UK - East Riding of Yorkshire Council has appointed an external manager to run part of its pension fund, while insurance company Aviva has initiated a staff consultation on changes to its defined benefit (DB) scheme.
Gwynedd Council has awarded an active bond mandate on behalf of its pension fund, while Hounslow has reappointed a provider for actuarial consultancy benefits and confirmed the pension committee agreed to vote with BP on the tar sands resolution at its AGM last week.The £2.29bn (€2.65bn) East Riding Pension Scheme has appointed Schroder Investment Management to run a portfolio valued at approximately £500m, or 30% of the scheme's total assets.
The pension fund employs only one external investment manager, with the remainder of the investments managed internally. Out of 15 offers Schroders was reappointed to the five-year contract starting in April 2010, based on scores from the evaluation process. (See earlier IPE article: East Riding of Yorkshire seeks investment manager)
A spokesman for East Riding said under the terms of the contract Schroders will manage "part of the overseas equities and part of the bond portfolios".
Latest minutes from the council's pension fund committee meeting in February noted the strategic asset allocation "for this quarter be agreed at 69.5% equities, 16% bonds and cash and 14.5% alternative investments whilst allowing the fund managers flexibility to vary this in the light of the market conditions during the quarter".
In a statement, the company - which also owns the RAC automobile service - noted around 14,000 UK employees in the two companies are in a money purchase pension with just 7,600 in a DB scheme so moving to a single DC scheme it claimed to ensure a "unified approach to pensions", while also reducing financial risk and volatility.
Aviva argued while only a third of UK staff has access to a DB scheme, the RAC and Aviva DB pensions together account for two-thirds of the employer contributions, which it claimed is "both inequitable and unsustainable". It has therefore entered into discussions with the trustees and trade unions, and a 90-day consultation period is expected to begin in June 2010.
The RAC's DB scheme is currently open to new entrants, with just under half of the 4,100 employees joining the scheme, while the Aviva DB scheme is closed to new entrants and 70% of employees are members of the money purchase section of the scheme. However, together the RAC and Aviva DB schemes have a pension deficit of around £3bn, compared to £1bn in 2006.
Gwynedd Council initiated a search for a manager in March last year, and through the process short-listed three potential managers for the mandate - Threadneedle, Henderson and Insight - before appointing the latter on the basis of an evaluation process.
Documents from the last full pension fund committee meeting in December revealed the committee had agreed to suggestions from its adviser Hymans Robertson to "invest up to £20m directly in Blackrock and/or KBC Lothbury property funds in order to ensure an increase in our property investments".
The scheme, valued at £525m at the end of March 2010, re-tendered its actuarial contract in September last year as the existing contract with Barnett Waddingham was about to expire. The new contract will for a period of six years, and the responsibilities will include triennial valuations and actuarial monitoring of funding levels.
It was meanwhile confirmed all cross-party councillors - apart from one - in the pension fund committee voted against the tar sands resolution for more disclosure by BP, as proposed by campaigners including FairPensions and the Environment Agency Pension Fund. (See earlier IPE article: Pension funds lose oil sands campaign against BP)
John Todd, chairman of the Hounslow pension fund, said the scheme has a "robust Statement of Investment Principles (SIP)" and it endeavours to comply with the UN Principles of Responsible Investment. (UN PRI).
The vote at the AGM went in favour of BP, with 93.9% of votes, excluding abstentions, and Todd noted before the committee voted the pension fund had received "written advice and guidance on this matter from a number of sources including our professional advisor, investment manager, and the LAPFF. I also sought the views of another large London pension fund," said Todd.
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