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Hymans and Mercer lose out at E.ON (Update)

UK – Consulting firms Hymans Robertson and Mercer Human Resource Consulting have lost out following a £4bn (€5.9bn) merger between four UK pension schemes of Germany’s E.ON (updates merger size).

The merged schemes have opted for Hewitt Associates as sole advisor following their merger in January.

The schemes involved are Eastern Electricity - which Hewitt used to advise - Powergen, East Midlands Electricity and Midlands Electricity. E.ON declined to disclose the financial details of the appointment.

“We looked very closely at what the merged fund required and after working with the Hewitt team we concluded that their tailored approach to strategy matched what we needed,” said Graham Bartlett, chairman of the E.ON trustees.

The merger of the pension fund could lead to some of the asset managers being dismissed. E.ON spokeswoman Kathy Doyle said: “The trustees of the pension fund are reviewing all investment strategies.” She added the process would be completed later this year.

Hewitt‘s initial tasks will be to review the investment strategy and investing the £420m injected into the schemes in January to ease their underfunding. The four schemes’ funding ratios ranged from 74% to 90% and their total deficit amounted to £728m.

“Our review of its investment strategy will focus on understanding risk from the perspectives of both the trustees and the sponsor, as well as the practicalities of managing the substantial cash flows that the scheme generates,” said Beverley Morgan, investment consultant at Hewitt.

Hymans Robertson and Mercer declined to comment.

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