An update on the Government’s mini-budget

How does the mini-budget affect the Scheme?

Since the release of the Government’s mini-budget in September 2022, the UK Government Bond (Gilt) market has seen significant volatility. This has an impact on the Scheme because the yield on Gilts is used to ascertain the value of all the commitments made to members to pay pensions now and into the future (known as the Scheme’s liabilities). As the yield fluctuates, so do the Scheme liabilities. Therefore, when yields rise, the liabilities fall and vice versa.

In addition to this, to reduce the risk posed by the fluctuating liabilities, a portion of the Scheme’s investments are moved into funds that move in a similar way to the liabilities. This is known as matching.

Our Scheme, like many UK pension schemes, targets a particular amount of matching to insulate (or partially insulate) against the risk fluctuating liabilities presents. This is a form of insurance which requires pension schemes to maintain appropriate levels of liquidity to meet commitments under the ‘insurance contract’.

Is my Pension safe?

The Scheme’s portfolio has been designed to handle unforeseen market stresses. As a result, the Scheme was well positioned coming into this volatile period.

On behalf of the Trustees, the Scheme’s Fiduciary Manager (SEI), has performed a rebalancing of the Scheme’s investments. This has been done in order to maintain the Scheme’s matching as far as practical, whilst preserving the expected return.

The security of current and future pension payments has not been affected by these recent events and the Scheme remains in a strong funding position. We are also supported by a strong employer which is committed to supporting the Scheme to ensure that all pension promises are met.