Docusign Envelope ID: 7C50003C-051D-4E0C-907A-F452AD5C4EA2
UNITED TECHNOLOGIES CORPORATION (UK) PENSION SCHEME YEAR ENDED 31 DECEMBER 2023
TRUSTEE’S REPORT
Investment performance
The returns for the Scheme assets held within the CIF have been as follows:
Year to 31 December 2023 – 5.05% increase. 3 years to 31 December 2023 (annualised) – 10.21% decrease. 5 years to 31 December 2023 (annualised) – 1.97% decrease.
The Asset Backed Funding arrangements increased in value by 3.48% from £212.6m to £220.0m during the year.
Market volatility
As noted in this report, the Scheme’s investment strategy includes the use of liability driven investment (LDI) and segregated investment in bonds that seeks to provide a broad match to changes in the Scheme’s liability values in order to help protect the Scheme’s overall funding position. These LDI and bond investments respond in a similar way to the Scheme’s liabilities, when government bond yields and expected inflation change.
There are currently no concerns regarding the Scheme funding level, its ability to meet the payment of benefits to members, or its ability to continue as a going concern.
The Trustee continues to monitor the situation and is well placed to take any further action as required.
Employer related investments
At 31 December 2023, less than 0.01% (2022; 0.01%) of the assets were indirectly invested in RTX, the ultimate parent of the principal employer of the Scheme through pooled investment vehicles with BlackRock (2022; BlackRock and Legal & General).
Environmental, Social and Governance considerations
The Trustee recognises that Environmental, Social and Governance (‘ESG’) issues can and will have a material impact on the companies, governments and other organisations that issue or otherwise support the assets in which the Scheme invests. In turn, ESG issues can be expected to have a material financial impact on the returns provided by those assets. The Trustee delegates responsibility for day-to-day decisions on the selection of investments to its investment managers. The Trustee has an expectation that the investment managers will consider ESG issues in selecting securities and other investments or will otherwise engage with the issuers of the Scheme’s underlying hold ings on such matters in a way that is expected to improve the long-term return on the associated assets.
In choosing investment managers, the Trustee and its advisers take the following factors into account in the selection, retention and realisation of investments:
Selection of investments: assessment of the investment managers' ESG integration credentials and capabilities, including stewardship.
Retention of investments: developing a process to monitor ESG considerations on an ongoing basis by regularly seeking information on the responsible investing policies and practices of the investment managers.
Realisation of investments: requesting information from investment managers about how ESG considerations are taken into account in decisions to realise investments.
The Trustee also takes these factors into account as part of its investment process to determine a benchmark asset allocation and considers them as part of ongoing reviews of the Scheme’s investments.
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