provisions are derived for capital adequacy purposes as the face value of the units less the best estimate of the Value-of-In-Force plus a risk margin. The terms of the fee agreement between the Company and SSGA are such that the fee retained by the Company would be revised if this was necessary to ensure the Company “retains sufficient funds to cover its day-to-day operational costs and capital requirements”. The consequence of this is that the increase in risk margin that would result from using a longer projection term would be offset by a corresponding increase in the Value of In-Force as in these circumstances the Company would exercise its right to retain more fees in order to cover its increased capital requirements. As such, use of a short projection period is an acceptable simplification in the Company’s circumstances. This approach is reviewed and assessed at least annually to ensure the Company continues to meet the requirements of Chapter 27 of the Technical Provisions - Further Requirements part of the PRA Rulebook. It is the policy of the Company to hold at least 210% of its last assessed capital requirement under the UK Solvency II rules.
(b) Analysis of regulatory capital resources
The below table shows UK Solvency II capital resource requirements based on year end reports submitted to the PRA.
2025 2024 £’000 £’000 unaudited unaudited
Total Assets 21,607,901 33,560,582 Total Liabilities (21,591,324) (33,545,273)
Capital resource before UK Solvency II adjustments 16,577 15,309
Value-in-force 96 112 Risk Margin (153) (186) Valuation of other liabilities - -
Capital resource under UK Solvency II 16,520 15,235
SCR 3,953 4,933
Surplus capital 12,567 10,302
MCR 3,500 3,500 UK Solvency II ratio based on SCR 418% 309%
Page 31
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
30
16. TECHNICAL PROVISIONS FOR LINKED LIABILITIES
The movement in technical provisions for linked liabilities during the year was as follows;
The fair value hierarchy of the technical provisions for linked liabilities follow those for the unit linked assets as disclosed in note 10.
17. OTHER CREDITORS
18. RELATED PARTY TRANSACTIONS The Company has entered into an agreement with SSGA, a Company registered in England and Wales and also a member of the Group for the provision of investment management, sales, marketing, administration and support services. The cost to the Company for the provision of these services during the year ended 31 December 2025 as disclosed in note 5 was £7.7 million (2024: £10.7 million).
The amount due to group undertakings at 31 December 2025, included within these financial statements, was as follows:
The investments held within SSGA Liquidity Fund as stated in note 9 above form part of related party transactions. SSGA Liquidity Fund is sub-fund of SSGA Liquidity Plc., a fellow Group undertaking of the Company which is registered under the laws of Ireland as a public limited company. The Company does not have any employees and there are no key management personnel.
2025 2024 £’000 £’000
At 1 January 33,534,681 37,244,842 Contributions 5,579,232 9,482,269 Redemptions (20,515,045) (18,622,125) Investment income 541,920 7,165,543 Unrealised gains / (losses) on investments 4,916,630 (1,697,908) Investment expenses (2,420,598) (9,462) Overseas taxes (60,593) (28,478)
At 31 December 21,576,227 33,534,681
2025 2024 £’000 £’000
Amounts owed to other group undertakings 3,738 3,621 Amounts due to policyholders 11,132 6,601 Trade creditors - 13 Corporation Tax 49 188
Other Creditors 14,919 10,423
2025 2024 £’000 £’000
Amounts owed to other group undertakings (see Note 17) 3,738 3,621 Amounts included within assets held to cover unit-linked liabilities 419 858
4,157 4,479
Page 32
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
31
19. PARENT AND ULTIMATE PARENT UNDERTAKING
Since 8 June 2017, the immediate holding company of the Company is SSGA Inc. The ultimate Parent company remains State Street Corporation (“SSC”), a company incorporated in the Commonwealth of Massachusetts, in the United States of America. Copies of the SSC consolidated financial statements can be obtained from 1 Lincoln Street, Boston, Commonwealth of Massachusetts, United States of America.
