- Some critics mention that the price swings of Bitcoin could result in notable losses and will put the pensions of retirees at risk.
- The Financial Conduct Authority (FCA) of the United Kingdom has suggested people invest the amount only what they can afford to lose.
- Regardless of these concerns, pension funds all over the world have initiated to exploration of crypto investments.
At the beginning of November 2024, news surfaced that a UK pension scheme became the first scheme in the UK to allot 3% of its portfolio in Bitcoin. Now, this scheme is reportedly being slammed for investing irresponsibly in Bitcoin.
An investment of £1.5 million investment was taken from its £50 million asset pool which was targeted to uplift the employee returns. This step was taken just before the historical win of Donald Trump which led to the price surge of Bitcoin.
On November 27, as reported by Sky News, many experts were not in favor of the pension fund decision. They have also warned that the decision will put the futures of retirees at stake. The managing director at Kingsfleet, Colin Low said that this move is strange.
He further went on to say that pension funds should look forward to long-term investments rather than risky bets. The managing director also highlighted that the regulators are risking the assets on Bitcoin which is actually a long-term investment.
Executive’s Stance Over Pension Scheme
An actuary at Wiltshire Wealth, Daniel Wiltshire referred to the investment as extremely irresponsible. He also highlighted that the pension executors must manage assets with extreme care and requested the financial scrutineer of the United Kingdom to involve itself for the trustee’s protection.
At the same time, the director at Thomas Legal, Chris Barry mentioned that allotting under 5% to crypto can be considered sensible. He asked the UK pension funds to look after the US peers who have been investing in cryptocurrency for many years.
The price volatility of Bitcoin does not line up with the risk profile pension funds prefer. These funds are anticipated to target stable, long-term growth, not high-risk putative assets like cryptocurrencies. Some critics mention that the price swings of Bitcoin could result in notable losses and will put the pensions of retirees at risk.
Worldwide exploration of Bitcoin reserve
The Financial Conduct Authority (FCA) of the United Kingdom has alerted the high risks associated with cryptocurrencies. The authority has also suggested people to invest the amount only what they can afford to lose.
This warning highlights the concerns associated with adding such assets to pension portfolios targeted at safeguarding retirement savings. Regardless of these concerns, pension funds all over the world have initiated to exploration of crypto investments.
In October 2024, the chief financial officer of Florida, Jimmy Patronis introduced a bill that mentioned creating a Bitcoin reserve and adding it to state pension funds. In May 2024, the State of Wisconsin Investment Board (SWIB), the ninth-biggest US pension fund put $99 million in Bitcoin.
