UK pension scheme called ‘deeply irresponsible’ for investing in Bitcoin
A UK pension scheme has been branded “deeply irresponsible” after investing in Bitcoin.
The unnamed defined-benefit scheme became the first in the UK to make the plunge, using 3% of its assets to buy into the cryptocurrency last month.
Pension specialist Cartwright acted as an adviser to the scheme and said the allocation was a “strategic move that not only offers diversification but also taps into an asset class with a unique asymmetric risk-return profile”.
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It claimed its approach meant the scheme could benefit from a significant potential bonus while limiting the possible negative outcomes.
But some experts seem less enthusiastic about the decision, warning it bordered on “gambling with retirees’ futures”.
“This is a very strange decision. Pension funds should surely be investing for the long term rather than speculating over the short-term,” Colin Low, managing director at Kingsfleet, told Newspage.
“It is ironic that a pension fund, having one of the longest investment time horizons, should speculate its beneficiaries’ assets on something that has no intrinsic value.”
Daniel Wiltshire, actuary at Wiltshire Wealth, added: “This is deeply irresponsible. Pension trustees have an obligation to ensure scheme assets are managed prudently.
“This precludes taking punts on a basketcase asset class like crypto. For the sake of the members, I hope the regulator is paying attention.”
Why are people so concerned?
Bitcoin is the largest and oldest cryptocurrency, although other assets like ethereum, tether and dogecoin have also gained popularity over the years.
Some investors see cryptocurrency as a “digital alternative” to traditional money – but it is very volatile, with its price reliant on larger market conditions.
Pension scheme trustees tend to be against taking big risks with retirees’ funds.
Advice from the Financial Conduct Authority states “you should never invest money into crypto that you can’t afford to lose” and warns people to be prepared to lose all their money.
And, while a 3% allocation doesn’t sound like a lot, it’s enough to make an impact on the pension fund’s performance.
This means that if Bitcoin continues to skyrocket, it could boost the scheme in a big way, but equally if it sinks, it could have a significant negative impact.
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As a defined pension scheme, it does mean the risk is being taken by the employer should there not be enough assets to meet future pension payments, rather than being borne by members.
Laith Khalaf, head of investment analysis at AJ Bell, says plenty of people have bought crypto personally, but it’s harder to make the case for investing in it to diversify a pension portfolio.
“While the price of Bitcoin is currently riding high, in the past we’ve seen strong performance quickly giving way to dramatic price falls. That in itself is a big hindrance to Bitcoin being adopted by consumers and businesses as a means of exchange,” he says.
“If you think Bitcoin is the future of currency despite its volatility, ask yourself if you’d be willing to be paid by your employer or billed by your mortgage provider in the cryptocurrency.
“It’s possible Bitcoin will thrive and prove its doubters wrong, but it’s also possible it will ultimately become worthless.”
Just last week, it hit a record high above $£99,000 – but less than two years before that it dropped below $17,000 following the collapse of crypto exchange FTX.
Some experts believe the potential pay-off means an investment in Bitcoin is a risk worth taking.
Chris Barry, a director of Thomas Legal, says that anything less than a 5% allocation is “sensible”, and UK pension funds need to catch up to their US equivalents who have been investing in crypto for years.
“Bitcoin is the top performing asset class over the past 10 years on average, even beating the NASDAQ. The direction of travel following Trump winning the US election is very bullish indeed,” he adds.
David Belle, founder and trader at Fink Money, has a similar view, saying a pension scheme portfolio is about numbers trying to deliver a return.
“A portfolio is just numbers made up of different betas, assets which either outperform or underperform a benchmark. Crypto is a fine asset class if it fits risk appetite.”
Birmingham band UB40 say the city’s striking bin workers and their union should “keep fighting” in their dispute over pay.
It comes as the government and the council urged them to accept a “fair and reasonable offer”.
“We’re fully on their side,” drummer Jimmy Brown told Sky News. “I think they shouldn’t give up, they should still be fighting.