20. RISK MANAGEMENT
(a) Governance framework
The Board members are responsible for overseeing the prudent and sound management of the Company and exercising their business judgment in what they believe to be in the best interests of the Company, its shareholders and policyholders. They are responsible for complying with their statutory and fiduciary duties in the interests of the Company and ensuring that the business affairs of the Company are adequately monitored and controlled. The Board’s role and responsibilities are defined within the Board’s Terms of Reference. Specific responsibilities are allocated by the Chairman amongst the Board members in accordance with the senior management arrangements, systems and controls (“SYSC”) policy statement applicable to Group entities operating and regulated in the UK. Members of senior management and the Board may also have additional reporting lines to senior management of State Street Bank & Trust Company (“SSBTC”) or SSC.
During the year, the Board comprised of senior management from across the main business functions and two independent non-executive directors, including the Chair. Post the year end, the Board composition has changed to comprise of senior management from the main business function and four independent non-executive directors, including the Chair. The Board serves to ensure that appropriate strategies, policies and guidelines are implemented across the business. The Board holds regular meetings to facilitate and ensure that a common communication platform is in place; to enable regular reporting of company-specific information and updates to the Board; and thereby allowing appropriate Board challenge and oversight. Board meetings are also attended by individuals from Finance, Compliance, Legal and Risk to present updates and be challenged by the Board.
The Board delegates some of its responsibilities to the Working Group. The Board Terms of Reference recognises that the Working Group is designed to “assist and support the Board in key strategic matters, review business activities and risks and provide support in certain matters”. In turn, the Working Group delegates day to day management responsibilities to business line managers and governance committees within SSGA.
The Board also delegates certain responsibilities to the MPFL Audit Committee. The key responsibilities are the reviewing of the annual report and financial statements and the annual regulatory reports and the related Actuary’s and Auditor’s reports and the Company’s solvency position and recommending the appointment of the Company’s Auditor and Actuary.
The Company maintains a clearly defined governance structure to ensure that issues are escalated in accordance with materiality to the appropriate level of decision making. Members of senior management provide reports on the activities conducted within the Company to the Working Group through business line management reporting and to the Board.
The Company engages with WTW who provides an outsourced actuarial service to the Company that includes on-going support including inputs and reviews of the UK Solvency II reporting, advice to the Board on any relevant emerging risks that might impact the Company’s ability to meet policyholder liabilities as they fall due. WTW monitors those risks via management information provided by the Company, attendance at Board meetings and discussions with key personnel. As part of the SSC Group, the Company is subject to adherence with Group risk management policies and procedures. The Company and its business functions are also subject to internal audit as part of the Group Audit programme as well as examination by the PRA, and other regulatory authorities. Group Internal Audit function independently examines and reports to the Audit Committee, on the adequacy of the Company’s risk management and governance and the effectiveness of its internal controls processes.
Page 33
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
32
20. RISK MANAGEMENT (CONTINUED)
(b) Risk assessment
The Company is exposed to a range of risks through its business activities.
(1) Insurance risk
Insurance risk refers to the inherent uncertainties as to the occurrence, amount and timing of insurance liabilities. Although the policy contracts sold by the Company do not insure against any traditional insurance risks, the contracts do include an option for the policyholder to take out an annuity on non-guaranteed terms. In practice the Company does not market the availability of annuity products, and any annuities actually offered would be un competitively priced (and if a policyholder insisted on taking out an annuity, the Company would reinsure the risk).
In connection with the development of the Company’s retirement income products there is an assumption that no annuities will be held within the unit-linked funds. Certain defined contribution linked funds would hold some investments (mainly bonds) expected to match the pricing of annuities and, at retirement, the units reflecting those investments can be sold by the policyholder and the proceeds used to purchase an annuity held in the policyholder’s name.
Each policyholder enters into a policy with the Company that states that should they elect an annuity, the Company would, in practice, find another insurance company to provide such investment option to the client, and any transfer of amount payable would be actioned as soon as possible.
(2) Expense risk
There is a risk that, for varying reasons, the direct administrative expenses of the Company increase from the current expected level of approximately £454,000 per annum. However, in accordance with the IMA, the retained fee income of £750,000 per annum can be increased with SSGA, and therefore the expense risk has been assessed as zero. Historical practice has shown that the retained fee income can be increased within a short time frame and quickly agreed within the Company via ad-hoc Board meetings.
