UK - The £2.9bn (€3.36bn) Lancashire County Council pension fund is to abandon standard investment consulting mandates in favour of hiring a panel of specialists.
Following its triennial valuation, which is due at the end of this month and will be followed by an asset liability review, Lancashire will hire a "bench" of investment consultants appointed on an ad hoc basis to assist with expected fund manager changes.
The fund stated: "All of this activity contained elements which [are] highly specialist and for which it would be appropriate to utilise external advice. In order to secure the best results for the fund it was important to call upon the best available intellectual input both in formulating strategy and in securing managers."
Rather than relying on the usual investment consultant model, the local authority pension fund will establish a panel of consultants who can be called upon to undertake specific pieces of work through "mini competitions" when needed.
The pension scheme added: "This would enable the fund to access specialist expertise for particular work or research programmes as required. This would replace the current arrangements whereby a single generalist consultant [currently Mercer] was used to provide advice and research to the committee and the investment panel."
Lancashire plans to use the same approach when procuring transition managers, a decision that will see index manager Legal & General replaced as the default provider in this area.
Lancashire refutes that the ‘bench' approach will result in additional expense for the scheme, adding: "Costs would only be incurred when the bench was called upon to undertake specific pieces of work or to give advice through so called mini competitions as and when required. Any decision to award a contract would be presented to the [pension] committee for approval."
The pension fund plans to have a group of investment consultants in place by July.
The fund also revealed it was in talks with Cumbria and Merseyside pension schemes to establish joint-working arrangements that would be of mutual cost benefit.
Lancashire said: "Such arrangements would benefit the fund in terms of expertise and help to reduce transaction costs particularly around procurement."
Separately, the fund is tendering for a global custodian; a post currently held by Bank of New York Mellon.