Should Your Pension Hold Bitcoin? What the UK's First Allocation Actually Tells Us.

Published: 2024  |  Perspective updated: 2025

In late 2024, a UK pension scheme made history — quietly, without naming itself, and to considerable industry debate. Advised by Cartwright, an unnamed defined benefit scheme allocated 3% of its portfolio to bitcoin. The first allocation of its kind in the UK, it followed a thorough trustee training and due diligence process and reflected the scheme's relatively long investment time horizon.

Whatever your view on bitcoin — and views span a very wide range — this is worth taking seriously. Not necessarily as a signal that all pension schemes should now hold bitcoin, but as a prompt to think more carefully about what bitcoin actually is, what its role in a diversified portfolio might be, and why the pension sector's instinct to dismiss it deserves a more considered examination.

The context for the scepticism

The pensions industry is, by design, conservative. It is managing long-term liabilities on behalf of members who depend on the money being there in retirement. The instinct to avoid assets that are volatile, novel, and not admitted to regulated markets is a reasonable one given that mandate.

Bitcoin is all three of those things. Its price has been dramatically volatile. It has only existed since 2009. And until recently, institutional custody solutions adequate for pension scheme investment did not exist.

That last point matters more than it is often given credit for. A key barrier to bitcoin maturing as an institutional asset class was counterparty risk in custody arrangements — an issue that was substantially resolved during 2024 through the development of institutional-grade multi-signature custody solutions. The conversation about bitcoin in pension portfolios is different now than it was three years ago partly because the infrastructure has caught up.

What the investment case actually says

Cartwright's argument for the allocation is not that bitcoin is a safe haven or a stable store of value in the short term. It is that a small allocation — 2% to 4% — provides asymmetric return potential that complements rather than replicates existing asset classes.

The scheme's investment consultant described bitcoin's asymmetric risk-return profile as offering significant potential upside while the downside, at a 3% allocation, is bounded by the size of the position. If bitcoin performs well over a ten-year horizon, a 3% allocation has a meaningful positive impact on overall fund performance. If it goes to zero — a scenario Cartwright considers unlikely but not impossible — the scheme has lost 3% of its assets, which a diversified portfolio can absorb.

Cartwright has also drawn an explicit parallel with how pension schemes historically adopted new asset classes — equities in the 1970s, high-yield bonds in the 1980s, liability-driven investment strategies in the 2010s. Each was controversial at the time. Each became mainstream. The argument is not that bitcoin will necessarily follow the same trajectory, but that dismissing it without genuine analysis repeats a pattern the industry has lived through before.

The legal and fiduciary dimension

It would be wrong to discuss this without acknowledging the genuine legal complexity.

Pension scheme trustees investing in bitcoin need to consider their scheme rules, their statement of investment principles, and the requirement that scheme assets consist predominantly of investments admitted to trading on regulated markets. Given that bitcoin markets are not yet regulated in the UK in the way that equity or bond markets are, the practical implication is that any allocation should remain modest — which is precisely what Cartwright advised.

Trustees also need to be confident that they have genuinely understood what they are investing in and can explain their decision in terms of their fiduciary duties to members. The training and due diligence process that preceded the Cartwright allocation was extensive for exactly this reason. This is not an asset class to stumble into on the basis of news coverage.

What I actually think

My instinct when I saw this news was not that it was obviously right or obviously wrong. It was that it was a serious institution taking a considered position on an asset class that the rest of the sector had largely avoided engaging with.

Professional Pensions reported that Cartwright was in conversations with several other pension funds following the announcement, arguing that hundreds of UK pension trusts could benefit from a non-zero exposure to bitcoin within a well-diversified portfolio. Whether that turns out to be true will depend in part on how bitcoin performs over the next decade, and in part on whether the sector develops the expertise to evaluate the asset class properly rather than reflexively.

Pension schemes exist to deliver good outcomes for members. That requires genuine engagement with all the tools available. Bitcoin may or may not be one of them. But the question is worth asking properly.

If you want to understand bitcoin more deeply before forming a view, I have written a plain English explainer here.