(3) Financial risk
The Company assumes a variety of financial risks in conducting its business activities. The nature of the unit linked policy contracts passes all such risks assumed in respect of the Company’s unit-linked funds to the policyholder. The exception to this occurs when the Company deviates from the agreed investment policy. The risk of such deviation is assessed as part of operational risk borne by other Group entities.
The financial risks that remain with the Company relate to its investments or assets that are not classified as unit linked. The Company institutes various measures and policies to ensure these risks are at an acceptable level.
(i) Credit risk
Credit risk is the current or prospective risk to earnings and capital arising from an obligor’s failure to meet the terms of any contract with the Company relating to assets held.
The Company is exposed to credit risk on the following non-linked assets held on the balance sheet:
Page 34
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
33
20. RISK MANAGEMENT (CONTINUED)
(i) Credit risk (continued)
The majority of the Company’s other financial investments are holdings in SSGA Liquidity Fund. This fund is a highly liquid fund with AAA Standard & Poor’s credit ratings; therefore, the risk of default is considered to be minimal. The risk of default on the policyholder receivables is mitigated due to the ability to compulsorily redeem policyholder units to recover the fees (although such redemption would require senior management’s approval). In the event of any fee premiums being irrecoverable in this manner, under the terms of the investment management agreement with SSGA, the equivalent amounts due to SSGA would be cancelled. To enhance the risk mitigation, a process has been put in place that will retain fee income ultimately payable to SSGA in respect of any amounts owed, so this risk falls on SSGA.
The table below provides analysis of non-linked assets exposed to credit risk by credit ratings (Standard & Poor’s ratings used).
At both year ends, the Company had seed capital invested in MPFL Timewise Target Retirement Sub-Fund. This seed investment is currently not rated by Standard & Poor’s. The debtor amounts are also disclosed as not rated.
(ii) Market risk (including interest rate risk, price risk and foreign currency risk)
Market risk can be defined as the current or prospective risk to earnings or capital arising from changes in interest rates, foreign exchange rates and commodity prices or security prices.
Interest rate risk
Interest rate risk is the possibility that changes in interest rates will result in higher or reduced income from the Company’s interest-bearing financial assets. The Company does not hold interest bearing liabilities. Interest rate risk on investments held in respect of linked liabilities to policyholders under investment contracts are borne by the policyholders. The Company’s non-linked portfolio as analysed below is subject to interest rate risk. The change may impact the interest earned or the unrealised gains or losses on valuation that are reported as part of the investment income.
2025 2024 £’000 £’000
Other financial investments 13,513 12,927 Debtors arising out of direct insurance operations - policyholders 2,265 3,266 Other debtors - 21 Cash at bank and in hand 15,896 9,687
Total 31,674 25,901
2025 2024 £’000 £’000
AAA 12,818 12,325 A-1+ 10,961 6,671 A-1 4,763 3,036 Not rated 3,132 3,869
Total 31,674 25,901
Page 35
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
34
20. RISK MANAGEMENT (CONTINUED)
(ii) Market risk (including interest rate risk, price risk and foreign currency risk) (continued)
Price risk Price risk arising on unit-linked funds is borne by policyholders. If the value of the unit-linked funds fell, then there would be a fall in the income received from those funds. However, unless the fall in asset values was extreme (around 90%), this would have no direct impact on the financial position of the Company as the level of retained fee income would be unchanged, and expenses not defined by reference to fee income would be unaffected.
Foreign currency risk Currency risk within the unit-linked funds is borne by policyholders. The Company manages its risk by setting investment guidelines to ensure currency risk is within tolerable limits for each unit-linked fund. The risk is considered to be immaterial in relation to the non-linked business which has very limited exposure to foreign currency arising from debtor balances. Although the exposure in the debtor balances is very limited, gains or losses will be offset by change in the amount due to SSGA.
