Parliament pension fund snubs Trident but invests in China

Matt Oliver

Mon, February 23, 2026 at 9:46 PM GMT+9 4 min read

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The new rules blacklists defence company BAE Systems, which builds Trident’s nuclear submarines - Jeff J Mitchell/Getty

Parliament’s pension fund has come under fire for investing in Chinese technology giants while excluding defence companies that provide Britain’s nuclear deterrent.

Two fifths of the money looked after by the parliamentary contributory pension fund (PCPF) has been put into funds that automatically exclude businesses with links to nuclear weapons, accounts show.

The rules effectively blacklist Britain’s biggest defence companies – including BAE Systems, which is involved with the Trident nuclear deterrent – despite their role in providing what Sir Keir Starmer has called “the bedrock” of national security.

At the same time, the £850m pension fund is indirectly invested in Chinese technology companies Tencent and Contemporary Amperex Technology (CATL), which are accused by the US of working with China’s armed forces.

It is the latest example of so-called environment, social and governance (ESG) rules blocking investment in the defence industry, at a time when British military chiefs have repeatedly warned about the growing threat from Russia.

It also comes at a time when ministers are under pressure to plug a £28bn shortfall in the Ministry of Defence’s spending plans.

Jack Rankin, a Conservative MP who recently called a debate on ESG in Parliament, said: “This Government can increase defence spending by a decimal point here and there but until we address the current, self-immolating culture, nothing will change.

“We should start by insisting that no public sector pension schemes should invest in funds that exclude British defence companies, either explicitly or through subsidiaries.

“This would send a clear message to the financial services industry that it’s ok to invest in defence and that it’s actually a moral necessity.”

Parliament’s pension fund is in charge of managing the retirement pots of hundreds of MPs. It currently holds assets worth around £853m.

Of these, the two biggest holdings by far are in the BlackRock low carbon fund and Schroders’ multi-factor equity fund, representing 20.7pc and 18.3pc respectively.

As part of its “baseline” rules, the BlackRock fund excludes investments in any companies with “direct involvement in the production of nuclear weapons or nuclear weapon components or delivery platforms, or the provision of auxiliary services related to nuclear weapons”.

The Schroders multi-factor equity fund also states that it will not invest in any company that makes 5pc or more of its revenues from nuclear weapons.

Both policies effectively rule out investment in BAE Systems, Babcock and Rolls-Royce, Britain’s three major defence champions, which are all involved in the Royal Navy’s submarine patrols, also known as Operation Relentless.

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BAE is the manufacturer of the Vanguard-class of submarines armed with Trident nuclear missiles and it is currently building the next generation of Dreadnought-class boats as well.

Meanwhile, Rolls builds the nuclear reactors that power the Navy’s subs and Babcock is responsible for maintaining the fleet.

Sir Keir has repeatedly described the nuclear deterrent as “the bedrock of Labour’s plan to keep Britain safe”.

It is understood that neither BlackRock nor Schroders have group-wide policies that exclude defence firms or nuclear weapons. The PCPF is responsible for choosing where it invests member funds.

By contrast, however, the fund’s money – via the same investments – has been partly invested in shares in Chinese firms Tencent and CATL, which are both accused of working with China’s military under the country’s “military–civil fusion” policies.

They were both classified by the US state department as “military companies” last year. Tencent and CATL deny the claims and Beijing has accused Washington of “unreasonable suppression of Chinese companies”.

When approached by The Telegraph, the PCPF insisted it was not aware of any holdings in Chinese companies but that this was left to the discretion of the funds it invested in.

A spokesman said: “Following the 2024 general election, the Chancellor of the Exchequer announced a pensions review, the first stage of which examined actions to support greater productive investment within the UK.

“In line with the spirit of this review, almost a quarter of PCPF investments are allocated to the UK.

“The PCPF encourages its managers to maintain diversified portfolios, and does not impose any defence specific restrictions or exclusions on its managers.

“The aggregate exposure of the fund to the aerospace and defence sector is broadly aligned with global index levels.”

BlackRock, Schroders, BAE Systems, Babcock and Rolls-Royce declined to comment.

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