P & R Fabrics Pension Scheme

​The Occupational Pension Schemes (Scheme Administration) Regulations 1996 (“the Administration Regulations”) require the trustees to include an annual statement regarding governance in the annual report.

 

Default arrangement

Members of the defined contribution section of the Scheme who do not make an explicit choice regarding the investment of their contributions use the assets of the Scheme as a default arrangement as described in the Statement of Investment Principles, a copy of which is appended to the annual report and financial statements. The Statement was produced in February 2021 and will be reviewed after any significant change in the investment policy or the demographic profile of the members participating in the default Arrangement. Following a review during the year, there was no change in policy and the Statement of Investment Principles dated February 2021 remains unchanged. It will in any event be reviewed, in the year following 30 April 2027.

 

Return on investments

The Scheme’s administration by the Trustees and the Actuary has been well managed over the course of the year. On the investment side, the period under review was characterised by generally constructive market conditions for much of the year, followed by a sharp but short-lived market correction at the very end of the financial year.

 

Through most of 2024 and early 2025, markets were supported by easing inflationary pressures, resilient economic activity, and improving corporate earnings. Returns across asset classes were uneven at times, reflecting ongoing geopolitical uncertainty and changing interest-rate expectations, but overall conditions remained supportive for diversified portfolios.

 

The most significant event during the period occurred in early April 2025. On 2 April, global markets fell sharply following the announcement of new US tariff measures by President Trump. This triggered a sudden increase in market volatility and led to a decline in asset values in the final days of the financial year, which is reflected in performance figures to 30 April 2025.

 

This market weakness was driven by short-term sentiment and uncertainty around global trade rather than a deterioration in underlying fundamentals. As such, it should be viewed as a normal episode of late-cycle market volatility rather than a structural shift in market conditions.

 

Portfolio Positioning and Risk Management

 

Over the period, the scheme maintained - and selectively increased - its allocation to absolute return and alternative investment strategies. This has contributed positively to the scheme’s risk-adjusted returns, helping to reduce overall portfolio volatility while maintaining long-term return potential.

 

These strategies are designed to be less dependent on the direction of traditional equity and bond markets and seek returns from a broader range of sources. This diversification proved particularly valuable during periods of heightened market stress, including the sharp sell-off at the end of the financial year, where drawdowns were moderated relative to more traditional portfolios.

 

From a fixed-income perspective, the scheme has adopted a cautious stance towards conventional government bonds(gilts). In recent years, gilts have delivered poor real returns, with capital values negatively affected by rising yields and persistent inflation. In addition, their diversification benefits have been less reliable during periods of market stress.

 

Given this backdrop, the preference has been to limit gilt exposure and instead focus on strategies offering greater flexibility, income resilience, and the ability to adapt to changing economic conditions. This reflects a forward-looking assessment of risk rather than a reliance on historical assumptions about bond behaviour.

 

The Trustees laid down the following investment restrictions on the manager (MCM Bespoke Investment Services) to ensure the portfolio does not take too much risk in any single asset class.

 

UK Equities: 20% to 40% - (13.1%)

International Equities: 10% to 35% - (25.0%)

Corporate Bonds: 15% to 25% - (13.3%)

Property: 0% to 20% - (0.0%)

Index-Linked Bonds: 0% to 15% - (10.0%)

Absolute Return Funds: 0% to 20% - (31.9%)

Cash: 0% to 15% - {1.70%)

 

Exposure to the asset classes is obtained by investing via collective investment funds managed by specialist investment managers in each of the sectors, which were selected by the portfolio manager. At the end of the period, there were 13 investment funds managed by 10 different investment management companies.

 

The investment funds held and their exposure at the end of the period are shown below.

 

Schroder Asian Income: 4.2%

Jupiter Asian Income 4.4%

Blackrock Continental Europe: 5.0%

Blackrock European Absolute Alpha 5.6%

Royal London Extra High Yield Bond: 13.0%

Royal London Index Linked Gilt 9.5%

JPMorgan Global Macro Opportunities: 5.5%

Schroder Income 9.7%

Fundsmith 6.7%

Greencoat UK Wind: 4.2%

Gemcap Inv Def Ret: 7.0%

Jupiter AM Series Abs Rtn: 7.1%

Mulben Inv VT De Lisle B Net: 4.4%

Vanguard Inv UK Government Bond: 5.0%

YFS Argonaut Abs Rtn: 7.0%

 

 

In addition, cash of 1.7% was also held. According to the portfolio manager, all the investment funds are daily dealt and are readily realisable.

