Your Pension Is At War

(And Nobody Told You)

We have a certain sort of irony that only really works in real life, because if you wrote it into a novel, your editor would send it back with “a bit much, don’t you think?” scrawled in the margin. Here it is anyway, free of charge, courtesy of the universe’s continuing commitment to dark comedy…

On the 4th of May, Iranian missiles hit the Fujairah oil terminal in the UAE. Big explosion. Black smoke stretching into the sky in that way that makes the news anchors go quiet for a second before remembering they’re being paid to talk. Real, expensive, geopolitically significant destruction.

And somewhere in Cambridgeshire, a retired council worker called… let’s say Brenda, because there’s always a Brenda… carried on with her Tuesday entirely unaware that she now owns a tiny, fractional, deeply theoretical piece of a smoking hole in the Arabian Gulf.

Brenda didn’t choose this. Brenda has never been to Fujairah. Brenda probably couldn’t find Fujairah on a map without a great deal of squinting and at least one apology to the map. But her pension fund… the quiet, sensible, “we’ll sort your retirement, don’t you worry about the details” institution she’s trusted for decades… decided, on her behalf, that Middle Eastern fossil fuel infrastructure was a smashing place to park her money.

It seemed sensible at the time. It’s not feeling especially sensible now.

The Money That Goes Quietly

Here’s the bit that genuinely impresses me, in the way you’re impressed by a particularly elaborate magic trick: nobody set out to put Brenda’s pension in the firing line. There’s no villain in a darkened room cackling, “let’s gamble on Gulf geopolitics with public sector retirement funds.” It’s worse than that. It’s just… drift. Bureaucratic, well-intentioned drift, dressed up in the kind of financial language specifically engineered to make your eyes slide off the page.

It goes something like this. Local government pension schemes… the funds covering teachers, council workers, librarians, the people who keep bins collected and roads gritted… put money into infrastructure funds. These funds promise a “healthy, stable return,” which is financial-speak for “trust us, this is the boring, safe option, go back to your crossword.”

Fund managers, BlackRock chief among them, then go looking for assets that can deliver that stable income over the long term. And it turns out a wonderful place to find long-term, stable-seeming income is… gas pipelines across the Saudi desert. Tankers queuing behind the Strait of Hormuz. An LNG terminal in Bahrain, sitting there with the quiet confidence of something that has never once considered it might get bombed.

It’s a brilliant piece of financial alchemy, really. Risk that should sit with oil and gas companies… companies built, insured, and staffed specifically to absorb that sort of risk… gets quietly handed down the chain until it lands on the people least equipped to deal with it. Public sector retirees. People who paid into a pension precisely because they wanted less uncertainty in their lives, not a geopolitical flutter on Gulf stability.

And at the centre of an awful lot of these deals sits BlackRock, run by Larry Fink, who in 2020 wrote rather beautifully about how climate risk was compelling investors to “reassess core assumptions about modern finance.” Stirring stuff. The kind of line that gets pulled out at conferences to generous applause.

Meanwhile, BlackRock raised over $5 billion from pension providers and insurers… including Teesside’s local government scheme… and ploughed a chunk of it into a $15.5 billion deal funding Saudi Aramco’s gas pipeline network. The same network Iranian drones have already had a pop at.

So: BlackRock collects the fees. BlackRock manages the deal. And the underlying investors… Brenda, and several million Brendas like her… carry the risk. It’s not a conspiracy. It’s just how the incentives happen to fall, and nobody particularly minds, because nobody particularly notices, because the whole system is built to be too dull to look at twice.

Stranded, Literally

There’s a phrase in finance… “stranded assets”… usually used to describe fossil fuel reserves that have lost their value early, either because climate regulation makes them unburnable or because renewables have simply made them pointless. It’s a tidy, abstract little phrase. The sort of thing an analyst says while gesturing vaguely at a graph.

During this war, the phrase has developed an uncomfortable habit of meaning exactly what it says.

The Al Daayen LNG tanker and the Seapeak Bahrain LNG storage unit are, right now, trapped in the Persian Gulf behind the Strait of Hormuz. Genuinely stuck. Can’t move. As Councillor David Noland of North Yorkshire’s pension fund committee puts it, with the kind of bluntness I have a great deal of affection for: “They’re stranded assets, physically. You can’t touch them.”

