News broke this month that the program was the first in the UK to allocate 3% of its portfolio to Bitcoin. The £1.5 million investment, drawn from a pool of£50 million in assets, was aimed at increasing returns to employees. The move came just before Bitcoin’s price rose significantly following Donald Trump‘s election victory.
Sky News reported Wednesday that several experts had criticized the pension fund’s decision, warning that it risked “gambling the future of pensioners.”
Colin Low, managing director of Kingsfleet, called the move “bizarre.” He argued that pension funds should prioritize long-term investments rather than speculative bets. Low pointed out the irony that a fund with such a long investment horizon is risking beneficiaries’ assets in Bitcoin, which he said has no intrinsic value.
Daniel Wiltshire, an actuary at Wiltshire Wealth, called the investment “deeply irresponsible.” He stressed that pension fund trustees must manage assets carefully and called on the UK financial regulator to intervene to protect members.
Meanwhile, Chris Barry, a director at Thomas Legal, said allocating less than 5% to cryptocurrencies is “sensible.” He urged UK pension funds to follow the example of their US counterparts, who have been investing in cryptocurrencies for years.
Sam Roberts, director of investment advisory at Cartwright, told Cryptonews that the fund was trying to diversify its portfolio. “Bitcoin now for pension funds probably seems the same as stocks in the 1970s,” he said.
Bitcoin’s price volatility is generally not in line with the risk profile preferred by pension funds. These funds are expected to focus on stable, long-term growth rather than high-risk speculative assets such as cryptocurrencies. Critics say bitcoin’s volatility could lead to significant losses, putting retirees’ financial security at risk.
The UK’s Financial Conduct Authority (FCA) has warned of the high risk of cryptocurrencies, advising people to invest only as much as they can afford to lose. This warning underscores concerns about adding such assets to retirement portfolios designed to protect retirement savings.
Despite the concerns, pension funds around the world are beginning to examine investments in cryptocurrencies. Last month, Florida Chief Financial Officer Jimmy Patronis proposed creating a bitcoin reserve and adding it to state pension funds. In May, the State of Wisconsin Investment Board (SWIB), the ninth largest pension fund in the US, invested $99 million in bitcoins.
