UK roundup: BT Pension Scheme, Charity Commission, Mercer, Thomas Cook, Barnett Waddingham
The BT Pension Scheme has seeded a new ESG global equities fund being launched by wholly owned subsidiary Hermes.
The fund only includes companies that outperform peers in an ESG rating.
The rating, between 1 and 100, is creating by scoring companies on their environmental impact, social issues and governance – the latter using quantitative and qualitative data from Hermes EOS.
The pension scheme has provided £40m to seed the fund.
Meanwhile, the Charity Commission has sent a warning to the trustees of pension schemes within charities to ensure they explain how deficits within DB funds are being addressed.
The public body recently conducted a review of accounts of charity organistions and found 740 current run deficits.
After further investigation, it identified 31 that do not disclose any information of recovery plans.
Sam Younger, chief executive at the Charity Commission, said: “Pension deficits can pose a potentially serious risk for charities.
“Some charities do not adequately explain how they are dealing with their pension deficit, thereby missing out on an opportunity to demonstrate to their donors and beneficiaries that they are tackling the problem appropriately.”
In other news, Mercer’s monthly update on UK FTSE 350 defind benefit (DB) funding showed levels deteriorated over the course of April, despite improvement in investment markets.
The consultant’s Pensions Risk Survey showed the deficit in these UK schemes reached £111bn (€135bn), a £15bn increase over the course of 2014, and £9bn in April alone.
Asset values increased by £4bn over the month. However, this was outdone by liabilities, which increased by £13bn.
This left the total amount of pensions assets in FTSE 350 schemes at £575bn, compared with £686bn in liabilities.
Ali Tayyebi, senior partner at Mercer, said: “The driving factor was a significant increase in liability values, which in turn resulted from a small reduction in long-dated corporate bond yields, combined with a small increase in the market’s expectations for long-term inflation.
“This is a sobering thought for those inclined to assume financial conditions are bound to get better and might therefore be deferring risk management or deficit correction actions on that basis.”
Finally, the Thomas Cook Pension Plan has appointed Barnett Waddingham to provide investment consultancy to its trustees.
The £850mDB) scheme picked the consultant after running a competitive tender.
Andy Cooper, who chairs the trustee board, said: “We were impressed by the personalised service Barnett Waddingham offered in their tender.
“The attention to detail and real effort to truly understand our needs was particularly impressive.”