UK - Northumberland County Council has appointed Mercer as its investment adviser, replacing Watson Wyatt who had held the contract for almost two decades.

The council re-tendered the contract in September 2008 as part of a long-standing intention to formally review the contract because although Watson Wyatt had been re-appointed to the role in 2000, the original appointment dated back more than 10 years before this. (See earlier IPE article: Northumberland seeks investment adviser)

Following a tender process, Northumberland revealed it had chosen Mercer out of the four applicants on the basis of a range of criteria including strategic advice and modelling, price and fund manager selection.

The four-year contract will require Mercer to provide the £519.6m (€603.4m) pension scheme with information, advice and technical support to officers and elected members of the scheme, while it is also expected to carry out an asset liability modelling exercise later in 2009.

Meanwhile, a report presented to the last meeting of Northumberland Council's pension fund panel in May revealed the director of resources had requested the panel defers the review of the pension scheme's actuarial adviser until after the next triennial valuation in 2010.

The pension fund currently employs Hewitt Associates as its actuary, following an appointment in 2000, however despite a commitment to review the contract in 2009/10 the panel was given a number of reasons for deferring the review:

Limited time frame for a review and possible tender as the EU process takes six months and the next valuation is set for 31 March 2010; The scheme will need some actuarial input into the ALM exercise run by Mercer so it would be "unhelpful" to conduct a review during the exercise; The 2010 valuation "will be more complex than previous valuations because of the introduction of cost-sharing" as authorities will effectively need two valuations - one for the national cost-sharing mechanism and the normal triennial valuation, The principal adviser from Hewitt is Tim Lunn, who is "one of only two local government actuaries advising the CLG on the introduction of cost sharing. This link is very useful to the Fund and we would wish to retain it (at least) until cost sharing is fully introduced".

Elsewhere, the report noted the pension fund produced an annual return of -24% in the year to March 2009, causing the value of the fund to drop from £658.2m at the end of March 2008 to £519.6m a year later. The biggest drop of £48.9m was reported to be between June and September 2008 as the scheme assets fell from £652.9 to £604m.

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