Both are owned by a Stonepeak fund whose investors include the Border to Coast pensions pool and the Worcestershire Pension Fund. So somewhere on a spreadsheet in Worcestershire, there’s a line item that is, at this very moment, bobbing about uselessly in a war zone, unable to do the one thing it was bought to do, which was deliver fuel to someone who’d pay for it.

You couldn’t make it up. Which is precisely why nobody had to… it simply happened, the way these things do, while everyone was looking somewhere else.

“Diversified,” They Said

The funds themselves, when asked, responded with the sort of statement that could win awards for Saying Absolutely Nothing While Using A Great Many Words. Worcestershire Pension Fund “recognises the continued transition taking place across global energy markets” and the need for “balancing risk, return, energy security and long-term economic considerations.” Border to Coast assured everyone their portfolios are “diversified across geographies, sectors and asset types,” focused on “managing and mitigating long-term systemic risks.”

I read these statements three times each, looking for the part where someone admits a tanker is stuck in a war zone, and found nothing but warm, grey fog. It’s the financial equivalent of being asked if the house is on fire and replying that the household maintains a “balanced approach to thermal events.”

To be fair to them, they’re not technically lying. The Middle East assets in question probably are a small slice of a much larger pie. Most of these funds likely are reasonably diversified. But there’s a difference between “this won’t sink the whole fund” and “this was ever a sensible thing to be invested in,” and the statements rather pointedly address the first while ignoring the second entirely.

Meanwhile, BlackRock and Stonepeak declined to comment at all, which is its own kind of statement. Sometimes silence is just silence, and sometimes it’s a perfectly tailored suit with nothing underneath it.

The Bit Where It Gets Bigger Than Pensions

I grew up around the machinery of geopolitics in a fairly literal sense. Service family, Cold War, my father in the Royal Signals attached to NATO forces in Germany and Norway. You absorb, as a child in that world, the sense that big decisions happen somewhere far above you, made by people in rooms you’ll never see, and that your job is simply to live downstream of the consequences without much say in the matter.

What strikes me about this pension story is how perfectly it recreates that same dynamic, except now the “rooms you’ll never see” aren’t NATO command centres. They’re asset management offices. The decisions aren’t made by generals weighing troop movements, but by fund managers weighing yield against risk on a spreadsheet, with about as much emotional investment in Brenda’s retirement as I have in the contents of a stranger’s recycling bin.

And here’s the genuinely uncomfortable thought, the one that doesn’t resolve neatly: it’s not really anyone’s fault, and that’s worse than if it were. There’s no smoking gun, no boardroom villain twirling a moustache over Brenda’s pension statement. There’s just an enormous, sprawling financial system, built entirely out of good intentions and reasonable-sounding decisions, that has somehow arranged itself so that ordinary people’s retirements are quietly riding shotgun on regional conflicts they’ll never read a single briefing paper about.

Carbon Tracker’s Guy Prince makes the obvious point well: pension funds need to ask “whether long-term pension savings should depend on politically unstable regions and an uncertain future energy demand.” Of course, they shouldn’t. Nobody, asked directly, would say “yes, please invest my retirement in a pipeline currently being shot at.” But nobody was asked directly. That’s rather the point. The whole system is engineered so that you never have to be asked, because if you were, you might actually say no, and that would be terribly inconvenient for everyone collecting fees along the way.

So we arrive at the punchline, such as it is: somewhere in the UK right now, hundreds of thousands of people are quietly, unknowingly invested in the literal apocalypse… in stranded tankers and bombed pipelines and the slow, expensive death rattle of an industry that the planet itself is trying to retire early. They didn’t choose it. They couldn’t have found it if they’d gone looking. And when the bill eventually comes due, in fallen returns or in nothing at all, because Teesside’s spokesperson rather tellingly noted its scheme is defined benefit and doesn’t depend on investment performance… when it does come due, it’ll land exactly where it always lands.

On Brenda. Bless her. She really did just want a quiet retirement.

Until Next Time