UK - The £3bn (€3.5bn) Merchant Navy Officers' Pension Fund (MNOPF) has re-appointed Towers Watson as its delegated CIO and is finalising an RFP for the appointment of an ongoing adviser.
This follows a year-long process led by KPMG that confirmed Towers Watson's position in the delegated role.
The appointment is a major boost for Towers Watson, which has acted as investment adviser for MNOPF since 1990 and was appointed in 2008 to become "highly engaged" in its asset management decisions and selections.
The appointment was subject to review in summer 2009, by prior agreement.
The deal ranks Towers Watson among other consultants in fiduciary management terms.
Mercer already runs around €5.8bn in fiduciary assets, while Cardano has €4bn and the UK consultant PSolve runs about €2.4bn, according to IPE's 2010 fiduciary management survey.
Andrew Waring, chief executive at MNOPF, told IPE: "We are going to introduce a check and balance element to the delegated CIO with the appointment of an independent investment adviser."
The aim is to provide "a level of investment specialist challenge" to the delegated CIO and to "ensure the investment committee has the right tools at its disposal to make sure it is making effective decisions".
He said the fund was looking to appoint the independent adviser in 2011, but did not comment on whether KPMG would be a preferred bidder.
"We have a role specification, but there will be full review, and it will involve the appointment of a firm, not an individual," he said.
Waring also emphasised the delegated CIO would now take on more responsibility.
"There's a much greater delegation now with the hiring and firing of managers to speed up the implementation of investment decisions," he said.
Roger Urwin, Towers Watson's global head of invesmtent content, and designated invesmtent lead for the MNOPF account, said the model set a new standard in solvency management.
"We are using all the tools available, with the emphasis on all investment opportunities, including LDI and buyins," he said.
The agreement will involve a fee structure intended to align interests between the two parties.
Patrick McCoy, head of investment advisory at KPMG, said: "We have been keen to get an alignment of interests between the fund and the delegated CIO.
"We're making sure the delegated CIO is accountable for the performance of the fund relative to the liabilities."
No party was prepared to go into details on the remuneration structure.
Towers Watson will continue to work with MNOPF in tapping the insurance market.
In May, MNOPF transacted a £100m buy-in of pensioner liabilities for the £1.1bn 'old' section of the scheme. The counterparty was Lucida.
MNOPF is split into two sections - the 'old' section that closed to new members in 1978 and the new section for post 1978 members.
In September 2009, MNOPF also agreed a £500m buy-in deal agreed with the insurer.
Towers Watson acts as delegated CIO for both sections, which are legally separate entities.