UK roundup: BlackRock backs LGPS cost transparency code
The world’s largest asset manager has pledged to disclose all costs according to a new template set out by the UK’s local government pension schemes (LGPS).
In an update to the LGPS Advisory Board’s website, BlackRock said it would begin supplying data to LGPS funds from next year when the template is rolled out fully.
“BlackRock were supportive of the Code of Transparency initiative from the start, and participated in designing the common industry standards used to provide cost data to our LGPS clients,” the company said.
BlackRock runs £16.4bn (€18.4bn) in assets for 77 LGPS clients.
According to the Advisory Board, Mirabaud Asset Management and TT International have also signed up to the code. Signatories now number 19 and include Fidelity International, Legal & General Investment Management and UBS Asset Management.
The code was developed by LGPS, the Investment Association, and Chris Sier, professor at Newcastle University Business School and recently named chair of the Financial Conduct Authority’s working group on asset management cost transparency. It was based on a template developed in the Netherlands.
Improved disclosure was expected to increase reported fees above £1bn for 2017, according to the LGPS Advisory Board.
The £13.1bn Tesco Pension Scheme has more than halved its deficit by moving its discount rate calculation to one based on corporate bond yields rather than government bonds.
As a result of the change, the shortfall fell from £5.5bn to £2.4bn between February and August.
In Tesco’s half-year report, the company said the new discount rate – 2.8%, as opposed to 2.5% six months earlier – “more appropriately reflects long-dated corporate bond yields for the cash flow profile of the Scheme’s liabilities”.
In addition, the supermarket chain has agreed with the scheme’s trustees to increase its annual contributions by £15m to £285m, with effect from April 2018.
Tesco will also pay any excess Pension Protection Fund levy above £75m across three years, and has pledged to increase the market value of property held as contingent assets for the benefit of the pension scheme.
The trustees of UK charity Mencap have awarded a £120m fiduciary management mandate to Kempen.
The Mencap Pension Plan tendered for a new fiduciary manager last year and said it was “impressed” with the company’s offering.
According to its latest available annual report to the end of March 2016, the scheme had liabilities of £125m and assets of £106m.