The Trustees are responsible for setting the Scheme’s policy for allocating the assets between various types of investments and amongst investment managers. They do this after each Actuarial Valuation and advice is taken from the Scheme’s investment consultant. The Guarantor is then consulted on the strategy and his comments are considered by the Trustees.
Typically, a scheme with no contributing members paying pensions linked to inflation, like the MPS, would hold a very high proportion of the assets in index linked securities issued by the UK Government. The existence of the Guarantee, however, enables the Trustees to pursue a more varied investment strategy, and a significant proportion of the Scheme’s assets remain invested in equities. Over the long term these are expected to produce higher returns, but the returns can vary significantly from year to year.
Details of the actual asset allocation are published each year in the Scheme’s Annual Report and Accounts. A copy of the latest version of the Scheme’s Report and Accounts can be found on the publications page of the website.