UK – The Pension Protection Fund has named three asset managers and a custodian as it seeks to take a “proactive” approach to managing the assets raised by its levy.
It named Insight Investments and PIMCO as asset managers for fixed income, with Goldman Sachs Asset Management taking a deferred appointment. State Street was named as custodian.
“All four companies bring a wealth of knowledge and experience that will enable the Pension Protection Fund to deliver its strategic investment objectives,” said PPF chairman Lawrence Churchill.
The appointments came as the PPF published a statement of investment principles outlining how it will invest the cash raised by its levy.
Initial investment will be in government bonds, non-government bonds, index-linked bonds and cash and derivatives.
“Our investment objective is to have sufficient funds to pay compensation to scheme members of eligible schemes that transfer into the Fund,” Churchill said.
“To help achieve this we will be adopting a proactive approach to asset management, seeking to match our assets as closely as possible to our liabilities in the long run.”
State Street said it would provide global custody, fund accounting, transition management, cash management and performance measurement.
“The Pension Protection Fund is an important new entrant on the UK pensions landscape, which makes this mandate a very strategic piece of business for us to win,” said Alasdair Reid, head of State Street’s Asset Owner Group in Northern Europe.
State Street added that Mercer Investment Consulting assisted the PPF in its selection process. The fund’s assets will be run from State Street’s operations in Edinburgh.
PIMCO said its mandate would be benchmarked against a combination of UK government fixed interest and index-linked bonds and seeks excess returns of 1.5% relative to the benchmark.
"We are delighted to be working with the Pension Protection Fund, especially in view of the importance of its role in securing longer term pensions for those who might otherwise suffer due to insolvency of their corporate sponsor,” said Paul Craven, PIMCO's head of UK institutional business development.