North Yorks re-signs Mercer and reviews fixed income
UK - North Yorkshire County Council has reappointed Mercer to provide actuarial services for its local government pension scheme for a further six years.
The council started the search for a scheme actuary in March 2008, but following the receipt of four tenders, with three firms asked to attend a clarification meeting, the pension fund panel agreed to reappoint Mercer.
The contract - valued at £480,000 - requires Mercer to undertake a range of actuarial services which includes conducting triennial valuations of the scheme's assets and liabilities, producing annual interim reviews and FRS17 figures as well as advice on the calculation of benefits.
Mercer begins its new contract on July 1, 2008 for an initial period of six years, which covers the triennial valuations in 2010 and 2013, and the pension fund has the option to extend the contract by a further three years.
Figures from the latest meeting of the North Yorkshire Pension Fund panel revealed the value of the scheme's assets had fallen from £1.27bn (€1.59bn) to £1.22bn over the last 12 months to March 31 2008.
As a result, while the last triennial actuarial valuation - carried out by Mercer on March 31 2007 - revealed the scheme was 68.8% funded with a deficit of £602m, the latest figures from the scheme's statement of annual accounts for 2007/08 showed the funding position of the scheme has worsened in the last 12 months.
According to the report, as of March 31 2008 the funding position of the scheme had fallen to 56% and the deficit had increased to £958m, which the scheme attributed to a "combination of pressure on investment returns in difficult financial markets during 2007/08 plus the 'growth' in liabilities, which are valued using gilt prices".
Documentation relating to the latest committee meeting confirmed the scheme is still in the process of seeking global property and overseas equity managers, but also revealed the fund has commissioned an analysis of the performance of its two global fixed income managers - Crédit Agricole Asset Management and European Credit Management (ECM) - ahead of its next committee meeting in September.
The analysis follows concerns raised at an earlier committee meeting in May about the poor performance of the two bond managers, and although it stressed that no decision would be made yet about "continued involvement" with these managers, it was suggested at the meeting these investments "could be utilised to liquidate the property mandate".
The pension fund announced in May it was altering its asset allocation to incorporate a £60m global property portfolio. (See earlier IPE article: North Yorks moves into property)
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