UK pension scheme embraces bitcoin

A UK pension plan has made a historic decision to diversify and perhaps expand over the long run in the face of economic difficulties by allocating 3% of its portfolio to bitcoin.

Curious new role of bitcoin in UK pension plans

Cartwright, a defined benefit and hybrid pension specialist, on Monday (November 4) revealed a groundbreaking bitcoin investment in the portfolio of a UK pension plan.

The company explained: “Following a thorough training and due diligence process, the allocation—the first of its kind in the UK—took place in October.”

In keeping with the scheme's long-term investment horizon, the trustees of the unnamed scheme decided to allocate 3% of their funds to bitcoin.

Cartwright explained that Bitcoin's asymmetric return profile, which is backed by strong risk management at the scheme and asset levels, enables a small exposure to potentially deliver significant gains.

"Trustees are increasingly searching for creative ways to future-proof their schemes in the face of economic challenges," said Sam Roberts, director of investment consulting at Cartwright. This allocation to bitcoin is a calculated move that utilizes an asset class with a distinct asymmetric risk-return profile in addition to providing diversity.

He underlined: Including bitcoin in a pension plan's investment strategy is a daring move that shows how forward-thinking the trustees are.

"We are honored to have spearheaded this innovative action, which we believe will set the stage for institutional investors in the UK to follow suit and join the growing number of their international peers and rivals who are already utilizing bitcoin's special features," he continued.

According to Steve Robinson, head of investment implementation at Cartwright, security is a primary focus of their strategy, guaranteeing that even risk-averse pension plans can successfully control volatility.

He clarified: We've made it possible for institutional investors and risk-averse pension plans to profit from bitcoin's potential growth while controlling volatility within a safe strategic framework by fusing a highly secure custodial solution with a way to swiftly cut profits as they emerge.

Robinson explained that, in contrast to many early-stage investment possibilities, the solution has a low minimum investment level, making it available to pension schemes of all sizes. 

He pointed out that this strategy incorporates bitcoin into a sector that has historically been conservative, with the goal of providing scheme participants with long-term value and lowering reliance on employer contributions through safe custodial procedures.