The Fund’s investments are there to meet the cost of providing benefits for all the Fund’s members.
When deciding how best to invest the Fund’s assets, the Trustee weighs-up the potential growth against any possible risks. It also considers any other factors that are financially material to the performance of each investment.
The Trustee closely monitors economic developments, particularly recent changes in interest and inflation expectations and works closely with its advisers to monitor the Fund’s investments and understand the implications on investment objectives and strategy. The Trustee also closely monitors the Fund’s liquidity position following the market volatility in late 2022.
Our Climate Risk Report is available in our Legal Documents in the website library at nationwidepensionfund.co.uk/library
Regarding climate change, the Trustee recognises and supports the UK Government’s ambition to be Net Zero by 2050. The Fund has prepared its second Climate Risk Report and the Trustee’s climate strategy continues to evolve. The Trustee has embedded considerations of climate risks and opportunities within day-to-day management of the Fund’s portfolio, including annual Environmental, Social & Governance assessments where required.
In May 2023, the Fund entered a £1.7 billion longevity insurance policy to cover the risk that pensioners and their dependants live longer than expected by transferring the risk to two insurers. It provides the Trustee with more certainty over future funding costs and improves the security of members’ benefits.
Over the year to 31 March 2023, the Nationwide Section’s investment returns were 5.5% higher than benchmark with performance driven by Core Matching Assets (predominantly gilts) whose value fell by less than benchmark. The Cheshire & Derbyshire Section’s investment strategy is mature and passive, so does not record performance relative to a benchmark
Both the Nationwide and Cheshire & Derbyshire Sections are well funded. As a result, more than half of the Fund’s assets are invested in matching assets, which are broadly expected to track the value of the Fund’s liabilities (paying members’ pensions both now and in the future).
*Please note that whilst returns were negative due to increasing interest rates, the value of the Fund’s liabilities fell by more than the Fund’s assets, improving the funding level and hence increasing the security of the Fund’s pensions.
Both Sections have smaller allocations to return-seeking assets designed to further improve the funding position so that the Fund is less likely to need to rely on the financial support of the Society.