 

During the period three funds were removed, Slater Growth, Bluefield Solar Income and Franklin Templeton UK Rising Dividends and five funds were added Gemcap Inv Def Returns, Jupiter AM Series Absolute Returns, Mulben Inv VT DeLisle, Vanguard Inv UK Governments Bonds and YFS Argonaut Funds Absolute Returns.

 

While not forming part of the formal reporting period, it is important to note that markets recovered quickly following the early April sell-off. Performance since then has been strong, reinforcing the importance of maintaining a disciplined, long-term investment approach through periods of short-term volatility.

 

Looking ahead, markets are expected to remain supportive but volatile, with geopolitical developments and policy decisions continuing to influence short-term sentiment.

​

The scheme remains positioned with and payments a strong emphasis on:

> diversification across asset classes,

> reducing reliance on traditional equity and gilt-based risk,

> improving resilience through absolute return strategies.

 

This approach is designed to support long-term objectives while managing risk through an evolving and uncertain market environment.

 

Processing scheme transactions

The Trustees have a specific duty to ensure that core financial transactions (including the investment of contributions, transfer of member assets into and out of the Scheme, transfers between different investments within the Scheme and payments to and in respect of members) relating to the defined contribution section are processed promptly and accurately.

 

These transactions are undertaken, on behalf of the Trustees, by P & R Fabrics Limited and their investment provider Raymond James Investment Services Limited. The Trustees have reviewed the processes and controls implemented by those organisations and consider them to be suitably designed to achieve these objectives. The Trustees have also agreed service levels and reporting of performance against those service levels.

In the light of the above, the Trustees consider that the requirements for processing core financial transactions specified in the Administration Regulations have been met.

 

Transaction costs

The Administration Regulations require the Trustees to make an assessment of charges and transaction costs borne by the members of the defined contribution section and the extent to which those charges and costs represent good value for money for members.

 

The control of costs is key in the running of the scheme to represent the best value for the members. The bulk of the costs have been absorbed by P&R Fabrics Ltd. In the year no charges were made by P&R for administrative support services. In the year no charges were made by the Trustees for their services.

 

Charges paid by P&R Fabrics Ltd:

Actuary and Levy charges            £11,797.60

Charges paid the Pension scheme:

 

Portfolio management         £4,142.77

Share dealing costs           £ 324.00

 

Transaction costs incurred by the scheme are included within investment management fees in the fund account.

 

Thus, the charges solely on the defined contribution section of the Scheme were £1,388. Overall, the charges are 1.1% pa. Bearing in mind the limited opportunities of investment for a scheme this size and the payment of charges by P&R Fabrics Ltd, this is good value for running a self-administered defined contribution pension scheme.

 

Trustees’ Knowledge and Understanding

 

Sections 247 and 248 of the Pensions Act 2004 set out the requirement for the Trustees to have appropriate knowledge and understanding of the law relating to pensions and trusts, the funding of occupational pension schemes, investment of scheme assets and other matters to enable them to exercise their functions as Trustees properly. This requirement is underpinned by guidance in the Pension Regulator’s Code of Practice 07.

 

The Trustees have put in place arrangements for ensuring that they take personal responsibility for keeping themselves up-to-date with relevant developments and carry out a self-assessment of training needs. These needs are reviewed at Trustee meetings that typically take place annually. Appropriate training takes place within these meetings or at separate training events. In addition, the Trustees receive advice from professional advisers, and the relevant skills and experience of those advisers is a key criterion when evaluating adviser performance or selecting new advisers. Following the latest meeting the Trustees attended an external on-line training course.

 

Taking account of actions taken individually and as a trustee body, and the professional advice available to them, the Trustees consider that they are enabled properly to exercise their functions as Trustees.

 

The Statement regarding defined contribution governance was approved by the Trustees on 14 January 2026.