USS and Thames Water

Doctor_Who

Thanks dunstonh. I saw the figure of £91bn (as at 31 March 2022) on the USS website. I was trying to find out what value their investment in Thames water was, but Thames isn't listed in the top 100 equities that USS invest in here.

RSTime

dunstonh said:

Its also worth noting that the USS value is around £89bn and the likely write-down with failure is going to be around £1bn.   That is around 1.1% of the fund value.   The FTSE100 is currently down 1.33% today.

So, its big money but within acceptable tolerances.

Thanks @dunstonh, a relief as a deferred member who is planning to start drawing down in the next year...

NedS

Doctor_Who said:

Thanks dunstonh. I saw the figure of £91bn (as at 31 March 2022) on the USS website. I was trying to find out what value their investment in Thames water was, but Thames isn't listed in the top 100 equities that USS invest in here.

Thames Water also have a lot of debt, and it's not unreasonable to think that pension funds like USS may hold exposure to a substantial amount of that debt in corporate bonds. It's not just equity share holdings we need to consider.

Doctor_Who

NedS said:

Doctor_Who said:

Thanks dunstonh. I saw the figure of £91bn (as at 31 March 2022) on the USS website. I was trying to find out what value their investment in Thames water was, but Thames isn't listed in the top 100 equities that USS invest in here.

Thames Water also have a lot of debt, and it's not unreasonable to think that pension funds like USS may hold exposure to a substantial amount of that debt in corporate bonds. It's not just equity share holdings we need to consider.

On the USS website it says:

Credit – otherwise known as corporate bonds – is an important part of our assets, sitting between equities and government bonds on the spectrum of risk.

Corporate credit invests in the debt of companies and provides a regular income stream. We manage a global corporate credit portfolio valued at around £2bn.

So £2bn of corporate debt in total. If half of that is Thames Water (probably a lot less) it's still only ~1% of the total portfolio.

MX5huggy

Doctor_Who said:

Thanks dunstonh. I saw the figure of £91bn (as at 31 March 2022) on the USS website. I was trying to find out what value their investment in Thames water was, but Thames isn't listed in the top 100 equities that USS invest in here.

The list is the 100 public listed companies so Thames water would not appear. 

sheslookinhot

westv said:

We're always being told that profits go to "greedy shareholders" so it doesn't matter!
In reality, if course, these shareholders are very often connected to ordinary people like you or me.

I guess the main issue is salary’s and bonuses & share options, to be immediately sold, for the greedy management board.

Universidad

USS have issued a statement:

"Thames Water press speculation 

While we’re unable to discuss the recent press speculation relating to Thames Water, we can point to Thames Water’s recent statement and to a recent statement from Ofwat. 

Our diversified approach to investing means that we do not expect the current events surrounding Thames Water to have a material impact on the funding position or contribution rates coming out of the 2023 valuation, nor on the security of members’ promised pensions.

I must say, I think their position on the 2023 valuation should be taken with a pinch of salt.

The snapshot valuation taken at the nadir of the 2020 market crash was held to be an immutable fact while the pensions were being decimated in 2022.

I think they'd get short shrift if they suggested a valuation could be modified based on external facts after the roundly positive 2023 valuation.

I'm afraid they're stuck with good news for the short term, not that they know what to do with it.