31 December 2025
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
ContentsIntroduction 3
Risk management objectives and policies 4
Governance arrangements 8
Own funds 11
Own funds requirements 15
Remuneration policy and practices 18
Investment policy 26
Appendix 1 - statement of financial position 27
Appendix 2 - glossary of terms 28
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Introduction
Legal & General (Portfolio Management Services) Limited ("PMS") is authorised and regulated by the Financial Conduct Authority ("FCA") under Firm Reference Number 146786. PMS is a wholly owned subsidiary of Legal & General Retail Investments (Holdings) Limited and ultimately owned by Legal & General Group Plc ("the Group").
The specific requirements of MIFIDPRU draw a distinction between small and non-interconnected ("SNI") and non-SNI firms, with more stringent measures applying to non-SNI firms. Under the FCA's Prudential Sourcebook for MIFID Investment Firms ("MIFIDPRU") definition, PMS, by virtue of having permission to hold client money, is an investment firm and is classified as a non-SNI firm.
This document sets out the disclosures for PMS in accordance with MIFIDPRU chapter 8. The disclosures are as
at 31 December 2025 in line with PMS's latest set of published annual financial statements.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Risk management objectives and policies
PMS operates in accordance with the Group's Risk Management Framework, which comprise policies and processes to identify, measure, monitor, manage and report the risks that the Group is (or could be) exposed to, including the categories of risks addressed by MIFIDPRU 4, MIFIDPRU 5 and MIFIDPRU 6.
To ensure we operate within risk appetite, it is the Group's policy that processes must be in place to:
identify and record all material risk exposures;
regularly monitor actual exposures versus appetite;
take appropriate and timely management action to address identified issues;
accurately measure risk-based capital requirements; and
produce timely and accurate reporting for stakeholders, including regulators.
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High level approach to risk management
Taking informed risk is part of being in business, and understanding the risks faced, in the markets operated in, gives the Group a competitive advantage. The Group balances the risks that provide sustainable returns with those that do not and makes the best use of its capital to deliver its strategy. This is done to deliver increased earnings, business performance, and shareholder value, at the same time as keeping the Group's reputation intact and safeguarding its customers' interests.
Managing risk effectively is not a constraint on business growth. The Group's managers need a positive attitude to risk, so they can take advantage of business opportunities and meet business objectives; control areas of greatest risk and act promptly to remediate any weakness and failures in processes; and be satisfied that the capital held is sufficient to deal with risks the business is exposed to.
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Risk governance framework
The Group's risk governance framework, which is underpinned by the Group's risk appetite, provides structure to enable informed risk taking and decision making. It enables the Group Board to draw comfort that risk exposures are appropriately identified and managed, and that the risk of significant loss or reputational damage is minimised.
The framework is made up of six elements, each with a distinct purpose:
Risk taking authorities: Communicate risk appetite clearly to enable informed decisions within set limits.
Risk policies: Define the required approaches to managing specific risk, so that residual risks (the amount of risk that remains after steps have been taken to control or reduce it) are within appetite.
Risk identification and assessment: Resources to help managers identify and evaluate the risks we are exposed to.
Risk management information ("MI"): Effective reports that facilitate the assessment of risk exposures versus appetite.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
Risk committees: Review key risk exposures and refine risk management strategies. Group level committees oversee group risk management and challenge the effectiveness of the framework
Risk assurance and oversight: Processes and activities aimed at providing confidence that risks are being effectively managed. It involves evaluating whether the organisation's risk management, internal controls, and governance processes are functioning as intended and are aligned with the organisation's objective.
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Risk Culture and Adoption
The Group fosters a risk aware culture and relies on its strong risk culture and behaviours in order to manage
uncertainty and protect its customers and reputation. The Group's risk culture provides:
Openness and transparency: Risks are discussed openly and problems are dealt with early.
Alignment with our goals: Significant decisions impacting the Group's products and services are aligned to
support its strategy, protect its reputation, and benefit its customers.
Careful decision-making: Those who take risks must act responsibly and think about how their decisions affect client and business impacts, in addition to impacts on other businesses within the group.
Ownership of risk: Business Managers are responsible for the risks and controls associated with the activities they are responsible for. They must aim to manage these without process errors and perform regular assurance on their control design and operating effectiveness.
Quick response: If an issue or risk events occurs, this should be raised in the risk system and remediated in a timely and controlled manner with a timebound action plan created to remediate where required.
Everyone's involvement: All employees are expected to understand and engage with the risk framework, as they identify and manage risks in their daily duties. New and unmitigated risks are to be discussed with line managers so they can be logged in risk systems and mitigated in an appropriate manner, with material issues and events escalated to senior leaders and committees.
Constructive challenge: Risk committees review and challenge how we identify and manage key risks and agree on any needed changes e.g. extensions or limitations or risk appetites.
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Three lines of defence
The Group's risk governance framework is based on a three lines of defence model, whereby:
1st line (including 1.5): business management identify and monitor risks; implement appropriate controls; report regularly on the performance of the control framework; conduct regular self-assessments and audits and ensure compliance with internal policies, procedures and applicable regulatory standards.
2nd line: Group risk and divisional CRO teams and risk committees oversee and challenge the management of risks; and
3rd line: Group Internal Audit provide independent assurance on how effectively the risks are being managed, governance and internal controls.
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Risk and capital management
The Group's core measure of risk exposure is risk-based capital. Approaches to calculating risk-based capital requirements are set within the calibration standards and methodologies defined within the Group's Internal Model (and Internal Capital Adequacy and Risk Assessment (ICARA) standards, as appropriate).
