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Impact Investing

IPE special report May 2018

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Mandate roundup: Dorset, JLT, L&G, Pitmans, Merseyside, Aon Hewitt

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  • Mandate roundup: Dorset, JLT, L&G, Pitmans, Merseyside, Aon Hewitt

UK - The Dorset County Pension Fund is seeking to launch a protection or hedging strategy to combat its £370m (€414m) pension deficit.

The local government pension scheme (LGPS) - with £1.4bn in assets compared with £1.8bn in liabilities as of its latest actuarial valuation in March last year - is tendering for an investment manager to better manage its liabilities through the use of bonds or other appropriate assets.

The council said inflation now represented a "major risk" to the scheme and that it was therefore considering an initial £150m UK government bond portfolio to help offset this risk through hedging strategies.

Dorset said it was aiming for the "highest level of protection possible" and therefore working with JLT Investment Consulting on the appointment of a manager for the liability management mandate.

The three-year contract, running from April next year, can be renewed for a further 36 months if the fund is satisfied with the manager's performance.

Further information can be requested from JLT's Manchester office, with all applications due by 9 November.

Meanwhile, Legal & General has appointed Pitmans Trustees as independent trustees for the new defined contribution (DC) master trust, launched in the lead-up to auto-enrolment legislation coming into place in the UK.

The trust, developed by L&G and Hymans Robertson, will soon replace retailer Marks & Spencer's existing pension funds, with the new DC scheme - Your M&S Pension Savings Plan - launching later next year.

Richard Butcher, managing director of Pitmans, said the company had identified master trusts as a growth area ahead of auto-enrolment legislation, increasing the pension burden for employees.

"This is now our seventh master trust appointment, which not only demonstrates the growth in this market, but that we have relevant depth of knowledge and an approach ideally suited to this arrangement," he said.

Tony Filbin, Legal & General's managing director for workplace savings, added: "Strong fiduciary responsibility is critical to our master trust proposition, and we recognised from the outset the value that a strong independent trustee will add."

Finally, the head of the £4.7bn Merseyside Pension Fund has said the appointment of Aon Hewitt as its new investment consultant - replacing Mercer, as previously reported by IPE - comes at a time of "considerable change" in the local government landscape.

The consultancy will work with the LPGS on asset/liability modelling, as well as strategic asset allocation decisions and risk budgeting.

Commenting on the appointment, the scheme's head Peter Wallach said: "Aon Hewitt has been appointed at a time when the LGPS is facing considerable change, and we are looking forward to working with them to develop ideas and strategies to meet these challenges."

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