Blog
A deep-dive into a variety of pension topics to help you understand and learn more about your pension and the Scheme.
Our blogs will give you information, tips, insights and guidance to help you get to know your pension and support you on your journey to retirement.
You and your employer both pay money into your pension while you’re an active member of the Railways Pension Scheme (RPS). That money is then invested for your future, and can have an impact on the world around you too.
Railpen is the company responsible for investments
While the Trustee has overall responsibility for the Scheme and your money, they entrust a company called Railpen to look after it and invest your pension contributions on the Scheme’s behalf.
This in itself won’t have a direct impact on how much you’ll get in retirement. But Railpen are tasked with investing your pension in a way that helps to ensure it can be paid securely, affordably and sustainably.
Railpen recognises this is a significant responsibility and strives to give members like you the best possible outcomes in retirement, while also having a positive impact on the world you will retire into.
An 18-year-old who joins the rail industry today may not retire for 40 or so years. By then the world is likely to be a very different place to the one we live in today.
With this in mind, Railpen takes a long-term and patient approach to investing. This also means it can access investment opportunities on your behalf that aren't always available to other pension schemes.
Railpen invests primarily in 2 ways. It invests in:
In this context, an asset is something that has the potential to grow in value over time like stocks, bonds and property (we’ll get on to these shortly).
Railpen invests in financial assets through both public and private market opportunities.
Think of the public market as a financial marketplace where companies (that have satisfied set criteria) can raise money by selling stocks to investors. Companies in the public market are also knows as ‘listed companies’ and almost anyone can purchase shares in them.
By contrast, private market investing (as the name suggests) doesn’t happen on a public exchange. Historically, private markets have been fairly exclusive but they are now much more accessible.
Public investors can buy and sell at any time, while private investments focus more on the long term.
As well as financial assets, like stocks and bonds, your pension money is invested in areas like renewable energy, infrastructure, property investments and development in the UK, and others. These are called real assets.
These types of investments are fairly relatable because they are something we can see, hear, even touch in our day-to-day lives – like the houses we live in, where we go to work or shop and even solar farms that provide green energy to local communities.
Investing in real assets provides an opportunity for us to deliver attractive long-term returns for your pension.
Before Railpen decides where to invest your pension, they consider a range of factors. Along with the potential for good returns, this also includes any environmental, social and governance (ESG) factors which present both risks and opportunities.
Put simply, ESG are a set of standards that are used in the world of investments to measure the following:
Railpen seeks to invest in companies that perform well against ESG factors to help us deliver investment returns for our members. But not only that, Railpen engages with and uses its influence to enhance the value of the money it invests on your behalf.
They also look for ways to have a positive impact on the communities in which your pension money is invested. This means that ultimately by saving for a pension with the Scheme, you are not only saving for your future, but you are also potentially helping to contribute to a better world, perhaps without even realising it.
We’ll be going into more detail about how Railpen invests your pension money in forthcoming blogs, including a more detailed look at Real Assets and the company’s recent investments in Cambridge.
In the meantime, you can find out more in the investments section of the website and on Railpen’s own website using the links below.
You can also discover more about Railpen’s approach to sustainable investments in Stewardship Report 2023 at Railpen.com. A shortened version of this report, focussing on the areas members have said is important to them, will be released later this year. You can read the 2022 version here.
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