mast image

Special Report

Impact investing

Sections

Pension fund for Royal Mail grows assets by £2.1bn as yields plummet

Related Categories

The Royal Mail Pension Plan (RMPP) saw its assets grow by nearly 70% as falling UK Gilt yields added nearly £2.1bn (€2.8bn) in assets.

The pension fund for staff of the newly privatised UK postal service saw assets increase to £6.5bn from £3.9bn over the year to April.

It received more than £550m in contributions but only paid out £27m after shifting pre-2012 liabilities to the taxpayer to enable privatisation.

The RMPP comprises two pension funds for the Royal Mail Group (RMG) and the Post Office Ltd (POL).

<

Asset increases were primarily a consequence of a drop in Gilt yields over the year, which pushed up the value of the scheme’s liability-driven investment (LDI) portfolio, managed by BlackRock.

Over the year, the RMPP increased its LDI portfolio, with the pre-hedge of liabilities expected to commence in 2016-17 for the different segments of the scheme.

“During the year,” the RMPP said, “the pre-hedge resulted in a significant rise in value of liability-matching assets, and, consequently, the surplus is expected to have increased – although this is expected to unwind over the period of the pre-hedge as the benefits accrued increase.”

In the year to April, the RMG section achieved an investment return of 6.5% on its return-seeking assets and 89.8% on the LDI portfolio, generating a 2.5% overall investment return.

The POL section achieved a 0.3% return.

The RMG section increased its exposure to alternatives from 3% to 4.3%.

It also increased LDI allocations to 66.4% from 54.1% and reduced equity by 1.4 percentage points to 10.2%.

The majority of its allocation changes came from reducing the cash holdings in the scheme by 6 percentage points – now at 2.4% – as well as property, high yield and investment-grade credit.

The scheme added: “During the year, [RMPP] further diversified its return-seeking assets, adding new private equity portfolios with Quantum Energy Partners and Vivo Capital, as well as a new alternatives portfolio with Och Ziff Capital.”

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2559

    Asset class: Multi Assets.
    Asset region: -.
    Size: EUR 15m (may be split into two mandates EUR 7.5m).
    Closing date: 2019-09-06.

  • QN-2560

    Asset class: Private Equity.
    Asset region: Global.
    Size: $40m.
    Closing date: 2019-08-30.

  • QN-2561

    Asset class: Infrastructure.
    Asset region: Global.
    Size: $40m.
    Closing date: 2019-08-30.

Begin Your Search Here
<