Ted Jennings, an experienced property fund manager.

Let’s start by looking at the problem with ground rents from the perspective of someone on or getting on the housing ladder.

Ground rents are toxic. They’re stopping people getting mortgages. They’re stopping sales. The market is dead in certain areas on leasehold. @mhclg is oblivious. @CMAgovUK do nothing.

— Rainbowland (@rainbowland1979) November 8, 2025

I am not comfortable that we in pensions recognise the depth of feeling amongst young people about the housing market and the problems middle aged and older people are having with their leaseholds, if they have purchased them.

We simply accept that property is an illiquid asset which we can have problems with. I had not realised just how much of a problem

I have received an interesting insight into the trustee’s position with regards pensions investing  in Ground Rents. This comment comes from the reputable Byron McKeeby, whose understanding of Railpen, the multi-employer fund for railway companies.

Railpen had approximately £1.3bn in its Long Term Income Pooled fund which included investments in ground rents. In addition fire safety issues were identified at a number of buildings associated with these ground rents.

The 2023 and 2024 annual reports for Railpen state that the Long Term Income Pooled Fund delivered a return of -20.6% for 2024, -15.3% in 2023, -14.6% per annum over a 3-year period, and -7.3% per annum over 5 years.

The Pooled Fund has also closed the trading of its units in both years.

Not large investments in the grand scheme of things across the whole UK pensions universe, but nine figure losses for one pooled fund in which a number of sections in one industry-wide DB scheme will have been invested.

It is worth revisiting the “LTIF” , I am not at all sure I understand how one fund could have suffered as Byron says, the

The Railpen Long Term Income Fund (LTIF) is an investment fund managed by Railpen, the investment manager for the UK’s Railways Pension Scheme. Its primary objective is to target secure, long-dated, and inflation-linked income streams to match the pension liabilities of its members.

Investment Strategy and Objectives

The LTIF is designed to provide stable, defensive returns with protection against inflation. The key characteristics and objectives include:

• Stable and secure returns: Aiming to meet both current and future pension needs through steady, reliable income.
• Inflation protection: Investing in assets that provide returns which keep pace with inflation, either explicitly or implicitly, to preserve purchasing power over time.
• Diversification: Spreading risk across various asset classes, including infrastructure, real estate, and other private market investments.
• Long-term focus: Exploiting the advantages of a long investment horizon to invest in illiquid assets (physical assets like property and infrastructure) that offer potential for long-term growth and stable returns, which may be less volatile than public markets.
• ESG integration: Incorporating environmental, social, and governance (ESG) factors into investment decisions, as well-run companies with strong ESG practices are seen as more likely to succeed in the long term, thereby improving risk management and financial performance.

Key Investments and Size

The LTIF has approximately £2bn of committed capital and over 20 investments. Investments are focused on sectors and assets that provide contracted, inflation-linked cash flows, such as:

• Infrastructure: Investments in renewable energy (wind farms), social infrastructure (student accommodation), and rolling stock (electric trains).
• Real Estate: Investments in commercial ground rents and build-to-rent apartments (focusing on corporate, not consumer, leaseholders).

Target Audience and Availability

The LTIF is primarily an internal fund for the members of the Railways Pension Scheme and its 107 clients. It is part of the broader range of investment options offered to scheme members and is managed by Railpen on their behalf to secure their futures. It is not a fund generally available to the public.

Committed it may have £2bn but invested only £1,5bn  and the fall in value of the fund is not explained, in this information from RailPen

I have a worry as clearly Byron has, about the impact of property holding whether commercial (in the case of Railpen’s commercial property holdings) or retail (in the case of my and many of my friend’s bank balances).

The final information I have on Railpen’s LTIF gives me a name to follow up

The Railpen Long Term Income Fund (LTIF) is an investment fund that focuses on generating stable, secure, and inflation-linked income over a long-term horizon, primarily for members of the Railways Pension Scheme. The fund has over £1.5bn in assets under management and is managed by Ted Jennings

I hear no one talking to members of pension schemes about property from the pension fund manager’s point of view. I would be pleased to hear from Ted Jennings, I have reached out. Long term defensive funds seem important to maturing DC funds as they move towards defaults (including Retirement CDC).

Come and listen to Harry Scoffin at 10.30 am and I hope we can get an expert like Ted to explain things from the institutional point of view.

I have spoken to former CEO of Railpen John Chilman about this question and he’s clarified that it’s commercial and not retail ground rents that Railpen hold.

Property of all kinds seems a most mysterious investment and Ground Rents don’t make any sense to me as a pension expert or a leaseholder.