The Group's Own Risk and Solvency Assessment (ORSA) process provides an ongoing assessment of risk
exposures and evaluates capital requirements and the sufficiency of resources necessary to sustain the business
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
strategy over the planning horizon. The setting of the Group's overall risk appetite is an integral part of the ORSA
process.
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Risk taking authorities
Risk and capital mandates ("mandates") cascade the Group's risk appetite to each of its operating divisions. These mandates set out the risk-taking parameters that each business unit's managing director is empowered to operate within. Whilst the risk types, limits and tolerances will vary between each mandate, they follow a standard structure, including:
permitted products/services/geographies;
capital and volatility in earnings;
risk preferences; and
key risk limits and risk monitoring metrics.
Details of the above are documented within the Group's Risk Taking and Delegated Authority Framework.
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Risk policies
The Group's risk policies define the overall approach to monitoring and controlling specific risk types. Policies are in place for each of the Financial and Non-Financial risks, including market, insurance, credit, liquidity, operational, and group risks, defining:
risk appetite;
the framework for management and oversight of the risk; and
the minimum control standards and procedures required to ensure that the Group is only exposed to the residual risks set out within the risk strategy.
The Group Internal Control Policy provides guidance on the design of effective internal control and supports the risk governance framework through defining the control environment and activities that need to be in place to support risk mitigation.
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Risk identification and assessment
Business managers are responsible for identifying and assessing the risks in their business. Divisional CRO teams support the risk identification and assessment process and provide objective review and challenge.
Financial risks: exposures relating to capital adequacy, financial performance and business stability. These risks are typically linked to the products we offer and the investments assets we manage. These include market risk, insurance risk, credit risk and liquidity risk. Managing these risks is essential to protecting the Group's capital, ensuring financial stability and meeting regulatory requirements.
Non-Financial risks: risks from failures in systems, processes, people or external events. They can lead to loss, regulatory action, harm to customers, or damage to the Group's reputation. These risks are not directly financial in nature but can have significant financial and operational consequences if not managed effectively. Exposures associated with the Group's activities are identified and assessed with reference to business processes and the factors that may prevent those objectives being achieved. Significant risks together with key controls are recorded on OneSumX (the risk management system used within the Group) and are reviewed regularly with the effectiveness of controls being attested to by relevant individuals within the business in respect of controls they operate.
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Strategic risks: risks that could affect the successful delivery of the Group's strategy and objectives. These may include long-standing risks that are part of the business model or new emerging issues that require senior management attention to avoid significant financial loss or reputational harm. Strategic risks can include material operational, market, credit, insurance and liquidity risk, as well as external factors. If a risk is not already covered by our financial or non-financial risk categories, it should be classified as a strategic risk. Details are documented within the Group Enterprise Risk Management Framework.
Emerging risks: potential threats that may not yet be fully understood or measured. Over time, they can grow into other Enterprise risks. They can also influence the likelihood or impact of existing risks. Each division and Group Function should formally review emerging risks at least once a year. This review should include a range of perspectives to challenge assumptions and help identify new or evolving risks.
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Risk management information ("MI")
Effective MI is a key tool used by the Group for risk management. Business management are responsible for ensuring that appropriate and adequate MI is in place. The CRO function is responsible for overseeing the flow of MI on risks, mitigation actions and issues. The CRO team conducts independent analysis and reporting on significant, thematic, and emerging risk matters and reports upon the aggregation and concentration of risks on a Group wide basis. They also provide advice and guidance to business management on the development of risk MI. Risk committees are asked to periodically confirm that they are satisfied with the MI received.
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Risk oversight
Risk management is the responsibility of all business managers and directors, who are supported by the Group and divisional CROs and their teams.
The Group CRO role is:
independent of business lines, and has an independent reporting line to the Chair of the Group Risk Committee
("GRC");
within the 2nd line of defence, providing advice, oversight and challenge for all of the Group's risks; and
involved, where appropriate, in all material decisions to influence and provide objective challenge.
Divisional CRO's perform a similar role, working with business management to ensure an appropriate risk
management framework is in place, and that risk management is embedded in each division.
Group Internal Audit ("GIA") are responsible for reporting to the Group Audit Committee on adherence to internal systems and controls, procedures, and policies, and to the GRC on both the effectiveness of the Group's risk governance framework and adherence to the framework by the operating divisions. GIA are independent of the day-to-day activities of the Group.
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Risk committees
Risk committees provide forums to review key risks and develop risk management strategies. Group level committees provide forums for Board oversight and challenge of the operation of the risk framework, and the management of key risks.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Governance arrangements
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PMS Board
The PMS Board ("the Board") is the governing body of the firm, having overall responsibility for approving and overseeing the firm's strategic objectives, risk strategy and internal governance.
The Board meets quarterly, with additional meetings held as required to meet business needs. The Board has a schedule of regular items which it discusses, including MI on the performance and operations of PMS, and a schedule of matters reserved for the Board is in place, that is reviewed annually.
The Board allocates responsibility for the conduct of the business to the Chief Executive Officer who is supported by other Senior Managers, who collectively form the management body. The management body are allocated specific responsibilities in line with their Senior Management Functions ("SMF"), with the allocation of these responsibilities including appropriate segregation of duties in accordance with the Senior Management and Certification Regime.
A conflicts of interest register is maintained for each director and reviewed annually by the Board.
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Committees
The Board is supported by several committees, including the Workplace Savings Risk Committee ("The Committee").
