Background information to the BT Pension Scheme (BTPS):
The BTPS is the largest private sector pension scheme in the UK with close to 300,000 members and approximately £50bn of assets. It is a defined benefit scheme managed by an independent Trustee on behalf it its members. The Scheme was closed to new members in 2001 and closed to future accrual on 30 June 2018. BT Pension Scheme Management Ltd (BTPSM), a team of approximately 50 staff, acts as the executive arm of the Trustee and is the Scheme’s principal investment advisor. The Scheme’s assets are managed by external investment management companies across a diversified range of asset classes including equities, corporate and government bonds, property and alternatives.
The Scheme has a long history of being a responsible investor and engaged owner. It was a founding signatory of the Principles for Responsible Investment (PRI) in 2006 and is a Tier 1 signatory to the UK Stewardship Code. This commitment is articulated in the Scheme’s Responsible Investment Policy (publicly available at www.btpensions.net) by the mission statement which explains that “as a responsible investor we will manage the Scheme’s assets by seeking the optimal long-term risk-adjusted return while limiting outcomes which may harm our beneficiaries’ shared interests.” To do this effectively, the Trustee has integrated financially material environmental, social and governance (ESG) considerations throughout the investment process and promotes active stewardship of the portfolio companies and assets owned by the Scheme.
The Trustee oversees the Scheme’s responsible investment strategy, which also includes the consideration of emerging, long-term structural risks, including climate change and technological disruption. The implementation of the responsible investment strategy is undertaken by BTPSM, with activity focused on the following core areas: i) Understanding the risks and opportunities that may face the Scheme because of its long-term investment horizon;
ii) Integrating financially material ESG factors throughout the investment process, including in the design of investment mandates, new manager searches and ongoing monitoring of managers; and iii) Ensuring the Scheme is delivering long-term value through responsible ownership. The majority of the Scheme’s stewardship activities are undertaken by Hermes EOS, a leading provider of engagement resources.