UK - The Environment Agency is seeking global bond managers for its £1.4bn (€1.5bn) active pension fund.
Meanwhile, Logica and Vodafone have joined the growing list of firms that are consulting on the closure of defined benefit (DB) schemes.Following on from the recent global equity search last year, the Environment Agency is now tendering a global bond portfolio valued at up to £150m to be run by one or more managers. (See earlier IPE articles: UK roundup: Environment Agency, Leeds University, City of London and Environment Agency's SRI drive boosted by equity awards)
The new mandate follows the termination of an active corporate bonds mandate run by European Credit Management (ECM).
Howard Pearce, head of environmental finance and pension fund management, said the ECM mandate had been terminated following underperformance and a failure to sign up to the UN Principles of Responsible Investment (UN PRI). However, he added the new mandates would not affect the overall asset allocation for the fund as it is "like for like".
The new portfolio is to be actively-managed, with the majority of the mandate to be invested in fixed-rate investment-grade bonds denominated in major currencies, with an outperformance target of +1% a year on a rolling three-year basis.
The Environment Agency also stated it is seeking bond managers that "incorporate and integrate financially-material environmental, social and governance (ESG) criteria in line with best practice sustainable, environmentally-responsible investment". But it admitted that while ESG is important, it is also "keen to hear" from all global bond managers able to offer excellent returns.
The organisation noted that in terms of integrating ESG factors into the portfolio it is "open to proposals for new concepts, strategies and teams". These include a traditional bond mandate with an ESG overview or allocations to green bonds; climate change bonds; supranational and agency bonds and weather catastrophe bonds.
However, it added that the appointed investment manager(s) would be expected to either be a member of the UN Principles for Responsible Investment (UN PRI) or be willing to participate in the initiative.
The closing date for applications for the three-year contract is 8 January 2010 and further information can be obtained from procurement department at the Environment Agency.
A spokeswoman for the company confirmed it is consulting with employees on the restructuring of the UK pension arrangements, with the aim of moving towards a "consolidated DC scheme" from 1 April 2010.
As part of this restructuring, it is proposed the scheme will close to future accrual and transfer the 8% of the workforce to the new consolidated defined contribution (DC) scheme. However, Logica claimed if the proposals are implemented this would offer employees "greater contributions and investment choice" in their pension arrangements.
Its DB scheme closed to new members in 2005 and it is now proposed it will shut to future accrual from the end of March 2010. The 4,000 existing members would then be offered the opportunity to join a "substantially improved" DC scheme, which currently has around 6,000 members.
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