(iii) Liquidity risk Any liquidity risk arising on the unit-linked funds is borne by policyholders. The Company has minimal liquidity requirements, primarily relating to its ongoing operational expenses and tax liabilities. Cashflows are actively managed with surplus cash held in highly liquid and regulated SSGA Liquidity Fund to ensure the Company’s liabilities can be settled as they fall due.
Contractual maturity of non-linked investments
Should any liquidity shortfall arise by the Company as part of its normal business and liquidity management process, this shortfall is promptly actioned and provided by SSBTC or SSC as the ultimate Parent of the Company.
Securities lending and collateral accepted
The Company’s unit-linked funds participate in the State Street securities lending programme, which covers equity and fixed income assets around the world, providing the potential to generate incremental returns for investors in a risk-controlled manner. The lending to which State Street acts as a lending agent for the Company is collateralised by non-cash collateral, which provides coverage of 102%-110%. It is marked to market on a daily basis. Collateral types and collateralisation levels are under continual review based on prevailing market conditions.
The Company benefits from a counterparty default indemnity from SSBTC pursuant to its Securities Lending Authorisation Agreement.
Other financial investment 2025 2024 £'000 £'000 Investment type Cash Liquidity 12,818 12,325 Equity 695 602
13,513 12,927
2025 2024 £’000 £’000 Other financial investments On demand 13,513 12,927
Total 13,513 12,927
Page 36
Managed Pension Funds Limited
NOTES TO THE FINANCIAL STATEMENTS (continued) at 31 December 2025
35
20. RISK MANAGEMENT (CONTINUED)
(iii) Liquidity risk (continued) As of 31 December 2025 balance sheet securities on loan totalled £0.82bn (2024: £1.85bn) with related collateral of £0.88bn (2024: £1.98bn).
(4) Policyholders’ investment risk With the exception of operational errors and fraud, all investment risk arising on unit-linked funds is borne by policyholders. Inherent risks associated with the unit-linked funds are also explained in the policyholder disclosures. The Company through its outsourced service providers has key processes and controls in place, in addition to the governance structure described earlier to minimise this risk. The outsourced service providers within the Group adopt SSC’s global remuneration policy. The policy is designed to discourage excessive risk taking and incorporates measures aimed at avoiding conflicts of interest. The Company also requires that all investments are made in accordance with the relevant investment guidelines and the Permitted Links rules contained within Chapter 21 of the Conduct for Business Sourcebook of the FCA Handbook. These requirements are strengthened by the ‘Prudent Person Principle’ introduced by UK Solvency II, and the Company requires persons responsible for the investment of assets or holding other Key Functions within the Company, to be familiar with and abide by this principle at all times.
(5) Counterparty risk The SSGA Counterparty Risk Policy is executed by SSGA’s Counterparty Risk Management (“CRM”) team. The CRM team provides independent oversight and analysis of trading counterparties. The goal is to mitigate credit risk and protect against potential loss arising from trading and business relationships with financial institutions. Loss could arise from uncollateralised mark-to-market exposure or replacement of an unsettled trade upon a counterparty failure. The CRM team is also responsible for timely and comprehensive exposure reporting for all counterparties and instruments traded globally, inclusive of the Company’s business. As part of its core duties, the CRM team engages with various SSGA teams, including portfolio managers, traders, Legal, Compliance, IT, and other risk teams.
21. EVENTS AFTER THE BALANCE SHEET DATE
Since 28 February 2026, the United States, Israel, and Iran have been engaged in an escalating military conflict, leading to significant impacts on global energy markets, supply chains, and broader economic conditions. On 31 December 2025, the Company had Middle East exposure of £270.5 million, or 1.3% of the value of assets held to cover unit-linked liabilities. The Company continues to value these assets at fair value and monitor the wider impacts of the conflict.
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"text": "L Bordessa (appointed 25 February 2026)"
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"text": "E14 5HJ"
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"text": "Managed Pension Funds Limited"
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"text": "STRATEGIC REPORT"
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"id": "1266274c-03bf-4720-9ac3-0e77e45a7957",
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"text": "For the year ended 31 December 2025"
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"text": "2"
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"text": "The directors of Managed Pension Funds Limited (\u201cMPFL\u201d and \u201cthe Company\u201d) present the Strategic Report of the"
},
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"id": "805a250b-afec-49af-a09d-811e97a090f2",
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"text": "Company for the year ended 31 December 2025 and have complied with s414c of the Companies Act 2006 in"
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"text": "preparing the report."
