UK roundup: Tyne & Wear review, AA Pension Scheme, Staffs
UK - The £3.8bn (€4.1bn) Tyne and Wear Pension Fund has revealed it expects to tender a number of investment mandates in the next two months. The AA pension fund has appointed Hewitt for consultancy services and Staffordshire is seeking an investment consultant.
South Tyneside Council, which administers the pension fund, highlighted that no final decisions had been made on the mandates that will be put up for tender, although it added “the review is likely to include a number of quoted equity mandates and global property”.
The pension fund originally approved a new investment strategy in February 2008 following an asset liability modelling study and review of the strategy based on the 2007 triennial valuation data.
This review concluded that the Tyne & Wear Pension Fund should increase its allocation to alternatives, including a 2.5 percentage point increase in private equity, a 1% increase to infrastructure and new allocations of 2.5% each in absolute return strategies and overseas property.
As a result the scheme’s allocation would move from 59.5% in equities, 21% in bonds, 10% in property and 9.5% in alternatives to 55.5% in equities, 16.5% in bonds, 10% in property and 18% in alternatives.
However, while the new strategy had been expected to be implemented in 2008-09, the council revealed in its annual report that the changes were “put on hold as a result of the events in financial markets during 2008/09”. Despite this, it noted that the allocation to private equity had increased over the year to 31 March 2009 from 5% to 7.5%.
Meanwhile the annual report highlighted that the revised strategy agreed last year “will be checked to ensure that it remains appropriate in the changed environment” before the review is conducted.
A spokesperson for the council confirmed the trustees of the scheme “are considering how the fund should invest in equities and alternatives, and will be making some decisions over the next few weeks”, and the tender notices for the mandates are expected to be issued in December.
The decision to move ahead with the investment strategy review follows the council’s decision to terminate its UK active equity mandate, run by Fidelity International, in December 2008, with the assets from the portfolio currently being managed on a passive basis.
The AA Pension Schemehas appointed Hewitt Associates for actuarial and investment consultancy services.
Following a review by the trustees of the scheme, which has assets of £1bn and over 20,000 members, Hewitt has been awarded a mandate to provide services including guidance on funding, risk management advice, strategic investment advice, and monitoring of fund managers. David Eteen of Hewitt has been appointed scheme actuary and John Belgrove will become the fund’s investment consultant.
Staffordshire County Council has also issued a tender notice for the “provision of investment managers” for the £1.7bn Staffordshire County Pension Fund. This follows earlier searches by the council for actuarial and performance measurement services. (See earlier IPE article: Nottinghamshire approves pension merger)
The Pre Qualifying Questionnaire (PQQ) outlined that the tender is for the provision of a full investment consultancy service for the pension fund, including manager selection, monitoring of performance and fnud structure.
The closing date for the tender is 20 November 2009 and further information can be obtained from Staffordshire County Council.
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