The chief executive of the
£15.5bn (€23bn) Railways Pensions
(Railpen), Chris Hitchen, says
that pension schemes’ shift to fixed
income was an “overreaction”.
“I think the orthodoxy now is to
view pensions liabilities as bondlike
so you’ve got a negative bond
on your balance sheets and to actually
increase your weight into equities
is looking increasingly unorthodox,”
Hitchen says.
“Having said that, we always felt
that the headlong flight to bonds was
an overreaction and certainly at
these yields we’re looking to resist it.”
Hitchen, who is also chairman of
the National Association of Pension
Funds’ Investment Council, says the
scheme regards property as an
important portfolio diversifier.
“Yield compression is occurring
and I’m fairly realistic about what I
expect going forwards, but I don’t
expect great things from the other
asset classes either.”
Railpen has around £1bn in real
estate, which is slightly under the
target 7% weight due to scarce
opportunities. He says the fund is a
“couple of hundred million underinvested
at present”. The weighting
to real estate has risen from 5% a
five or six years ago.
“We’ve been building it up since
then gradually. The question is
what speed do you do that and I
guess we try to make haste slowly.”

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