Strength in Size
We have circa £9 billion in assets under management, split between defined benefit and defined contribution pension schemes.
Our combined strength and size enables us to invest to achieve economies of scale, the benefits of which we pass on to our customers.
Each scheme has its own separate section at the Trust ensuring its assets and liabilities are ring-fenced, giving peace of mind.
Investment decisions are made by the Chief Investment Officer, the Investment Committee (a sub-committee of the Board) and our Investment managers.
Each plays a different role, ultimately working together to add long-term value for the common good of beneficiaries.
All monies are managed externally by third-party investment managers.
Our Investment Beliefs
1) assets are held to pay benefits and should be invested taking account of the characteristics of these benefits.
2) Risk should only be tolerated to the extent that the Trustee Board has confidence that the covenant of sponsoring employer(s) is sufficient to meet potential adverse consequences. The investment strategy may take account of the preferences of sponsoring employer(s), including ethical concerns, where these are consistent with risk tolerance and investment beliefs.
3) Asset allocation is a more important determinant of returns than manager or stock selection.
4) Achieving a higher investment return requires taking higher risk (uncertainty in the future returns). Higher risk assets (e.g. equities) are expected to outperform lower risk assets (government bonds)but are also expected to have higher variability of returns (volatility).
5) Diversification of risk assets, both within and across asset classes, reduces the variability of returns, both in absolute terms and relative to liabilities.
6) The real world is complex; judgement and qualitative research are important alongside quantitative analysis.
7) Illiquid assets, that provide sufficient reward to compensate for illiquidity, may be suitable investments. Sufficient liquidity to meet payments, including in stress scenarios, should be maintained.
8) Market opportunities to deliver returns in excess of an index may exist. However identifying and implementing strategies that consistently deliver excess returns after costs is difficult.
9) Good governance improves the quality of investment decision-making. Transparency is an important enabler for good governance.
10) Responsible investment helps identify and mitigate risks. Responsible investment may also enhance portfolio returns.