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PA Pension Trustees award fiduciary mandate

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  • PA Pension Trustees award fiduciary mandate

UK - PA Pension Trustees Ltd has become the latest pension fund to award a fiduciary mandate to investment manager BlackRock.

The £410m (€450m) mandate for the UK pension scheme of PA Consulting follows in the footsteps of the pension schemes of Dutch company Vopak and German-based multinational Henkel, who gave fiduciary mandates worth €550m and €2bn respectively to BlackRock earlier this year. [See previous IPE stories: Vopak swaps Mn Services for BlackRock and Henkel creates global fiduciary pensions structure]

"We were particularly attracted to the concept of fiduciary management because of its comprehensive and holistic nature coupled with its sensitivity towards prevailing market conditions," said Norman Schofield, chairman of PA Pensions Trustees.

"Fiduciary management essentially is about outsourcing the asset management of a pension fund or an insurance company to one provider," said Leen Meijaard, head of institutional EMEA at BlackRock this morning. "The aim of that outsourcing is to free up the board of trustees to focus on more important issues. Investing and financial markets have simply become too complex for a board of trustees to be involved with each and every aspect of managing a pension fund."

BlackRock upholds its 2008 prediction that fiduciary assets could rise to £300bn in the UK by 2012, if the experience of fiduciary management in the Netherlands is repeated.

While the Netherlands is the most mature market for fiduciary management, the UK is more suited to the concept because unlike most UK schemes "most Dutch pension funds have internal staff to do the day-to-day management", according to Meijaard.

Germany is the third most important country on the fiduciary wave, with a number of fiduciary mandates having been awarded there, followed by the US.

"But the US market still needs a catalyst to get it going," he added. "We haven't seen any pension funds in Japan or the Nordics awarding a fiduciary mandate yet but we are involved in discussions with many pension funds and insurance companies there."

Meijaard pointed out that while the fiduciary wave was growing, it was also changing as it grew, leading to many more competitors in the field.

BlackRock has been providing full fiduciary management since 2005 when it purchased the internal asset management operation of the Dutch Philips pension fund in the Netherlands and was awarded a fiduciary mandate to manage the assets. As of 31 August 2009, it managed over $27bn (€18.4bn) in fiduciary mandates.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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