Our investment principles and strategy

Managing risk 

Managing risk is at the heart of our investment strategy. 

Our investment horizon is long-term. Many current, and future, members will depend on this support for decades to come. As a result, we must be resilient against economic shocks and financial stresses that could emerge over a longer time horizon. This matters not only for the our current membership, but all those that may require protection should an employer with a defined benefit scheme fail in the future.

As we need to be solvent at times when general pension schemes are significantly underfunded, we need a low-risk strategy that is relatively uncorrelated to the funding levels of the schemes we protect.
 
We operate within a tight risk framework, driven by our need to always remain solvent.

We use a Liability Driven Investment (LDI) strategy for our matching portfolio to help us to control the impact of changes in the value of our liabilities.

LDI helps us to manage the risks we don’t want to take and lets us focus measured risk-taking where it generates best returns.