Mitchells & Butlers Pension Plan (the ‘Plan’) recently published its Annual Report & Financial Statements 2025, detailing investment activities and strategic adjustments for the year ended 31 March 2025.
DB Section Allocation Shifts to Liquidity and Capital Preservation
For the fiscal year 2025, the Defined Benefit (DB) Section’s asset allocation strategy has significantly shifted. Following the purchase of buy-in policies in May and July 2023, which secured the majority of member liabilities, the remaining surplus assets are now focused on liquidity and capital preservation. The detailed asset allocation is no longer considered relevant as the buy-in policy replaces the majority of the Plan’s assets. The Trustee aims to invest in instruments that, when combined with the buy-in policy, focus on liquidity, notably cash funds. Two residual investments, M&G Real Estate Debt (£14m maturing in 2027) and Axa Secured Finance (£78m maturing in 2028), will be held to maturity. The Common Investment Fund (CIF) assets of £174m were composed of £82m cash, £14m M&G Real Estate Debt, and £78m Axa Secured Finance as of March 31, 2025. This strategy is intended to facilitate a potential future buy-out by providing funds for a deferred premium to Phoenix Life in late 2026 or early 2027. (Source: Mitchells & Butlers Pension Plan Annual Report & Financial Statements 2025, page 5, 11, 12)
DC Section Explores Private Markets and Regional Equities
During the fiscal year 2025, the Defined Contribution (DC) Section’s investment strategy, primarily managed through Legal & General (L&G) Target Date Funds, has evolved. The L&G approach now includes a small allocation to private markets, a move to regional equity funds, an increased focus on funds with ESG-related opportunities, and a changed allocation towards technology funds over a market capitalization approach. These developments are considered positive, with an increased proportion of investment in growth assets. The Trustee will continue to monitor the Target Date Fund approach and performance. (Source: Mitchells & Butlers Pension Plan Annual Report & Financial Statements 2025, page 5)
Planned Bulk Transfer of AVCs to Standard Life
The Trustee has decided to pursue a bulk transfer of Additional Voluntary Contributions (AVCs) from Prudential to an AVC arrangement with Standard Life. This decision was made due to a downturn in Prudential’s performance, specifically delays encountered when requesting disinvestments of AVC funds, and wider developments relating to the DB Section. This bulk transfer is due to complete in the 2025/26 Plan year. (Source: Mitchells & Butlers Pension Plan Annual Report & Financial Statements 2025, page 22)
DC Section Receives Significant Transfers from Executive Plan Wind-Up
In the fiscal year 2025, the DC Section received two significant transfers of funds from the Executive Plan due to its wind-up in November 2024. Firstly, all active and deferred members of the Executive Plan DC Section were transferred to the Main Plan DC Section in September 2024, along with a £15m bulk transfer of their pensions. Secondly, a £13m surplus from the Executive Plan DB Section, remaining after its buy-out, was transferred to the Main Plan DC Section in two phases in Autumn 2024. This surplus is ring-fenced to meet certain company obligations related to DC matters, such as company contributions, administrative expenses, and death in service. (Source: Mitchells & Butlers Pension Plan Annual Report & Financial Statements 2025, page 6, 7, 57)
DB Section Assets to Fund DC Employer Contributions
The Main Plan Trustee has agreed to sell some of its DB Section assets annually to help pay Mitchells & Butlers plc’s employer contributions for active members of the DC Section. This arrangement is possible because the DB Section holds assets significantly larger than the forecast Main Plan deferred premium and annual running costs. The annual cost of this is approximately £12m, with the first payment scheduled for the 2025/26 financial year as a single transfer to the Main Plan DC Section. This process will be subject to regular review. (Source: Mitchells & Butlers Pension Plan Annual Report & Financial Statements 2025, page 5, 75)
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