19/06/2023 |

BT Pension Scheme – a major investor in the UK

The Daily Telegraph today reported that the BT Pension Scheme has reduced its exposure to UK equities over the past 12 months. Wyn Francis, Chief Investment Officer, Brightwell which manages the BT Pension Scheme, explains the facts behind the headline.

Wyn Francis said: “The BT Pension Scheme invests globally but is a major investor in the UK with 64% of its total assets invested in UK gilts, corporate bonds, property, public equities, infrastructure and private equity. This figure has increased over the past 12 months.

“As a mature pension scheme, it is on a de-risking path so the allocation to equities has been steadily reducing for a number of years, an approach encouraged by The Pensions Regulator. Offsetting this, the Scheme has been increasing its exposure to the UK through investments in corporate credit, direct lending, infrastructure and income generating property.

“Currently, the average Scheme member’s age is 68 and by 2034 virtually all of the members will be retired.

"As the Scheme’s membership matures we need to ensure cash is generated to pay increasingly predictable liabilities – i.e. paying pensions to the members. As such, we’re repositioning the Scheme’s portfolio towards bond or bond-like investments which feature a regular contracted cash flow, or payment. In doing so, we will be able to generate the cash to pay liabilities without the need to sell assets. Since all the Scheme’s liabilities are in pounds, our exposure to UK assets is likely to continue to increase."