“Working people shouldn’t have to take a reduction in their incomes, which is what we’re talking about here.
“We’re talking about people being paid less and it seems to me with prices going up, heating, buying food, inflation and rents going up then people need a decent wage to have a half decent life… keep going boys!”
Members of the Unite union in Birmingham earlier this month. Pic: PA
Workers joined picket lines again on Thursday, with some fearing they could be up to £600 a month worse off if they accept the terms.
“We have total utter support for the bin men and all trade unions,” said guitarist Robin Campbell.
“The other side is always going to say they’ve made a reasonable offer – the point is they’re the ones who’ve messed up, they’re the ones who’ve gone bankrupt, they’re the ones now trying to reduce the bin men’s wages.”
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Lead singer Matt Doyle told Sky News: “It’s a shame that what we’re seeing is all the images of rats and rubbish building up, that is going to happen inevitably, but we’ve just got to keep fighting through that.”
About 22,000 tonnes of rubbish accumulated on the city’s streets after a major incident was declared last month by Birmingham City Council.
Rubbish has blighted the city’s streets for weeks . Pic: PA
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On a visit to the city, local government minister Jim McMahon said the union and local authority should continue to meet in “good faith” and the government felt there was a deal that could be “marshalled around”.
He paid tribute to the “hundreds of workers” who have worked “around the clock” to clear the rubbish.
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“As we stand here today, 85% of that accumulated waste has been cleared and the council have a plan in place now to make sure it doesn’t accumulate going forward,” said Mr McMahon.
Sky News understands talks are not set to resume until next week.
Trans women in British Transport Police custody will now be strip searched by male officers – not female – following Wednesday’s Supreme Court ruling.
The force said it is introducing an “interim position” while it digests the Supreme Court’s decision that the definition of a “woman” under the Equality Act 2010 refers to “a biological woman and biological sex”.
A British Transport Police (BTP) Authority spokesman told Sky News: “Under previous policy, we had advised that someone with a gender recognition certificate (GRC) may be searched in accordance with their acquired sex.
“However, as an interim position while we digest today’s judgment, we have advised our officers that any same sex searches in custody are to be undertaken in accordance with the biological birth sex of the detainee.”
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In September last year, BTP, which is responsible for policing the UK’s railways and similar transport systems, published its “position” on transgender and non-binary officers carrying out strip searches.
It said officers would “only be able to search persons of the same sex on their birth or gender recognition certificate (GRC).
Officers who identified as another gender but who did not have a GRC were not allowed to, but if a trans woman had a certificate, they could strip search a female detainee.
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Strip searches involve the removal of more than a jacket, outer coat, gloves, headwear and footwear.
They “expose buttocks, genitalia and (female) breasts”, the BTP guidance says.
The Sex Matters campaign applied for a judicial review of that guidance with the High Court in December.
It said the policy “puts detainees at risk of sexual harassment and sexual assault”, and said it was a violation of Article 3 of the European Convention on Human Rights, which protects against torture and inhuman or degrading treatment.
Sex Matters said the policy “also puts female officers in a humiliating and dangerous position, as they may be pressured to search trans-identified men”.
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Campaigners celebrated outside the Supreme Court after Wednesday’s ruling. Pic: PA
One of the High Court judges who made Wednesday’s decision, Lord Hodge, said the ruling should not be read as “a triumph of one or more groups in our society at the expense of another”.
Government minister Karin Smyth told Sky News public bodies have been told to look at how equality laws are implemented following the ruling.
She said: “Obviously, public bodies have been asked to look at their own guidance.
“And we will do that very, very carefully.”
But she warned against public bodies making statements “that may alarm people”, telling them to take their time to look at their guidance.
Baroness Kishwer Falkner, chair of the UK’s Equality and Human Rights Commission (EHRC), said the ruling means there is “no confusion” now.
She said the NHS will “have to change” its 2019 policy, which says transgender patients are entitled to be accommodated on single-sex wards matching how they identify.
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