Mandate roundup: Berkshire, Strathclyde, NEST, Royal London
UK - The Royal County of Berkshire local authority scheme has launched a search to appoint a longevity hedge provider, with the contract running for 60 years.
The £1.5bn (€1.8bn) scheme, administered by the Royal Borough of Windsor and Maidenhead, said the awarded contract would be for a "fixed cohort" of its members, although the scheme's fund manager Nick Greenwood was unavailable for comment to explain which membership group would be covered.
The contract will run until the last member or dependant had passed away unless otherwise agreed, with interested parties asked to apply through the Chartered Institute of Arbitrators by the beginning of July.
Speaking in the upcoming May issue of IPE, Greenwood discussed how the scheme was currently pursuing a liability-driven investment approach that differed from other local authority funds, as Berkshire did not discount its liabilities on a gilt basis.
"That means that implementing a gilts-based interest rate hedge would actually introduce more volatility into our funding ratio," he said.
"If we did discount on a gilts basis, we'd be nowhere near 100% funded. In other words, we'd need substantially more assets to even consider going down the LDI route."
In other news, the £11.1bn Strathclyde Pension Fund has signed framework agreements with three managers to provide transition management, as well as risk solution services.
The tender, first announced a year ago, attracted interest from eight managers, with BlackRock, Nomura and Legal and General Investment Management being shortlisted for the position.
Finally, Royal London Asset Management has won an actively managed sterling corporate bond mandate from the National Employment Savings Trust (NEST) first put out to tender last year.
Chief investment officer Mark Fawcett said the mandate, which will form the basis of the scheme's retirement date funds, as well as feed into its pre-retirement fund - at which time NEST seeks out assets matching annuities - would allow it to "further refine the already sophisticated approach" used.
The appointment is significant, as the defined contribution scheme opted for a passive approach across most of its portfolio in an effort to reduce management costs.