How our pensions fund the invasion of Ukraine: Savings invested in Russian companies helped Putin amass £480bn in foreign exchange reserves
Pension savings invested in Russian energy companies and state-owned banks helped Vladimir Putin amass £480 billion in foreign exchange reserves to fund the invasion of Ukraine.
Staff from British Airways, the Church of England and many councils and ministries were among those who saw part of their pension contributions paid into these schemes even after Russian troops annexed Crimea in March 2014, a joint Daily Mail and Bureau of Investigative Journalism investigation found.
Despite strong initial returns, stock prices fell as Russian tanks prepared to enter Ukraine earlier this year.
Dirty money? British pensions may have helped Russian leader Vladimir Putin pay for equipment like these tanks
Global sanctions and closed markets have now prevented many investors from selling.
Pensions campaigners have warned the investments mean UK workers have unknowingly ‘enabled Putin’s war’ and jeopardized ‘the very future’. [they were] save for’.
Kira Rudik, leader of the Voice of Ukraine party, said: “It was clear that Putin was a tyrant eight years ago and the fact that everyone in the modern day is still doing business with him and making money there, results in what we see now.’
Companies and public sector employers usually use a specialist company to invest their staff’s pension funds in a portfolio of stocks, bonds or other assets.
These include BlackRock, which manages the pensions of more than 10 million British employees, and is also among the main shareholders of the largest Russian companies.
Since 2014, it has returned £1 billion in dividends to its clients through its stakes in ten of the country’s largest companies that form the backbone of Russia’s economy, according to our analysis.
Over the same period, the Russian government received £35 billion in dividends from its stakes in six such companies – Gazprom, Rosneft, Sberbank, VTB, Transneft and Alrosa – which are partly state-owned.
Putin (pictured) benefited from heavy tax returns on the four non-state companies – Lukoil, Tatneft, Novatek and Nornickel
Putin also benefited from heavy tax returns on the four non-state companies – Lukoil, Tatneft, Novatek and Nornickel – which had also received investment from British pension funds. Many of these companies have now been sanctioned by Western countries.
There is no suggestion that BlackRock acted illegally or breached sanctions and initially said it was selling Russian investments after Ukraine’s annexation, with chief executive Larry Fink saying: “I wouldn’t invest in Russia for now, not until she wants to be part of the world community.
The firm said clients held more than £13.87 billion in Russian assets at the end of January this year.
But since invading Ukraine, it has reduced the value of its Russian assets to zero – although these could rise again when markets reopen and sanctions are lifted.
BlackRock said: “Prior to the Russian invasion of Ukraine, exposure to Russia in our clients’ portfolios was less than 0.2% of BlackRock’s assets under management.”
BA Pensions said one of its schemes, the New Airways Pension Scheme (NAPS), had “minor exposure” to Russian investments with a total allocation of less than 0.02% of assets at the end of February 2022, which were marked as zero following government sanctions.
He said that due to the low exposure, his members would not be affected by falling Russian investment returns.
The Church of England said it sold all of its Russian assets on February 24, when the invasion of Ukraine began. It is not clear whether the CofE investments were made through BlackRock.
- Additional reporting: Matthew Chapman and Simon Lock