The Committee is a key element of the governance structure being responsible for ensuring that business management maintain a proportionate system of risk management and internal control, overseeing the management of risk events and deficiencies. The Committee meets at appropriate intervals throughout the year, typically monthly with a minimum of six meetings a year. Details of the risk management framework and objectives are covered within Section 2 of this document. In addition to the Committee, there are further sub-committees that report to the Board and have responsibility for the oversight of specific risks.
MIFIDPRU 7.1.4 states that MIFIDPRU 7.3 does not apply "where the value of the firm's on-balance sheet assets and off-balance sheet items over the preceding 4-year period is a rolling average of £100 million or less." As this condition is held for PMS, it is not required to have its own risk committee separate from the Workplace Savings Risk Committee.
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Directorships
The number of directorships (both executive and non-executive) held by each member of PMS's management body
is set out below.
This excludes directorships held in organisations that do not pursue predominantly commercial objectives and directorships within the Group.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
Name Senior management function
Number of executive directorships
Number of non-executive directorships
Alastair William Hall
Sally Clayton
SMF3 Executive Director (appointed 18 February 2020)
1
0
0
0
0
0
0
0
0
0
1
2
0
0
0
0
SMF9 Chair of the Governing Body (appointed 24 March 2026)
SMF16 Compliance Oversight (appointed 4 March 2025, resigned 30 March 2026).
Replaced by Coralie Glaunes (subject to regulatory approval)
Katharine Ann Photiou SMF1 Chief Executive, SMF 3 Executive
Director (appointed 22 July 2024)
Marco Groot-Wassink SMF3 Executive Director (appointed 2
November 2022, resigned 4 April 2025)
Jason Cule SMF17 Money Laundering Reporting Officer (appointed 19 February 2025)
SMF9 Chair of the Governing Body
Simon Jonathan Burke
(appointed 21 December 2017, resigned 24
March 2026)
Richard Longley SMF3 Executive Director (appointed 10 July
2025)
Paula Llewellyn SMF3 Executive Director (appointed 7 July
2025)
PMS is not a SYSC significant firm under the definition of SYSC 1.5.2R and therefore its management body are not limited on the number of directorships they can hold.
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Diversity
The Board Inclusion and Wellbeing Policy (the 'Policy') sets out the approach to inclusion and wellbeing of the Board of Directors (the 'Board') of Legal & General Group Plc and its Committees in compliance with the FCA's Disclosure Guidance and Transparency Rules (DTR 7.2.8AR(1)). It also provides an overview of the Board's approach to diverse representation and inclusion in senior management roles. From a governance perspective, the Group Inclusion and Wellbeing function drives and implements inclusion and wellbeing initiatives across L&G and ensures consistent execution of the inclusion and wellbeing strategy globally, as agreed annually with the Group Management Committee and Group Nominations & Corporate Governance Committee. The L&G inclusion and wellbeing strategy also supports broader workforce efforts on People & Capability, as agreed with Group HR. The Group inclusion and wellbeing strategy, and related policies, are reviewed at least annually by the Board to ensure a diverse and inclusive representation of leaders in executive roles are successfully recruited and retained. Remedial action plans will be put in place and tracked in the event there is any shortfall in progress or performance.
The Policy applies to the Board and takes account of the requirements of MiFID II published by ESMA and the EBA. The Policy will be reviewed annually by relevant boards and any recommendations made to the Board for approval.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
We have a responsibility to develop and sustain a panel of Board members that are diverse and are reflective of our people as well as the businesses and communities that our organisation serves. All appointments to the Board are based on the impartial evaluation of knowledge, skills, experience and representation gaps across the membership. This gap analysis is routinely conducted by relevant boards which review the composition of the Board and make relevant recommendations to the Board for any changes. This evaluation also takes account of succession plans to ensure a sustainable pipeline of diverse Board talent. Both appointments and succession plans should be based on merit and objective criteria and should promote diverse representation, inclusion and equal opportunity, as referenced in Principle J of the UK Corporate Governance Code (2024).
The Board continues to support the FTSE Women Leaders Review voluntary recommendation for FTSE 350 companies that 40% of the Board should be women and to have at least one woman in the four key roles of Chair, Senior Independent Director, CEO and Finance Director. The Board also supports the equivalent FCA Rules for Listed Companies recommendations for Board representation and senior Board positions. We also continue to support the Parker Review recommendations for FTSE 350 companies to have at least one ethnic minority director on the Board. As at the date of this disclosure, we have delivered against all of these goals.
The Board is responsible for overseeing the implementation of our Group-wide Inclusion and Wellbeing Policy (the 'Group Policy'). This Group Policy applies to all people directly employed by Legal & General Group Plc and forms the basis of our engagement with our clients, suppliers and other third-party providers. This Group Policy supports us in achieving our aspirations to foster a dynamic, multi-faceted and thriving workforce, including achieving gender parity and increasing ethnic representation, and other minority representation, in our workforce. As per the expectations set out in the UK Corporate Governance Code (2024), the Board reviews the Group Policy and any initiatives, their objectives and link to company strategy, how they have been implemented and progress on achieving the objectives.
MIFIDPRU Disclosure 31 December 2025
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PMS Board
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Own funds
The own funds disclosures as made in line with the template requirement set out in MIFIDPRU 8.4 and MIFIDPRU 8 Annex 1.
