Brent Pension Fund navigates inflation risk amid mixed investment performance
The Brent Pension Fund is facing persistent inflation risk, which directly impacts its liabilities, while its investments have shown mixed performance. The Fund experienced a negative return of 0.9% in the quarter ending March 2026, though it achieved a positive return of 12.7% over the preceding 12 months. The total valuation of the Fund stood at just under £1.5 billion at the end of the quarter.
The Pension Board, meeting on Tuesday, July 21, 2026, was presented with an updated risk register that flagged inflation remaining higher than expected
as a significant concern. This is particularly critical as the Fund's liabilities are linked to inflation, meaning higher price rises directly increase the amount the Fund must pay out in pensions.
While global equities saw an 18% increase and UK equities rose by nearly 22% over the year, driven by strong corporate earnings, other asset classes delivered more muted returns. The current asset allocation sees growth assets representing 58% of the Fund's holdings. The remaining allocation is in bonds, property, and cash, which generally delivered positive but less substantial gains.
John Smith, Pensions Manager for Brent Council, explained that predicting inflation is inherently difficult, influenced by numerous economic factors. He indicated that a return to more stable inflation parameters would likely depend on a reduction in external shocks, such as geopolitical instability and supply chain disruptions.
To counter these risks, the Fund's investment strategy is being adjusted. A multi-year plan is in place to reallocate towards protection and income assets, aiming to build greater resilience against inflationary pressures and market volatility. This strategic shift includes increasing allocation to fixed interest gilts and the multi-asset credit fund to 20%
. A new long-term allocation, agreed as part of the strategy review, also incorporates a new 2.5% allocation to natural capital
and an allocation to private equity
. The specific timeline for this reallocation is described as over several years
.
Despite the inflation risk, the Fund's overall financial position remains robust. The draft annual accounts for 2025-26 show a valuation of just under £1.5 billion, and the Fund remains cash flow positive. Contributions and in-goings have seen a slight fall due to a decrease in contribution rates, while benefit outgoings have increased due to a fall in active members and a rise in pensioners drawing benefits. However, significant investment performance increases have bolstered the Fund's assets, with fund assets rising by approximately 13% to just under £1.5 billion. The Chair's Annual Report confirms that the fund remains cash flow positive despite having fewer active members than pensioners and so forth.
Further details on the Fund's performance and strategy can be found in the Public reports pack presented to the Pension Board. The meeting agenda is available here.