The £33 billion RBS Group Pension Fund, one of the UK's largest retirement schemes, has beaten its investment targets for the third year running, a period during which it shifted over £1 billion out of equities and more than halved the number of hedge funds in which it invests.

The pension fund, which manages the savings of 219,000 current and former Royal Bank of Scotland employees, was closed to new members in 2006. In recent years it has been reducing the risk in its investment portfolio, selling equities and equity futures, diversifying into a broad range of other investments and increasing its interest-rate and inflation hedging.