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IPE special report May 2018

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Merrill Lynch Investment Managers settles pension case

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UK – Merrill Lynch Investment Managers has settled a legal dispute with the 2.1 billion pound (2.9 billion euro) pension scheme of the Co-operative Group.

“Merrill Lynch Investment Managers has settled its dispute with the Co-operative Group Pension Fund,” the Co-op said in a statement.

“On behalf of the trustees I can confirm that we have resolved our dispute with MLIM amicably,” said Nick Eyre, Co-operative’s secretary and a trustee of the fund.

“We are not prepared to discuss any of the details or the issues involved. I can confirm however, that, as a result of this agreement, we will be resuming our business relationship with MLIM.”

“There is a financial sum involved,” said Martin Henderson, head of public relations at the consumer cooperative. He declined to be more specific.

“We have resolved all past issues on an amicable basis and are pleased to resume our business relationship,” said MLIM spokesman Nigel Webb.

In May 2002, the group’s CWS Pension Fund announced that it was ending its 30-year relationship with MLIM “following dissatisfaction over MLIM's investment performance and the recent departure of key staff”.

MLIM had run more than 500 million pounds for the fund – which were placed into passive management with Legal and General Investment Management.

MLIM has now settled with three UK pension schemes over disputes relating to Mercury Asset Management, the fund management firm it bought in 1997. The most high profile was a battle with the Unilever pension fund.

The CWS fund says it recently reviewed its investment manager structure. It retained Legal & General, Deutsche Asset Management, Fidelity and LaSalle. It has also added Lazard, Bank of Ireland, Merrill Lynch, Western and State Street.

The fund continues to hold 35% in bonds but has cut equity investments to 55% from 60%. Direct property holdings are up to 10% from 5% before. “The exercise followed an asset liability study in conjunction with Watson Wyatt,” it says.

MLIM is the fifth largest manager of European pension fund assets, with around 83 billion dollars of such assets under management. It recently won a 410 million pound (572 million euro) mandate for the pension fund of international engineering business IMI.

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