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Composition of regulatory own funds
As at 31 December 2025, to meet its regulatory obligations, PMS held own funds (regulatory capital) of £17,009k (2024: £16,393K). All own funds are held within common equity tier 1 capital and the composition is below:
Composition of regulatory own funds - OF1
Amount 31 Dec 2025 Amount 31 Dec 2024Source based on reference numbers/letters of the balance sheet in the(£000s)
(£000s)
audited financial
statements (Appendix I)
1 OWN FUNDS
17,009
16,393
11
2 TIER 1 CAPITAL
17,009
16,393
11
3 COMMON EQUITY TIER 1 CAPITAL
17,009
16,393
11
4 Fully paid-up capital instruments
64,252
64,052
6
5 Share premium
73,248
62,448
7
6 Retained earnings
(135,491)
(125,107)
9
Accumulated other comprehensive income/(expense)
Other reserves - Capital contribution reserve
Adjustments to CET1 due to prudential filters
15,000 15,000 8
Other funds
(-) TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1
CET1: Other capital elements, deductions
and
adjustments
ADDITIONAL TIER 1 CAPITAL
Fully paid up, directly issued capital instruments
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
Share premium
(-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1
Additional Tier 1: Other capital elements,
deductions
and adjustments
TIER 2 CAPITAL
Fully paid up, directly issued capital instruments
Share premium
(-) TOTAL DEDUCTIONS FROM TIER 2
Tier 2: Other capital elements, deductions
and
adjustments
Own funds have increased in FY2025 due to share issues to the total of £11m, increasing share capital and share premium (explained in 4.3 below), offset by losses of £10.4m.
An extract from the audited financial statements providing the statement of financial position (balance sheet) with relevant references can be found in Appendix 1.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Own funds: reconciliation of regulatory own funds to balance sheet in the audited financial statements
Amount (£000s)
Column A - Balance sheet as in published/audited financial statements
As at period end 31 Dec 25
£000s
Column B - Balance sheet as in published/audited financial statements
As at period end 31 Dec 24
£000s
Column C - Cross-reference to template OF1
ASSETS - Breakdown of asset classes according to the balance sheet in the audited financial statements
Investment in subsidiary
20
20
Deferred tax asset
12
15
Trade and other receivables
4,112
4,019
Cash and cash equivalents
16,699
14,989
Total Assets
20,843
19,043
LIABILITIES - Breakdown by liability classes according to the balance sheet in the audited financial statements
Trade and other payables
(3,834)
(2,650)
Total Liabilities
(3,834)
(2,650)
SHAREHOLDERS' EQUITY
Share capital
(64,252)
(64,052)
4
Share premium
(73,248)
(62,448)
5
Capital Contribution Reserve
(15,000)
(15,000)
8
Retained earnings
135,491
125,107
6
Total Shareholders' equity
(17,009)
(16,393)
1
As PMS has the same accounting for its balance sheet and regulatory scope of consolidation, PMS is only required to disclose its balance sheet information and a reconciliation relating to the regulatory scope of consolidation is not applicable.
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Main features of own instruments issued
The main features of own funds instruments issued by PMS are:
Share capital consists of fully paid ordinary shares of £1 each, with 64,251,600 shares in issuance as at 31 December 2025 (2024: 64,051,600). The original share capital has increased in tranches since incorporation. There was one tranche issued during 2025; 200,000 £1 shares issued on 1 May 2025. The total consideration received during 2025 was £11,000,000 (£200,000 nominal and £10,800,000 share premium).
100% of the called-up share capital is owned by the immediate parent company, Legal & General Retail Investments (Holdings) Limited, a company registered in England and Wales.
A dividend of £Nil (2024: £Nil) was paid during the year.
MIFIDPRU Disclosure 31 December 2025
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100% of total shareholder's equity is recognised as regulatory own funds capital.
Share capital, share premium and all other reserves have no specific terms and conditions attributed to them.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Composition of regulatory own funds
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Own funds requirements
MIFIDPRU 4.3 states that PMS must at all times maintain own funds so that they are at least equal to its own funds requirement.
As PMS is classed as a non-SNI MIFIDRU firm, the own funds requirement is the highest of:
permanent minimum capital requirement;
K-Factor requirement; and
fixed overhead requirement ("FOR").
These are shown within the table below.
£K
31 December 2025
31 December 2024
Permanent minimum capital requirement
150
150
K-factor requirement
18
12
Fixed overhead requirement
3,728
3,329
Own Funds Requirement
3,728
3,329
PMS held sufficient own funds throughout the year to cover this minimum regulatory obligation.
As at 31 December 2025, PMS holds excess own funds of £13,681k (2024: 13,064k) over the regulatory own funds requirement.
Compared to the prior reporting period, there have been no significant changes to the K-factor requirements and fixed overhead requirement. The three components are discussed further below.
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Permanent minimum capital requirement
This is the initial capital required for authorisation by the FCA and is a fixed amount of £150k, which is based on the investment services and activities PMS undertakes.
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K-factor requirements
The purpose of the K-factor requirement is to align capital requirements to the level of risk posed by investment firms and the activities they undertake. There are 9 K-Factors, which are split into 3 categories:
Risk to Client: risks carried by an investment firm during its services, actions or responsibilities, which could negatively impact clients. For many investment firms, failure to carry out its services or operations correctly will be the most important risks they need to manage.
Risk to Market: applies capital requirements against the impact an investment firm could have on the markets in which it operates, and on those counterparties it trades with.
Risk to Firm: intended to capture risks to an investment firm's solvency from its trading activity and market participation. While the primary impact of crystallised risk is on the investment firm itself, its shareholders and its counterparties and creditors, a deterioration in an investment firm's financial standing can lead to increased risks to its clients and/or the wider market.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
The Risk to Market and Risk to Firm categories are largely only relevant for firms that trade on their own account and are therefore not generally applicable to PMS.
