£39bn BT Pension Fund cuts investment in UK amid Hunt's Big Bang 2.0 ambitions

BT's stance is the latest setback for Jeremy Hunt's plans to kick-start a new wave of growth in UK equities. Photo: Kirsty O'Connor/HM Treasury.

One of Britain's largest pension schemes has cut its UK equity stake in response to Jeremy Hunt's hopes of launching a 'Big Bang 2.0'.

The £39 billion BT pension fund has cut, according to new figures. its share of shares registered in London, up to a total of £100 million, or 0.3 per cent of assets. Investment has declined from £300m last year and £3.6bn in 2010.

BT is the largest blue-chip scheme in London's FTSE 100 index, with around 270,000 members.

Mr Hunt has committed to a series of banking reforms, designed to cut bureaucracy and has been compared to a major overhaul of Margaret Thatcher's Square Mile.

BT's failure to support the UK has also drawn condemnation from Baroness Ros Altmann, former Pensions Minister.

Former Pensions Minister Baroness Altmann was outraged that the fund does not support the UK economy. Photo: Jonathan Brady/PA Wire

Baroness Altmann said: «It is outrageous that a large pension fund, especially one that is somewhat supported by the government and heavily funded by taxpayer money, is not supporting the British economy.»

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“If you do not have domestic sources of long-term funding to support your own economy, then however much you believe you will get a great return on investment abroad, you are impoverishing your own domestic base, and so your pension members, because they will live in a poorer country.»

Nick Delfas, an analyst at Redburn, said BT's paltry domestic assets had «bounced» and urged policymakers to take note.

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Baroness Altmann urged MPs to do more to encourage pension funds to invest in the UK, saying it was critical to economic growth.

She added: «I just think we've lost the story a bit about what should reach the pension fund…it's time to help pension funds understand that there is a liability that comes with getting tax credits.”

The spokesman said BT's pension scheme is reducing its exposure to equities as part of a risk-mitigation strategy. The scheme is very mature, with an average age of 68.

The scheme's overseas shares also suffered big losses, falling 75% to £1.7bn.

However, the fund's small proportion of UK shares underscores the FTSE 100's declining status among global competitors. Last year, Paris overtook London as Europe's largest stock market.

Pensions expert John Ralph said: «The truth is that the UK is a small stock market.»

The 66% decline in British pension fund BT shares is believed to be partly due to the turmoil in the financial markets that erupted last September. products called liability-driven investments (LDI), which are popular among pension funds.

The Bank of England was forced to undertake a massive £65bn intervention to cushion the effects of the crisis, forcing many pension funds to quickly sell assets to meet margin requirements.

2405 who issues UK bonds

BT Pension Fund has suffered The value of its assets has fallen by £11bn as a result of the crisis and has fallen by nearly £15bn since 2022.

Analysts have also raised concerns about the high proportion of illiquid assets held by BT's pension scheme. Only 65% ​​of the scheme's assets are listed after last year's sell-off, according to Redburn.

Illiquid assets are considered riskier because they are harder to sell and more difficult to establish value. .

The revelations come just days before a special committee on work and pensions is due to launch an investigation into defined benefit pension plans amid fears last year's crisis has exposed governance and regulatory weaknesses.

Wyn Francis, chief investment officer at Brightwell, which manages BT's pension scheme, said: «BT's pension scheme is a major investor in the UK, with 64% of its total assets invested in UK securities, corporate bonds, real estate, public shares, infrastructure and private equity.

“As a mature pension scheme, it is on a risk-reducing path, so the shareholding has been steadily declining for a number of years.

“Compensating for this, the scheme is expanding its reach into the UK through investments in corporate credit, direct lending, infrastructure and income-generating real estate.”