Assets give pension schemes independence from the sponsoring employer, enabling them to pay benefits even if the employer is no longer able to support the scheme. A 30 year old scheme member may still be receiving pension benefits in 60 or even 70 years’ time. Even small schemes hold a lot of money for a long period of time.
This is why trustees need good returns on investments on a long-term basis. And unlike other investors, pension schemes have liabilities. So pension schemes don’t just invest to maximise returns, but also to meet those liabilities.
With these complications, it’s important that trustees get advice that balances returns with the risks that the scheme can afford to run.