Investments
Investment objective and management
In September 2019, the Scheme’s funding target was met and the MRBS Section trustee (the trustee), with the full support of Maersk Line UK Limited, entered into an insurance contract with Legal & General (L&G), further reducing the investment risk within the MRBS Section of the Scheme. This insurance contract is in the form of a buy-in policy*, the value of which exactly matches the value of the liabilities it covers.
Following the purchase of the insurance contract with L&G, the trustee, in conjunction with its investment adviser Willis Towers Watson Ltd (WTW), reviewed its investment strategy for the remaining assets held directly and determined that its focus should be on protecting the value of these assets, rather than seeking investment return. In July 2022, the direct lending portfolio was liquidated, and the proceeds invested in the L&G Sterling Liquidity Fund. As at 31 March 2024 the MRBS Section's assets comprised of the insurance contract, the L&G Corporate Bond over 15 Year Index Fund, the L&G over 5 Year Index Linked Index Fund, and cash held in the L&G Sterling Liquidity Fund.
How is the money in the Scheme invested?
The assets held by the Trustee as at 31 March 2024 are shown below:
| 31 March 2024 | Value | Asset allocation |
|---|---|---|
| £000 | % | |
| Total Portfolio | 813,069 | 100 |
| L&G insurance contract | 712,000 | 87 |
| Pooled Investments Liquidity Fund | 93,409 | 12 |
| AVCs | 7,947 | 0.97 |
| Other investments | (287) | 0.03 |
Following a further review of the investment strategy with its investment adviser in September 2023 the trustee moved the bulk of the £89.8 million held in the L&G Sterling Liquidity Fund and invested in the L&G Corporate Bond Over 15 Year Index Fund (20%) and the L&G Over 5 Year Index Linked Index Fund (72%), with the balance (0.8%) remaining invested in the L&G Sterling Liquidity Fund. This is intended, as far as the trustee is able, to efficiently hedge the risks that might be associated with the way that these assets are expected to be applied to secure improvements to member benefit entitlements.
At 31 March 2024 the pooled investments are split as follows:
| Fund | Value |
|---|---|
| Corporate Bond Fund | £19,871 |
| Gilts Fund | £67,347 |
| Liquidity Fund | £6,191 |
The Statement of Investment Principles (SIP) sets out the principles governing investment decisions made by or on behalf of the trustee. The Implementation Statement outlines how key activities and decisions have helped the trustee achieve certain policies and objectives set out in the Scheme's SIP.
*A ‘buy-in’ is an insurance policy a pension scheme buys to cover the payment of member benefits that are insured. Its purpose is to reduce the risk of a pension scheme not having enough money to provide member benefits. This could happen if future investment returns on the pension scheme’s assets are lower than expected and/or its members live longer than expected. Under a buy-in policy, a pension scheme’s trustees hold the policy as an asset to meet member benefit payments, receiving money from the insurer each month to pay pensions to beneficiaries. This increases the security of members’ benefits, which is the trustees’ main priority.