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Investment series: Managing risks and uncertainty when we invest your pension

Jul 23, 2026
Your pension is supported by investments, which can rise and fall over time. Find out how we manage risk and uncertainty to help protect your pension over the longer term.

 

The money paid into the Fund by members and employers does not simply sit in an account. It is pooled together and invested by Railpen, which looks after the railways pension schemes and manages investments on behalf of the Trustee.

Because the value of investments can go up and down over time, a large part of Railpen’s approach is focused on managing risk and uncertainty. This supports the Trustee’s aim to pay members’ pensions securely, affordably, and sustainably.  

Investing means managing uncertainty 

All investments involve some uncertainty. The economy changes, and longer-term issues can affect how companies and markets perform. 

Railpen cannot get rid of this uncertainty completely, but it does work hard to manage key risks and protect members’ pensions over the long term.  

One of the main ways Railpen does this is through diversification.  

This means spreading the Scheme’s investments across different asset classes, such as company shares, bonds, and physical assets, like property or infrastructure, as well as different industries and countries, rather than relying too heavily on any one area. This helps reduce the impact if one investment performs less well, because others should help balance this out over time. 

Another way Railpen manages risk is by taking a long-term view.  

Pensions are long term by nature. Some of the railway pension schemes’ 350,000 members are already receiving their pension, while others may not retire for many years. This means Railpen can take a long-term view when investing, looking beyond short-term market changes and focussing on the issues that could affect members’ pensions in the future. 

Railpen does this by taking into account a wide range of risks and uncertainties, such as inflation, market changes, and global events, as well as longer-term issues like climate change. 

Why climate change matters to your pension 

Climate change is not just an environmental issue. It can also affect the value of investments over time. 

For pension schemes like ours, climate-related risks can affect: 

  • the companies the Fund invests in and the value of those investments 
  • the employers that support the Fund 
  • the cost of paying pensions in the future

Because climate change affects so many parts of the economy, these risks cannot be avoided completely. For example, changes in law, new technologies and the shift to a lower-carbon economy can all affect different industries in different ways. More frequent extreme weather can also affect companies; infrastructure, and the goods and services they rely on. 

This is why the Trustee, supported by Railpen, considers climate-related risks and opportunities as part of its wider approach to investing your pension. 

In practice, for Railpen this means:  

  • taking climate-related risks into account when deciding where to invest 
  • working closely with the companies they invest in on how they manage these risks 
  • choosing not to invest in some areas where the risks are considered too high
Railpen also looks for suitable investment opportunities linked to the move towards a lower-carbon economy, where these support the needs of the Fund. 
 
For example, Railpen currently has a 50% stake in AGR Power (AGR), a leading London-based renewable energy and sustainable infrastructure developer. It has also invested more than £500 million in UK energy infrastructure projects since 2019.  

 The latest Taskforce on Climate-Related Financial Disclosures (TCFD) Report explains this in more detail and outlines why managing climate-related risk is an important part of acting in members’ best interests.  

 It also shows what progress the railways pension schemes are making towards their climate targets, including halving their carbon footprint by 2030 and being net zero by 2050 or sooner. 

 You can read the TCFD report in full here or via the investment reports page. 
 

Where to find out more about our investments 

You can: 

  • visit the Investments section of the website for more information about Railpen’s approach to investing  
  • read the latest TCFD report for more detail on how climate-related risks and opportunities are taken into account