UK roundup: Barclays UK Retirement Fund, CBI, Ofgem, Babcock, Aon Hewitt
UK - The £18.2bn (€21.6bn) Barclays UK Retirement Fund's internal investment team has been renamed Oak Pensions Asset Management (OPAM) to give them more flexibility to execute investment decisions.
Regulation to date has required the investment team's best ideas to be implemented through external fund advisers, whereas OPAM, as an FSA-registered vehicle, will now be able to implement these ideas itself.
Barclays' internal investment team has expanded since the appointment of Tony Broccardo in 2008 and now numbers seven investment professionals, expanding its manager selection and tactical asset allocation capabilities.
The pension fund said that, over the last three years, the active strategies overseen by the investment team added value of around £1bn to the scheme's defined benefit portfolio, principally through active management of the LDI portfolio and opportunistic moves into credit in late 2008, which enabled the fund to take profits in 2010.
In other news, the Confederation of British Industry (CBI) has called for clarification on its position on retirement rules and how it will respond to businesses' concerns before it scraps the Default Retirement Age (DRA) next April.
The UK's leading employers' group said companies faced huge uncertainty and greater risk of tribunal claims if the government failed to tackle the unintended consequences of the decision.
The CBI is proposing solutions to five key problems it said the change would create for employers.
It says the removal of the DRA will complicate the rules around retirement for employers and their staff, making the resulting process potentially less dignified and more complicated.
Despite announcing that the DRA will be phased out from April, the government has not yet produced any guidance or draft regulations to clarify for employers or staff what the new legislative framework will look like.
In the absence of a replacement to the DRA, the CBI is calling for the change to be delayed for a year, for retirement conversations to be protected and for the law on performance management and unfair dismissal to be made simpler and more balanced.
It also wants the government to spell out how companies can use 'objective justification' to defend a retirement age and for the state pension age to be used as a milestone, after which employers would no longer have to offer occupational benefits.
Meanwhile, energy regulator Ofgem has ordered a review of pension liabilities of some of the UK's biggest gas and electricity companies, according to the Independent on Sunday newspaper.
Electricity distributors can charge £1.65bn to customer bills to cover their pension deficit and administration costs under a five-year funding plan agreed in January.
The regulator has asked government statisticians to investigate whether pension liabilities have been run well enough to justify the funding in a move that has angered unions and raised concerns that pensions could be cut.
Ofgem announced in November that the UK retail energy market would be reviewed after recent price hikes pushed up operators' profit margins.
British Gas-owner Centrica and Scottish & Southern Energy, which account for 60% of the market, both recently raised gas and electricity prices.
Lastly, Babcock International Group, the FTSE 250 engineering support services company, has forged a partnership with Aon Hewitt that will see the consultancy introduce a major operational review and change programme to Babcock's Pensions Administration Office (PAO) in Thurso, Scotland.
The partnership with Aon Hewitt comes as part of a significant investment Babcock is making in its PAO. Babcock and Aon Hewitt aim to develop the PAO to better enable it to attract new clients, while enhancing its offering to its existing client base.
The PAO is an established provider of pensions administration services, currently employing 37 people providing administration under contracts that encompass more than 72,000 members.
Its main focus is the administration of complex final salary public service schemes, but it has expanded over the last five years to take on the administration of additional schemes, including the private sector defined contribution and CARE structures.
The new partnership arrangement follows a number of major pensions administration contracts recently won by Aon Hewitt, including BMW and Premier Foods' RHM pension scheme.