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"text": "REVIEW OF THE BUSINESS"
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"text": "Principal Activities"
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},
"id": "3b67e0d5-a114-4cb2-89ee-1170d08d853c",
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"text": "The Company is a UK-based insurance company authorised by the Prudential Regulatory Authority (\u201cPRA\u201d) and"
},
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"id": "77713b73-edac-40f8-9fa2-3204972663cc",
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"text": "regulated by the Financial Conduct Authority (\u201cFCA\u201d) and the PRA. Its principal activity is to provide pooled"
},
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},
"id": "3e5d718b-7c82-4a4b-9d1c-5a1d3a2bc39f",
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"text": "investment management services to pension schemes and reinsurance platforms under unit-linked life insurance"
},
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"id": "1e9f1107-dc5d-48bf-b790-fa92d1aa71e8",
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"text": "contracts."
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"text": "Business Model"
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"id": "d8e9acba-caaa-48ca-8ec9-095bdc1797a2",
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"text": "The Company operates as an integrated part of the State Street Corporation Group of companies (\u201cthe Group\u201d) and"
},
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"text": "has outsourced all client facing, investment management and back-office services to other companies in the Group."
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"id": "5de48499-b9fe-47a2-a44e-d3eaa5f1d697",
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"text": "State Street Global Advisors Limited (\u201cSSGA\u201d) provides investment management, sales, marketing, administration"
},
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"id": "d354e2fd-3bdf-447c-a535-2bf94aa89b9e",
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"text": "and support services to the Company. The costs to the Company for the provision of these services are met out of"
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"id": "9bb1cf8b-8a16-4160-bbd2-3c2df382db34",
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"text": "fees charged to policyholders, plus any investment management fees deducted from specific funds, less a retention"
},
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"id": "8157c4c1-896a-46c4-9630-22158f2f587c",
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"text": "due to the Company of \u00a3750,000 (2024: \u00a3750,000). This retention is to enable the Company to meet its direct"
},
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"text": "administrative expenses and to maintain a sufficient capital buffer to meet its regulatory obligations."
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"text": "Results and Performance"
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"text": "The Directors consider that the Company\u2019s key financial and other performance indicators are as follows:"
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"text": "Net policy outflows of \u00a314.9 billion and investment return on policyholder funds of \u00a33.0 billion resulted in a \u00a311.9"
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"text": "billion year on year decrease in the value of unit-linked liabilities and the assets held to cover these. Inflow to"
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"text": "policyholder funds was \u00a35.6 billion (2024: \u00a39.5 billion), whilst the level of outflow was \u00a320.5 billion (2024: \u00a318.6"
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"text": "billion). The driver of net outflows was a trust-based defined contribution workplace pension scheme divesting from"
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"text": "passive funds. The investment return of \u00a33.0 billion was driven by passive equity funds. Other technical income"
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"text": "comprises fees charged to policyholders based on the assets held to cover unit-linked liabilities. The decrease in this"
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"text": "income arose from a decrease in assets under management during 2025. The capital coverage increased in line with"
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"text": "an increase in capital resources."
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"text": "PRINCIPAL RISKS AND UNCERTAINTIES"
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"text": "The directors of the Company (the \u201cBoard\u201d) are responsible for identifying and evaluating the key risks facing the"
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"text": "business. The Own Risk Solvency Assessment (\u201cORSA\u201d) process established under the UK Solvency II rules is the"
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"text": "process by which the Board considers the Company\u2019s strategy, and the risks faced in pursuing the strategy. The Board"
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"text": "ensures there are adequate mitigations for the risks identified and these risks are within the Board\u2019s appetite. The risk"
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"text": "profile of the Company is also regularly monitored by the Board using a framework that establishes tolerances. Key"
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"text": "risks and other operational reports are also provided to and monitored by the Board on a regular basis."
