South Yorkshire Pensions Authority (SYPA) has published a revised Investment Strategy Statement (ISS), setting out changes to its asset allocation and reaffirming its commitment to local and responsible investment.

The updated strategy, approved at the authority’s meeting on 12 March 2026, introduced a more balanced approach to risk, including a modest reduction in equities and illiquid private market assets, alongside an increased allocation to corporate bonds.

The changes followed an investment strategy review, undertaken alongside the fund’s latest actuarial valuation, which showed a funding position of 142 per cent as at 31 March 2025.

As part of the revised allocation, SYPA will increase its target allocation to credit assets by 5 per cent, while reducing listed equities by 2.5 per cent and illiquid assets, including private equity, infrastructure and property, by a further 2.5 per cent.

The authority said the changes were designed to improve the likelihood of meeting long-term funding objectives while reducing downside risk and ensuring sufficient liquidity to meet benefit payments.

Under the strategy, listed equities will account for 35.5 per cent of assets, while credit allocations will rise to 12.5 per cent, alongside diversified allocations across private markets and alternatives.

The revised approach also reflected the fund’s increasing maturity and reduced reliance on contributions, with greater emphasis placed on generating income from assets and maintaining liquidity.

Meanwhile, the ISS confirmed SYPA’s long-term return objective of around 6 per cent per annum, with a target of maintaining a funding level of at least 120 per cent by 2045.

Alongside the asset allocation changes, the strategy formalised SYPA’s approach to local investment, confirming that up to 5 per cent of total assets may be allocated to local impact opportunities.

At least half of this allocation will be invested directly within South Yorkshire, with the remainder supporting investments that deliver tangible economic or social benefits to the region.

Priority areas for local investment included residential development, local lending and support for small and medium-sized enterprises, aligning with the ambitions of the South Yorkshire Mayoral Combined Authority.

The authority noted that it may accept slightly lower returns on local investments where there is a clear and demonstrable regional benefit, provided this does not materially impact overall fund performance.

The updated ISS also reiterated SYPA’s commitment to responsible investment, including continued investment in climate-positive assets, nature-based solutions and efforts to reduce the portfolio’s carbon footprint.

However, the authority acknowledged that achieving its ambition of a net-zero portfolio by 2030 remained challenging, citing global decarbonisation trends and the need to balance environmental goals with financial returns.

Looking ahead, SYPA stressed that it would continue to work with its pool manager, Border to Coast Pensions Partnership, to implement the revised strategy, in line with anticipated changes to LGPS pooling and investment regulations.

Commenting on the update, SYPA chair, Councillor Donna Sutton, said the revised strategy “ensures the fund remains resilient in the face of evolving market conditions, while reinforcing our leadership in responsible and place-based investment”.

She added: “It reflects careful consideration, robust challenge and a clear focus on delivering long-term value for our members and South Yorkshire. We now look forward to working with our pool manager, Border to Coast, to implement our strategy.”

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