The K-Factor requirement for PMS is as follows:
K-Factor requirements (£K)
31 December 2025
31 December 2024
K-AUM, K-CMH and K-ASA
18
12
K-COH and K-DTF
0
0
K-NPR, K-CMG, K-TCD and K-CON
-
-
Total
18
12
A summary to explain the various K-Factors can be found in Appendix 2 - Glossary of Terms.
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Fixed overheads requirement ("FOR")
The purpose of the FOR is to ensure that firms hold a minimum amount of capital to support an orderly wind-down. As determined by MIFIDPRU 4.5, the FOR equates to 3 months' worth of relevant expenditure. Relevant expenditure is the total expenditure before distribution of profits and firms may deduct certain items of variable expenditure such as staff bonuses, if fully discretionary.
The FOR is based on the annual expenditure reported in the most recent audited financial statements. When a material1 change to projected relevant expenditure is anticipated during the financial year, the FOR is recalculated based on the revised projected expense base and immediately becomes the requirement.
PMS's FOR is £3,728k (2024: £3,329k), which has been calculated using the annual expenditure from the most recent audited financial statements relating to the financial year ending 31 December 2025.
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Own funds requirement assessment
The FOR is the highest own funds requirement and PMS held sufficient own funds throughout the year to cover this minimum regulatory obligation.
As at 31 December 2025, PMS holds excess own funds of £13,681k (2024: 13,064k) over the regulatory own funds requirement.
- Approach to assessing the adequacy of Own Funds
The K-factor requirements and FOR, as determined above, establish the regulatory minimum level of own funds which PMS is required to hold.
The overall financial adequacy rule as set out in MIFIDPRU 7.4.7 requires that PMS must, at all times, hold own funds and liquid assets which are adequate, both as to their amount and their quality, to ensure that it is able to remain financially viable throughout the economic cycle, with the ability to address any material potential harm that may result from its ongoing activities; and its business can be wound down in an orderly manner, minimising harm to consumers or to other market participants.
PMS has in place an ICARA process which seeks to identify all material harms that could result from the ongoing operation of the business, or from the winding-down of the business, and to establish the amount of capital and liquid assets required to cover those potential harms.
1 Material is defined by MIFIDPRU as a 30% or more increase in the firms projected relevant expenditure for the current year or an increase of
£2m or more in the firms FOR based on the projected relevant expenditure for the current year.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
PMS's risk management and control framework enables the identification, mitigation, and monitoring of risks to the
business and consideration of potential harms to clients, the firm, and the wider financial markets.
The ICARA process reflects PMS's risk management framework, incorporating assessment of its business model
planning and forecasting, stress and scenario testing, recovery planning and wind-down planning.
Risk-based capital and liquidity assessments are determined on a "1-in-200 year" basis, such that the internal capital and liquid assets threshold requirements are sufficient to ensure solvency and liquidity over a one-year time horizon with 99.5% confidence.
The assessments are forward-looking in terms of expected business plans and risk exposures, although are prepared on the basis of the existing systems and controls framework, and as such do not take account of any future risk-mitigating management actions or any planned control improvements not yet implemented at the time of the assessment.
The assessments are performed at entity level and at the parent company consolidated level.
PMS's Board has set a capital coverage risk appetite aimed at ensuring that the amount of own funds held exceeds the higher of the assessed internal capital threshold requirement and the minimum regulatory level, together with an additional margin for prudence.
PMS complies with the overall financial adequacy rule by regular monitoring of its capital and liquidity positions in comparison to the calculated threshold requirements, and by regular monitoring of risk exposures and associated metrics. This allows implementation of timely management action as and when appropriate to ensure continuing compliance, including updated assessments at least annually of threshold requirements to reflect emerging exposures and material changes in the business and risk control environment.
The adequacy of the ICARA process is reviewed at least once every 12 months, and (irrespective of the annual review) following any material change in the business model or operating model.
PMS's governance structure provides significant oversight of the business and the ability to raise issues with relevant subject matter experts, and to discuss and implement appropriate management actions as and when required.
PMS's ICARA risk-based assessment ascertains that it holds a higher requirement than the regulatory minimum of the own funds requirement (K-Factors/FOR). Throughout the year, PMS held sufficient own funds and liquid resources to cover the threshold requirements calculated through its ICARA processes.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Remuneration policy and practices
PMS has no direct employees, with all staff employed by other subsidiaries of the Group.
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Group Remuneration Committee
The Group Remuneration Committee ("the Remuneration Committee") has responsibility for determining and approving the principles and parameters for the Group's remuneration policy for all employees, managing the remuneration of executive directors and designated senior managers, and overseeing compliance with remuneration regulations that apply across parts of the Group.
The Remuneration Committee determines the remuneration policy of the Group having regard to:
the views of the Group's shareholders and other stakeholders;
the risk appetite of the Group;
alignment to the Group's long term strategic goals;
the requirement that a significant proportion of remuneration should be structured so as to link rewards to corporate and individual performance; and
designed to promote the long-term success of the Group.
The Remuneration Committee is supported by the Reward Steering Committee, which helps review the implementation of the remuneration policy and set the framework within which incentive arrangements are normally reviewed and implemented, with a view to supporting business strategy, whilst acting within the Group's risk appetite and within the relevant regulatory framework applying to remuneration.
A number of regulatory regimes impact the Group, all of which are taken into account in the remuneration policy. In particular, the policy is consistent with the way the Group integrates risks, including sustainability risks under applicable regulation.
