UK - The £11.9bn (€17.5bn) British Coal Staff Superannuation Scheme says is cutting its allocation to listed equities, especially those in the UK, and replacing it with a 20% exposure to absolute returns via private equity.

The shift is being funded by a reduction in passive equities managed by Barclays Global Investors, which managed the transition.

The fund's fixed income brief with Goldman Sachs Asset Management will be increased by a transfer of bonds previously passively managed by BGI - which acted as transition manager for the shift.
"Despite these changes, BGI continues to manage the largest share of scheme assets," the fund said in its 2005-2006 annual report on its web site.

The changes come as Geoff Mellor joins as chief executive designate at the start of next month. He'll take over from David Morgan as CEO of Coal Pension Trustees, the executive arm of the UK's coal industry funds, when Morgan retires.

"These changes when fully implemented will result in the equity allocation benchmarked to market indices reducing from 70% to 50%," the scheme said. It had a 58% allocation to equities as at the end of the 2006 financial year.

Within equities, the UK allocation will be cut from 45% to 30% by 2008.

The investment strategy was changed in the year to increase the absolute return allocation from 5% to 15% at the year-end and 20% by mid-2006.

The allocation to fixed income and index-linked gilts were both increased by 0.5% to 8%. A cash buffer of 4% of assets is being accumulated over three years.

The British Coal Staff Superannuation Scheme provides pensions to 65,000 former managerial and clerical staff of British Coal, while the Mineworkers fund has 192,000 pensioners.