The Brent Pension Fund is navigating a complex financial landscape, grappling with the persistent threat of inflation and the growing imperative to address climate-related risks within its investment strategy. These challenges were highlighted during a recent Pension Board meeting, where updates on the Fund's risk register and investment strategy were discussed. The meeting information can be found in the Public reports pack Monday 23-Mar-2026 18.00 Pension Board.
Inflation remains a significant concern, identified as a risk with a high likelihood and impact score. The current geopolitical situation is cited as a key driver, with market volatility in the commodity space particularly noted. While recent official inflation figures and interest rate decisions have shown some positive signs, the upward pressure on inflation is considered a live risk.
In response to these challenges, the Fund is undertaking a review of its investment strategy, as detailed in the Investment Strategy Review document. The revised strategy, following recommendations from advisors Hymans Robertson, proposes a shift towards reducing exposure to 'growth assets' and increasing allocations to 'protection assets'.
'Growth Assets' are defined as Assets which deliver positive real returns over the long-term enabling the Fund to meet its obligations whilst maintaining the affordability of the target level of contributions (assets such as global and private equity)
. Conversely, 'Protection Assets' are defined as Assets which reduce or hedge the Fund's investment risk and thereby seek to protect the funding position (assets such as traditional gilts and index-linked gilts)
.
Key changes include reducing global equity exposure. This reduction in global equities is part of a broader strategy to reduce its risk exposure
due to improved funding levels. While this indicates a reduction in risk, the specific impact on overall return potential is not quantified.
Allocations are increasing to private equity and natural capital. The increased allocation to private equity is driven by government proposals for pension funds to allocate some assets towards local investment, with private equity being a likely vehicle for this. An allocation to Natural Capital is also recommended, as it offers diversification benefits achieved away from traditional asset classes, together with attractive returns, an allocation to Natural Capital helps the pension scheme in achieving its net zero ambitions.
Specific timelines for these impacts are not yet provided.
Furthermore, the Fund will boost investments in infrastructure and property while reducing exposure to multi-asset funds. The allocation to the multi-asset portfolio is being reduced to 5% as part of a strategy to increase the total allocation to 32.5% in income assets, specifically by re-investing proceeds into gilts and multi-asset credit. No explicit drawbacks of multi-asset funds were mentioned, only that the allocation is being reduced to rebalance towards other asset classes.
Implementation of the new investment strategy will be managed by the London CIV (LCIV) from April 2026. An earmarked portfolio of liquid assets, including equities, bonds, and cash, will be established to fund future private markets investments.
Officers are also considering broadening the scope of the risk register to include more explicit references to climate-related and other systemic risks, as outlined in the Risk Register document.
