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UK roundup: Teachers' pension scheme liabilities grow by £76bn

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The liabilities of the UK’s Teachers’ Pension Scheme (TPS) ballooned by 27.8% in the 12 months to 31 March 2017, according to the scheme’s annual report and accounts.

Liabilities reached £347.2bn (€402.7bn), up from £271.7bn a year earlier. The increase was driven primarily by a reduction in the discount rate, which was cut from 3.6% to 2.8%.

TPS is an unfunded scheme, meaning annual benefit payments are paid direct from government contingency funds. It covers more than 2m current and former teachers and other education sector staff.

In addition, the scheme has had to set aside £35m to compensate pensioners who were underpaid between April 2011 and April 2015.

Meanwhile, accounts for two other unfunded public sector schemes showed a similar significant increase in liabilities.

The pension scheme for the UK’s judiciary service recorded a 22% increase in liabilities, also primarily caused by a reduction in the discount rate. It contributed to the scheme’s obligations rising by £682m. Liabilities were £3.8bn at the end of March.

The UK Atomic Energy Authority’s pension scheme recorded a 23% rise in its liabilities, from £6.7bn to £8.3bn at the end of March.

LGPS pool names two non-execs to board

LGPS Central, one of eight local government pension scheme (LGPS) asset pools, has named two non-executive directors to its board.

John Nestor and Eithne McManus join Joanne Segars (chair) and Andrew Warwick-Thompson (CEO) on the leadership team for LGPS Central’s asset management company.

The company was set up to consolidate £40bn of assets from nine LGPS funds based in the Midlands.

Nestor has worked in asset management for more than 30 years, including in UK chief executive roles at UBS Global Asset Management and Citigroup Asset Management. He has also worked as institutional marketing director at Henderson Global Investors. He is currently chair of Prudential’s corporate pension fund trustee board, and an independent member of the company’s independent governance committee.

McManus currently sits on the boards of insurance companies Countrywide Assured and UIA. She was previously a director at Countrywide and worked as chief financial officer and later CEO of City of Westminster Assurance.

McManus will chair the audit, risk and compliance committee at LGPS Central, while Nestor will chair the remuneration committee.

BlackRock handed £1.5bn LDI mandate

The Serco pension scheme has appointed BlackRock to run its liability-driven investment (LDI) strategy.

The scheme – which caters for employees of Serco, a service provider for the public sector – previously employed three LDI managers. This approach was reviewed with a view to reaching fully funded status within 10 years, according to a statement from BlackRock released yesterday.

Guy Leach, chairman of the Serco Pension and Life Assurance Scheme, said: “The scheme is in a strong position, but we recognised that efficiencies could be made by transitioning our LDI portfolios into one mandate. Having the ability to onboard and transition the funds seamlessly was a key requirement when choosing an investment manager. The team at BlackRock showed real strength and expertise in LDI, and we were confident that they were best placed to handle the transitions of the three existing portfolios and manage the risks that came with this.”

Graham Jung, managing director in BlackRock’s UK institutional business, added that the group’s scale and access to markets helped complete the “complex” transition.

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