Pension Policy at the Boots Co. Plc

Posted: 5 Jul 2006

See all articles by Luis M. Viceira

Luis M. Viceira

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Akiko M. Mitsui

affiliation not provided to SSRN

Date Written: June 25, 2003


SUBJECT AREAS: Asset allocation, Bonds, Debt management, Financing, Investment management, Pension funds, Hedge funds, Risk Management, Liability, Capital Structure, Inflation-indexed bonds

CASE SETTINGS: United Kingdom; Retail industry; 5 million British pounds revenue; 75,000 employees; 2000

In early 2000, the trustees of the pension scheme at Boots considered a proposal to move 100% of the pension assets into a bond portfolio, which would be passively managed. The Boots Co. PLC was a leading retailer of cosmetics and toiletries in the United Kingdom, and the company pension scheme was one of the largest in the country, with 2.3 billion British pounds in assets. If implemented, Boots would depart significantly from its prior pension investment strategy, which had been similar to that of other large U.K. pension funds. In general, such funds used external managers for active and passive portfolios of roughly 75% equities, 17% bonds, 4% real estate, and 4% cash. This unprecedented investment policy change would more closely align pension assets and liabilities and, according to long-standing academic principles of corporate pension fund management, it might also have significant effects on Boots itself, its shareholders, and other stakeholders. In making their decision, the trustees would have to consider these effects as well as the practical feasibility of such a plan.

Suggested Citation

Viceira, Luis M. and Mitsui, Akiko M., Pension Policy at the Boots Co. Plc (June 25, 2003). HBS Publishing Case No.: 9-203-105; Teaching Note No.: 5-206-099. Available at SSRN:

Luis M. Viceira (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6331 (Phone)
617-496-6592 (Fax)


National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Akiko M. Mitsui

affiliation not provided to SSRN

No Address Available

Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics