The multi-employer scheme for the rail industry recorded a 4.8% investment return for 2023 in its latest annual report.
In its latest annual report, published at the end of last month, the multi-employer scheme stated that “some issues with a number of railways pension schemes’ member payments have been identified”.
The report said: “These issues are still under internal review and cannot be quantified at this time. In addition, there may be regulatory reporting required, which is also currently under consideration.”
The scheme had not been able to estimate the costs of any necessary corrections, but it was working to “formalise the approach to this work and engage with all relevant stakeholders”.
Despite this, Railpen reported that its administration team’s performance “remains good” with more than 150,000 communications handled during 2023.
Investment returns
During 2023, Railpen’s investment portfolio generated a 4.8% return. This was primarily driven by its Growth Pooled Fund, which makes up approximately two thirds of total assets and returned 9% for the year.
The majority of the Growth Pooled Fund’s £22.7bn in assets is invested in global equities, with the rest mostly allocated to government and corporate bonds and property.
Meanwhile, its Illiquid Growth Fund was up by 0.5% – although the scheme’s reported pointed out that private market asset performance usually lags that of public markets – and the Long-Term Income Fund lost 15.3%.
Railpen has generated an average annual return of a 7.5% over the past decade.
In her introduction to the report, Christine Kernoghan, chair of the Railways Pension Trustee Company, highlighted that investment performance had delivered more than £18bn for the scheme, “showing just how important investment returns are to the scheme, its members and employers”.
Defined benefit section assets grew by 3.3% during 2023 to reach £33.7bn, while defined contribution assets increased by 22.5%, from £213m to £261m.
Investment costs increased slightly from £103m to £114m.
The main change to the scheme’s roster of external managers come in July last year when Neuberger Berman was awarded a £2bn mandate to run a liquid multi-asset credit strategy. As of 31 December 2023, almost £1.3bn of this commitment had been allocated to the mandate.
Railpen is preparing to welcome Andy Bord as its new chief executive, who will succeed John Chilman in October.
Further reading
Railpen names Bord as new chief executive (9 July 2024)
Railpen laments ‘opportunity lost’ as FCA unveils listings overhaul (11 July 2024)
