Given recent investment market volatility, I wanted to write to you to reassure you of the implications of that volatility for the security of benefits within the Caterpillar Pension Plan (“the Plan”).

Firstly, the Plan has a very strong funding position – as outlined in the latest Plan Newsletter.

Secondly, the Plan's assets are invested in a way which is designed to protect the Plan’s funding position in periods of market volatility. Importantly, the Plan’s investment strategy is focused on bond-like assets which produce income for the Plan which is well matched to the benefit payments the Plan needs to make to members in the future. The Plan also took the step in 2023 to insure around £500m of the Plan’s future obligations to members with Aviva – adding further security for member benefits. The Plan is not invested in equity markets where the high level of volatility has been seen in recent weeks.

Finally, the Plan is a defined benefit pension scheme and so, by design, the benefits it provides to members are defined with reference to members’ service and salary, and not impacted by movements in investment markets. This promise is backed by the Plan’s large asset base and high funding level, as well as the security provided by Caterpillar, to support and fund the Plan when needed to provide the benefits promised to members.

The Trustee continues to frequently monitor the funding position to ensure the robustness of our investment and funding strategy to ensure the above framework remains appropriate.

Adrian Kennett
Chair of the Trustee
Caterpillar Pension Trust Limited