The Remuneration Committee has due regard to market competitiveness, internal relativities, individual and corporate performance when setting and reviewing remuneration. The Remuneration Committee also has regard to the principles of good corporate governance, including but not limited to the UK Corporate Governance Code, the FCA Remuneration Code and guidelines laid down by the investor community.
The Remuneration Committee undertakes a regular review of the adequacy and effectiveness of the remuneration policy to seek to ensure it is fully aligned with the group's long-term objectives.
The Remuneration Committee receives a number of reports to assist it in its oversight of remuneration policy, including reports on risk, financial performance across the group, customer experience and company culture, including progress on key diversity goals, and progress against strategic climate goals.
In considering remuneration proposals, the Remuneration Committee considers a report from the Group CRO which assesses the performance of the Group from a risk appetite perspective across a range of measures including:
capital and earnings risks;
prudential risk limits and tolerances;
operational risk and internal control;
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
conduct risk; and
sustainability risks.
In addition, the Committee also receives a report considering customer service assessed against the Consumer Duty critical factors:
Products and services;
Price and value;
Consumer understanding; and
Consumer support
The Remuneration Committee reserves appropriate discretions to adjust payments having regard to responsible and effective risk management.
The Remuneration Committee receives regular updates on regulatory developments and general remuneration issues, as well as market and benchmarking data from its remuneration advisors to support its decisions.
During the year ending 31 December 2024, the Remuneration Committee was made up of the following members:
Laura Wade-Gery (Chair);
Philip Broadley - retired from the Committee on 31 August 2025;
Henrietta Baldock;
Mark Jordy - appointed 1 July 2025;
Lesley Knox - retired from the Committee on 21 May 2025;
George Lewis;
Ric Lewis; and
Tushar Morzaria.
PwC was the independent adviser to the Remuneration Committee in 2025.
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Principles guiding remuneration policies and practice
The policy is built around a set of key principles designed to ensure that we reward our employees fairly, that we recognise performance, that we are competitive within our market, that we reward appropriately against risk appetite, and to promote the right culture, values and behaviours, including a strong focus on our customers and sound risk management. Our remuneration principles aim to be clear and simple, and strengthen the link between reward, exceptional performance, and balanced risk-taking, as well as emphasise the importance of collaboration.
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Material Risk Takers
The Remuneration Committee has identified 17 Material Risk Takers with responsibilities relating to PMS for all or part of the year ending 31 December 2025.
Identification of Material Risk Takers
The following groups of employees have been identified within the code firms as meeting the criteria for Material Risk Takers, based on the guidance set out in SYSC 19G.5:
members of the Board and Executive Committee;
employees performing a SMF in relation to PMS firm within the Group;
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
members of key decision making committees in relation to PMS;
individuals responsible for information technology and information security; and
key control function roles.
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Key characteristics of remuneration policy and practice
Remuneration at the Group is made up of fixed pay (base pay, retirement and other benefits) and performance-related pay (consisting of annual bonuses, deferred awards and long-term incentives). Performance related pay is designed to reflect success against a range of performance measures and targets taking into account the businesses performance. Performance related pay accounts for a considerable proportion of total remuneration for the majority of Code Staff.
Annual bonuses
Annual bonuses are designed to reward financial and non-financial performance that supports the business strategy, taking into account the Group's risk appetite and personal contribution in the business context that it was delivered. Targets are specific, measurable, set at the beginning of the year and communicated to employees.
For Material Risk Takers in the control functions (Internal Audit, Regulatory Compliance and Risk), separate performance measures have been designed which exclude any direct linkage to financial performance.
Individual performance assessment is supported by a structured performance management framework. In reviewing an individual's performance against their objectives, the individual's approach to risk management (including the integration of sustainability risks) is considered when determining the overall level of bonus pay out. The bonus policy allows for zero bonus payments to be made when appropriate.
Deferred bonus
Under the Group-wide deferral arrangements a significant proportion of the annual bonus for senior employees is deferred into Group shares over a three-year period. The purpose of the deferral plan is to promote the sustainable long-term performance of the Group and to align the interests of our senior management with our shareholders.
Deferred awards for senior employees may be subject to forfeiture if the performance which led to a bonus being paid is found to be incorrect or in the event of personal misconduct. Annual incentive awards (including any deferred element) are subject to malus and clawback for material risk takers.
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Design and structure of remuneration
Details on the individual components of remuneration are set out below.
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Fixed pay
Base pay
The Group aims to attract and retain key employees by paying base pay which delivers competitive total remuneration. Factors taken into account when determining salaries include:
the individual's skills, experience and performance;
scope of the role;
external market data;
pay and conditions elsewhere in the Group; and
overall business performance.
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Legal & General (Portfolio Management Services) Limited
As a member of the Living Wage Foundation, base pay is also set with reference to the Foundation's UK and London
living wage levels.
Benefits
All UK employees of the Group have access to private medical insurance, life insurance, and a range of family-friendly policies (maternity, paternity, adoption and shared parental leave).
In addition, there are several wellbeing support packages including Unmind (a confidential mental health app), childcare and elderly care support.
Pension
All employees are given the opportunity to participate in a Group Pension Scheme. The pension opportunity offered to the majority of the UK Group workforce was 12% of base pay during 2025.
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Variable performance related pay
Annual bonuses
The majority of the Group's employees participate in a discretionary bonus plan, unless an alternative plan applies based on role. An employee will be considered for a discretionary bonus award based on achievement against objectives, conduct and behaviours, the role performed during that year and internal relativities.
