How the $47bn Railpen fund plans to get out of its property pickle
The Railways Pension Scheme has found itself with a bill of about $413mn for remediation work to its property portfolio due to fire safety issues which were first discovered in 2019. But the fund has finally come up with a solution (Charlie Bibby/FT)
In 2024 a slightly ominous-sounding entity called Grey GR, which is actually just a subsidiary wholly owned by the $47bn Railways Pension Scheme, lost a legal battle with the British government which forced Grey GR to fix serious building safety issues with its building, a 16-story block of flats in Stevenage called Vista Tower.
The government at the time said legal action was launched after delays it deemed unacceptable in fixing multiple fire safety issues which were first discovered in 2019.
After the trial the government also sought remediation orders against five other Grey GR buildings.
Well, AOX can reveal that in total there have been projects to fix fire safety issues relating to 11 different Grey GR properties. Railpen’s latest annual report estimates the costs for this is $413mn as at December 31, 2025.
This sounds a lot but it is a reduction on the previous estimate which was $493mn.
“The estimated costs include building remediation work and secondary costs such as legal, insurance and alternative accommodation for tenants,” the report states.
The buildings sit in Railpen’s $1.3bn Long Term Income Pooled Fund which is currently closed for client trading (but not for this reason, according to the pension fund).
This has obviously affected the performance of the Long Term Income Pooled Fund. In 2025 the fund lost 1.3 per cent – while its benchmark (which is UK CPI +1 per cent) gained 4.4 per cent. This includes the fund selling off some of its existing investments.
Over a five-year period the fund has lost 8.3 per cent while its benchmark gained 6.3 per cent.
To re-open the fund Railpen’s trustee has agreed to open two sub-funds at some point during 2026; one which would hold the pesky residential ground rents and the other holding all other assets which will be reopened for trading - essentially they are going to hive all the Bad Stuff into its own separate fund and then presumably lock that away in a deep, dark hole.
When questioned by AOX – including on how this plan was proceeding and what would ultimately happen to the fund which contained all the Bad Stuff – Railpen declined to comment.
A source familiar with the pension fund’s thinking said it does not plan to invest in residential property again.