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"text": "2025 2024 Change"
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"id": "7dc668e7-2626-4e30-a49e-7e06921e95ab",
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"text": "\u00a3\u2019000 \u00a3\u2019000 %"
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"id": "f969fb03-8578-4c81-ba96-ad9dc28d0329",
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"text": "Value of unit-linked liabilities 21,576,227 33,534,681 (35.7%)"
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"text": "Inflow to policyholder funds 5,579,232 9,482,269 (41.2%)"
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"text": "Outflow from policyholder funds (20,515,045) (18,622,125) 10.2%"
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"id": "db18db3c-4efd-4062-80ce-95d2846dbddd",
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"text": "Investment return on policyholder funds (net of all charges) 2,977,359 5,429,695 (45.2%)"
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"text": "Other technical income 8,417 11,441 (26.4%)"
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"id": "141838d9-42b0-439b-9092-7a3211ff9bd0",
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"text": "Direct administrative expenses (454) (407) 11.5%"
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"id": "cd385ed9-6ea9-45e3-8b83-128ce9f18d92",
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"text": "UK Solvency II capital resource 16,520 15,235 8.4%"
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"id": "45031eaa-423d-4255-8c1e-3916649c6e71",
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"text": "UK Solvency II capital coverage 418% 309% 35.3%"
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"text": "Managed Pension Funds Limited"
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"text": "STRATEGIC REPORT"
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"text": "(continued)"
},
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"id": "aa82bfdd-752b-461f-aca0-aaa5c2782faa",
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"text": "For the year ended 31 December 2025"
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"text": "3"
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"text": "PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)"
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"id": "75ddbca3-cc94-41bc-a329-7ff478e7ba5e",
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"text": "The Company only writes unit-linked investment business that passes investment risk onto policyholders. It offers"
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"id": "84117b81-42b1-4092-b14d-a995c80b6832",
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"text": "no guarantees or options to policyholders that could give rise to a loss to the Company. It outsources most of its"
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"text": "activities to other Group entities and is indemnified against operating losses arising through the negligence or errors"
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"text": "of its outsourced service providers. The Board operates a programme of regular reviews of all outsourced activities."
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"text": "regions where these risks are the largest but continues to monitor and assess the wider impacts of these conflicts."
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"text": "STATEMENT OF COMPLIANCE WITH S172(1) OF THE COMPANIES ACT 2006"
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"text": "The directors have acted in a way that they considered, in good faith, to be most likely to promote the success of the"
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"text": "Company for the benefit of its parent company, and in doing so had regard, amongst other matters, to:"
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"text": "the need to foster the Company\u2019s business relationships with suppliers, policyholders and others;"
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"text": "the impact of the Company\u2019s operations on the community and the environment; and"
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"text": "the desirability of the Company maintaining a reputation for high standards of business conduct;"
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"text": "In order to promote the success of the Company, the Board directs and supervises the Company\u2019s affairs within a"
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"text": "framework of effective controls which enable risk to be assessed and managed. The directors set the Company\u2019s"
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"text": "objectives and policies and standards ensuring that its obligations to the State Street Group, its policyholders and"
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"text": "The Company has outsourced all client facing, investment management and back-office services to SSGA. The"
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"text": "directors perform regular oversight of these services through review of operational reports, routine meetings with"
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"text": "Through the Company\u2019s own activity and via the activities outsourced to SSGA, the following disclosure describes"
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"text": "how the directors have had regard to the matters set out in section 172(1) (a) to (f) and forms the directors\u2019 statement"
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"text": "required under section 414CZA of The Companies Act 2006."
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"text": "(continued)"
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"text": "For the year ended 31 December 2025"
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"text": "STATEMENT OF COMPLIANCE WITH S172(1) OF THE COMPANIES ACT 2006 (CONTINUED)"
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"text": "Clients / Policyholders"
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"text": "The directors monitor policyholder activity through regular review of financial and other reports on premiums and"
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"text": "claims and the performance of the funds in which the policyholders are invested."
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...