Annual bonuses are designed to reward financial and non-financial performance that supports the business strategy, taking into account the Group's risk appetite and personal contribution in the business context that it was delivered. Focus areas are set at the beginning of the year and communicated to employees.
Individual performance assessment is supported by a structured performance management framework. The performance management framework included an assessment and rating of both the "what" and the "how" of each individual's performance so considering both their achievement against the objectives set for the year, and the individual's conduct and approach to risk management (including the integration of sustainability risks). The combination of the "what" and the "how" ratings then determine the overall level of bonus pay out. The bonus policy allows for zero bonus payments to be made when appropriate.
The Remuneration Committee has ultimate discretion over all bonus plans and overall expenditure on annual bonuses is reviewed by the Remuneration Committee at the end of each year taking into account the performance of the business.
Deferred bonus
Bonuses above a certain threshold are subject to deferral with the deferral amount increasing with the size of the bonus. Deferred awards are normally held in shares for three years and are subject to malus and clawback. The purpose of the deferral plan is to promote the sustainable long-term performance of the Group and to align the interests of our senior management with our shareholders.
Deferred awards for senior employees may be subject to forfeiture if the performance which led to a bonus being paid is found to be incorrect or in the event of personal misconduct. Annual incentive awards (including any deferred element) are subject to malus and clawback for material risk takers.
The Group reserves the right to adjust deferral levels for Material Risk Takers as deemed necessary to comply with regulatory requirements.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
The value of PMS's on-balance sheet assets and off-balance sheet items over the proceeding 4-year period has been a rolling average of £100 million or less as set out in SYSC 19G.1.1R(2). It is therefore not required to provide details of its deferral and vesting policy under MIFIDPRU 8.6.6R(4).
Long term incentive awards ("LTIAs")
LTIAs are a common element of the remuneration of our senior employees and may also be awarded to less senior employees, particularly to recognise outstanding performance. Awards are granted as a combination of Performance Share Plan ("PSP") and Share Bonus Plan ("SBP") awards, with the weighting of each determined by seniority. At our Executive Committee level, awards are 100% PSP. For senior employees below Executive Committee level awards are a combination of SBP and PSP weighted towards the PSP element, and for the remainder of recipients' awards are 100% SBP.
Performance share plan ("PSP")
The PSP award element of LTIAs recognises the strategic and influential role that senior employees have in contributing to and driving overall company performance.
PSP awards are conditional on the achievement of specific level of performance, over a three-year period, of total shareholder return ("TSR"), Earnings Per Share growth and progress against our climate transition plan. In addition, vesting of awards is subject to an assessment of performance against Solvency II objectives. These measures are intended to ensure an alignment between reward and the interests of shareholders and provides a degree of risk management (TSR reflects both underlying financial performance and the market's assessment of the quality and sustainability of those earnings).
The Remuneration Committee may also exercise its discretion to scale back the vesting of awards if it was felt that the Group's financial performance did not justify the level of vesting (the Remuneration Committee may not increase the award).
Participation in the plan for one year does not guarantee participation in future years.
Share bonus plan ("SBP")
SBP is the main form of long term variable remuneration for roles below senior management.
An employee will be considered for an SBP award based on their role and performance during the year. Awards may also be made on an exceptional basis to more junior roles.
Awards are made in the form of restricted shares (or nil-cost options or a conditional award of shares). In normal circumstances awards are subject to a 3 year vesting period.
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Approach to risk adjustment
The Group's remuneration policy is designed to align with the risk appetite of the Group. Our remuneration arrangements are intended promote effective risk management and appropriate risk-taking and ensure the appropriate consideration of prudential, operational, reputational, conduct and sustainability risks.
All variable remuneration awards are subject to potential adjustment at a Group wide, divisional or individual level in line with the Group's risk adjustment policy. The policy allows for in-year adjustments, end of year adjustments or the application of malus and/or clawback.
In year adjustments may be applied on an individual basis based on issues raised through the Group's conduct risk
referral process.
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Group wide adjustments may be made based on:
assessment of Group's risk profile, taking into account;
performance against the Group's risk appetite statement;
response to emerging risks; and
management of core business risks.
robustness of the Risk Framework and Internal Control;
regulatory Perceptions and Risk Culture, including;
PRA perceptions of the Group's prudential risk;
FCA perceptions of conduct risk management; and
overall risk management culture. Divisional/ team adjustments may be made based on:
performance against capital and earnings risk appetite;
performance against prudential risk tolerances;
operational and risk controls;
IT security;
conduct;
internal audit findings; and
sustainability risks.
Malus and clawback
For Executive Directors and Code Staff cash awards, deferred bonus awards and long-term incentive awards may be subject to malus and clawback. For all other employees, any deferred bonus award or long-term incentive award may be subject to malus and clawback.
In all cases up to 100% of an award may be subject to malus and clawback with awards being potentially subject to clawback for up to 4 years from the payment date.
Ex-post risk adjustments may be applied in the following circumstances:
financial misstatement;
factual error in calculating payment/vesting;
personal misconduct;
material failure of risk management;
serious reputational damage;
material downturn in performance; and
other circumstances that are similar in nature or effect.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
Recruitment remuneration
The remuneration levels set for new recruits will normally be in line with the existing remuneration policy and guidelines.
In some instances, new recruits may have accrued deferred remuneration which may be lost upon change of employment. Accordingly, the Group may grant cash or share awards to compensate for awards forfeited upon leaving a previous employer, ensuring that they are no more generous than those being forfeited, and taking into consideration:
the form of the award
any performance conditions
the vesting profile; and
relevant regulatory requirements and guidance.
