Britain's Historic Royal Palaces will be evaluating tenders for the provision of a new pension fund for its staff.

The Historic Royal Palaces (HRP) will change status on 1 April this year, subject to the granting of a Royal Charter. Currently an executive agency, it will become a non-departmental public body. This change in status will allow the management of the palaces to become more focused on the needs of the palaces.

Once the change in status takes place, HRP's 400 staff will no longer be eligible for the Principal Civil Service Pension Scheme (PCSPS). Existing staff will have the option either to transfer accrued benefits acrossto the new scheme or to leave them in the PCSPS. All future contributions will go into the new fund. HRP estimates that as much as £5m ($8m) may transfer into the new scheme. The fund is likely to increase by nearly £1m annually based on employee and employer contributions.

The new fund must be up and running on 1 April. HRP is looking for a single pensions supplier that will provide investment management as well as actuarial, audit and legal services. The new scheme will have to be broadly comparable to the PCSPS, as assessed by the Government Actuaries Department.

Because of the wide range of services required, HRP expects that the mandate will go either to an insurance company or a consortium. According to Peter Mills, project manager responsible for establishing the new pension arrangements, these companies have similar schemes available, which can be easily customised. Separately, HRP is also seeking a provider for life insurance services

HRP will retain the right to change the management structure as the fund evolves, either bringing certain elements in-house as it develops its own expertise, or further subcontracting.

More than 25 organisations applied for invitations to tender for the new fund, and of these 10 were shortlisted. They are currently compiling their tender submissions, on the basis of which HRP expects to invite three or four for interviews. The final selection due to take place at the end of February. Stephanie Schwartz