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Impact investing


BBC scheme trustees back equities

UK – The trustees of the 5.8 billion pound (8.7 billion-euro) main pension scheme of the British Broadcasting Corporation are backing equities to produce higher returns in the long term.

“A high percentage of assets are held in equities which the trustees expect will produce higher returns in the long term,” the state-owned organisation said in its annual report.

“The allocation of assets by the scheme trustees is governed by a need to manage risk against the desire for high returns and any liquidity needs.”

It added: “The target allocation, based on market values, for equities is 60%, bonds and gilts 30% and property 10%.”

The scheme, which is advised by Watson Wyatt, expects equities to achieve a long-term rate of return of 7.9%. It currently holds 4.1 billion pounds in equities, or 70% of its allocation.

This compares to three billion pounds, or 62% of its allocation, last year - when the stated long-term expected rate of return was 8.3%.

The BBC and the trustees agreed in 2003 that employer contributions would rise to six percent by 2006 with employee contributions rising to the same amount by 2007. It said: “The position will be reviewed in 2005 after a new formal actuarial valuation by Watson Wyatt is produced.”

On a market valuation the scheme, with liabilities of 6.3 billion pounds, is 432 million-pounds underfunded – down from a 1.07 billion-pound deficit in 2003.

“The BBC, unlike many other organisations, has committed to keeping its defined benefit pension scheme to which the majority of employees belong,” said John Smith, director of finance, property and business affairs.

He said the net deficit “reflects short-term movements in equity values over the past 12 months and changes in interest rates but does not accurately reflect the underlying long-term health of the scheme which remains over funded on an actuarial basis”.

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    Asset class: Real Estate Equity Fund (non listed).
    Asset region: Europe.
    Size: Total CHF 600m, approx. CHF 100-300m per fund investment.
    Closing date: 2019-06-28.

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