In the first performance year only, new recruits may also be offered a bonus assurance, in recognition of lost bonus opportunity with their previous employer in that year. Bonus assurances may be subject to performance conditions assessed on a case-by-case basis.
Severance pay
Any termination payments in lieu of notice would consist solely of base pay and the cost of providing benefits for the outstanding notice period. Any statutory requirements are observed.
Eligibility for annual bonus, SBP awards and PSP awards are governed by their respective plan rules, as summarised below:
Annual bonus: there is no automatic entitlement to an annual bonus in the year of cessation of employment. However, the Group may determine, at its discretion, that an individual will receive a bonus pro-rated for the period through to leaving based on targets and performance for the full year, and an assessment of overall business and personal performance.
SBP: in the event that a participant is a 'good leaver' any outstanding unvested deferred awards will normally be released in accordance with the ordinary timescale. Exceptionally, the Group reserves the right to accelerate any vesting or payment, for example in the case of terminal illness.
PSP: unless the Remuneration Committee determines otherwise, in the event that a participant is a 'good leaver' any unvested PSP awards will be pro-rated for the period through to leaving and vest based on targets and performance to the end of the performance period, with awards released at the normal times. Exceptionally, the Remuneration Committee reserves the right to accelerate vesting or payment due, for example in the case of terminal illness.
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Fixed pay
- Quantitative disclosures
The tables below summarises remuneration for the year ending 31 December 2025 for PMS's senior management,
other material risk takers and other staff.
PMS identified 14 material risk takers under SYSC 19G.5.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
Senior management Other material risk takers31 Dec 2025
31 Dec 2024
31 Dec 2025
31 Dec 2024
Fixed pay (£m)
2.24
0.92
2.11
1.99
Variable pay (£m)
2.23
0.94
1.68
2.56
Total pay (£m)
4.46
1.86
3.79
4.55
PMS has no direct employees, with all staff employed by other subsidiaries of the Group.
Senior management Other material risk takersTotal amount of guaranteed variable awards made
31 Dec 2025 31 Dec 2024 31 Dec 2025 31 Dec 2024- - - -
Number of material risk takers receiving guaranteed variable awards
- - - -
Senior management Other material risk takers31 Dec 2025
31 Dec 2024
31 Dec 2025
31 Dec 2024
Total amount of severance -
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-
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Number of material risk takers -
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-
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Highest severance payment -
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-
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payments made
receiving severance payments awarded to a material risk taker
The value of PMS's on-balance sheet assets and off-balance sheet items over the proceeding 4-year period has
been a rolling average of £100 million or less as set out in SYSC 19G.1.1R(2). It is therefore not required to provide details set out under MIFIDPRU 8.6.8R(6).
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Group Remuneration Committee
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Investment policy
PMS is a non-SNI investment firm that meets condition (1)(a) set out in MIFIDPRU 7.1.4R, given that the value of its on-balance sheet assets and off-balance sheet items over the proceeding 4-year period has been a rolling average of £100 million or less. MIFIDPRU 8.7.1R therefore does not require PMS to disclose its investment policies.
MIFIDPRU Disclosure 31 December 2025
Legal & General (Portfolio Management Services) Limited
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Appendix 1 - statement of financial position
MIFIDPRU Disclosure 31 December 2025
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- Appendix 2 - glossary of terms
Term Explanation
K-ASA
K-ASA (Assets Safeguarded and Administered) - is the K-factor requirement for the amount of own funds assigned against the risk of harm associated with the safeguarding and administering of a client's financial instruments.
K-AUM
K-AUM (Assets Under Management) is the K-factor requirement for the amount of own funds investment firms are required to hold against risks associated with managing assets for clients. It covers both assets managed on a discretionary portfolio management basis and assets under an ongoing non-discretionary advisory arrangement.
K-CMG
K-CMG (Clearing Margin Given) is an alternative to K-NPR to provide for market risk for firms that deal on own account or execute for clients in the name of the investment firm It is based on the total margins an investment firm is required to give to a clearing member and can only be used with the agreement of the FCA.
K-CMH
K-CMH (Client Money Held) is designed to capture the risk of an investment firm causing potential harm to clients where it holds their money. It takes into account whether the funds are recorded on the investment firm's own balance sheet or in third party accounts, and arrangements provide that client money is safeguarded in the event of bankruptcy, insolvency, or entry into resolution or administration of the investment firm.
K-COH K-COH (Client Orders Handled) is the K-factor own funds requirement designed to cover potential risks from both the execution of orders in the name of the client and the reception and transmission of client orders.
K-CON
K-CON (Concentration Risk) is an own funds requirement that only applies to exposures in the trading book for investment firms that deal on own account or execute for clients in the name of the investment firm. It seeks to provide additional own funds to manage concentration risk to a single counterparty or group of connected counterparties.
K-DTF
K-DTF (Daily Trading Flow) is an own funds requirement that applies to investment firms that are dealing on own account, including where executing client orders in the name of the investment firm. It is designed to capture operational risks related to the value of trading activity an investment firm conducts throughout each business day. It excludes the value of orders handled which are already captured by K-COH.
K-NPR
K-NPR (Net Position Risk) is the K-factor that applies to firms that deal on own account or execute for clients in the name of the investment firm. It provides for market risk and is based on the market risk framework (standardised approach, or if applicable, internal models) of the Capital Requirements Regulation.
K-TCD
K-TCD (Trading Counterparty Default) is a K-factor own funds requirement that only applies to investment firms dealing on their own account or execute for clients in the name of the investment firm. It aims to capture risks from trading counterparties failing to meet their obligations to the investment firm.