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Asset Allocation

UK Pension Allocates 3% of Portfolio to Bitcoin

According to pension adviser Cartwright, an unnamed client allocated a single-digit percentage to the digital asset.
By Matt Toledo



Digital assets are not commonplace in the portfolios of institutional allocators, but one unnamed U.K. pension fund has made a 3% allocation to bitcoin, according to pension adviser Cartwright Benefit Consultants Ltd., which advised on the allocation.

The allocation, made in October, is the first of its kind among defined benefit plans in the U.K. According to a Cartwright news release, trustees of the plan, in consultation with Cartwright, made the 3% allocation, reflecting the plan’s long investment time horizon.

“Trustees are increasingly looking for innovative solutions to future-proof their schemes in the face of economic challenges,” said Samuel Roberts, a director of investment consulting at Cartwright, in a statement. “This Bitcoin allocation is a strategic move that not only offers diversification, but also taps into an asset class with a unique asymmetric risk-return profile.”

Cartwright said the firm hopes this is the beginning of a trend in which U.K. pensions allocate to the asset class, catching up with the increasing number of institutional investors around the globe who are already invested in or are exploring allocations to cryptocurrency.

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While the number of allocators invested in crypto is small, their numbers are growing. In May, the State of Wisconsin Investment Board added $160 million in bitcoin ETFs to its portfolio. The Michigan Retirement System holds $6.6 million in bitcoin ETFs and $10 million in a number of Ethereum ETFs, per a November 4 SEC filing.

While bitcoin and other cryptocurrencies are volatile assets, making them less attractive for risk-averse institutional investors, Cartwright sees a risk-averse strategy to bitcoin for long-term, liability-driven investors.

“By combining a highly secure custodial solution with a mechanism to quickly trim profits as they arise, we’ve opened the door for risk-averse pension schemes and other institutional investors to benefit from Bitcoin’s potential growth whilst managing volatility within a secure strategic framework,” said Steve Robinson, Cartwright’s head of investment implementation, in a statement. “Cartwright expects an institutional adoption curve similar to when pension schemes started investing in equities in the 1970s, or high-yield bonds in the 1980s, or [liability-driven investments] in the 2010s.” 

The bitcoin in the pensions’ portfolio is held on-chain with three institutional custodians using a multi-signature approach, Roberts said via email, adding that the approach is more secure than using ETFs.

Related Stories:

Pensions in Michigan, Jersey City Add Bitcoin ETFs to Portfolios

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Where Does a Bitcoin ETF Fit in an Allocator’s Portfolio?

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Home > News > Pensions > PBGC Approves SFA Funding for 4 Pension Funds
Pensions

PBGC Approves SFA Funding for 4 Pension Funds

Teamsters Local 111, Marine Carpenters Fund, UFCW Tri-State Plan and I.B.E.W Pacific Coast Fund, all distressed funds, were provided with support.
By Matt Toledo



The Pension Benefit Guaranty Corporation on Friday approved financing through the Special Financial Assistance Program to four distressed pension funds. Pension funds facing insolvency may apply for special financial assistance. 

Teamsters Local 111, a Brooklyn-based plan with 1,600 participants, will receive $17.1 million in SFA funds. According to the PBGC, the plan was projected to become insolvent in 2041. According to Local 111’s Form 5500 for plan year 2022, the plan had $55 million in assets and $51 million in liabilities.  

In addition, the Marine Carpenters Fund, a Pleasanton, California-based plan with 1,198 participants in the construction industry, will receive $34.6 million in SFA financing. The pension fund was projected to become insolvent in 2034.  

The PBGC also granted financing to the United Food and Commercial Workers Union and Participating Food Industry Employers Tri-State Penson Plan, which will receive $684.4 million. The Plymouth Meeting, Pennsylvania-based plan, which was projected to become insolvent in 2028, has 29,322 participants.  

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Approximately $75.5 million was granted to the I.B.E.W Pacific Coast Pension Fund. The Tacoma. Washington-based fund covers 3,318 participants in the construction industry. The plan had $228 million in assets as of plan year 2022, according to the fund’s Form 5500, and a funded status of 63%.  

As of November 1, the PBGC has approved $69.5 billion in special financial assistance for pension funds covering 1.2 million beneficiaries, according to a November 1 news release.  

The SFA Program was enacted as part of the American Rescue Plan Act of 2021.  

Pension funds that receive SFA funds must monitor earnings from the grant money as separate from other sources of funding. The PBGC requires that at least two-thirds of the money it provides be invested in “high-quality fixed income investments.” The Final Rule on Special Financial Assistance, issued in July 2022, states that the other third can be invested in “return-seeking investments,” such as stocks and stock funds. 

Related Stories: 

PBGC Approves $23.6M Grant to Midwestern Teamsters’ Pension Fund 

PBGC Approves $635M to Carpenters Pension Fund 

Teamsters Plan Receives $5.7B From PBGC 

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