UK roundup: Hackney, Mattioli Woods, Risk transfers
UK - The London Borough of Hackney has appointed two global equity managers, and pension consultancy Mattioli Woods has confirmed the acquisition of pension administration firm CP Pensions.
Meanwhile Hymans Robertson has calculated the pension scheme risk transfer market is set to reach £15bn (€17.6bn) in 2010, with longevity deals accounting for around two-thirds of the figure.
The committee for the pension fund, which had a funding level of 62.3% at the end of February 2010, had agreed to move its UK assets to passive management and tender for two global equity mandates benchmarked against a market capitalised weighted index.
Documents from the pension fund committee explained the move would "allow greater flexibility for the global managers with the objective of adding greater diversification to the portfolio and adding value in performance terms". It continued: "The impact of the moves would be to see a move away from the concentrated mature UK market, with a shift into global markets".
Hackney has now confirmed it has appointed Lazard asset Management and Wellington Management International to run the two mandates, which will account for approximately 34% of the pension fund's total assets. They will replace the existing global equity managers Axa Investment Managers and RCM Capital Management.
The deal will see the firm take on CP Pensions' consultancy and administration services for self-invested personal pension (SIPP) and small self-administered pension schemes (SSAS) clients, which equates to funds under trusteeship of more than £110m.Findings from Hymans Robertson's quarterly report on Managing Pension Scheme Risk has revealed the first quarter of 2010 posted the highest level of risk transfers at more than £4bn of liabilities.
The majority of this figure was attributed to the £3bn BMW longevity deal announced in February, but the report noted buy-outs and buy-in transactions covered more than £1bn in liabilities in the first quarter of the year.
Aviva and MetLife performed strongly in the first part of 2010 with the companies completing £350m and £230m of buy-outs and buy-ins, respectively, despite only transacting 15 deals between them. In contrast Pension Insurance Corporation (PIC) covered £305m of liabilities in the first quarter despite only completing two deals.
James Mullins, senior liability management specialist at Hymans Robertson, said: "Based on the level of activity we are currently observing and the deals already completed in Q1 2010, we expect to see pension scheme risk transfer deals to cover liabilities in excess of £15bn during 2010. With a broad split of £10bn for longevity swaps and £5bn for buy-ins and buy-outs."
He said this could be attributed to a number of drivers, such as improved market conditions making transfers more affordable, and a "snowball" effect whereby the growing number of schemes tackling scheme risk increases the pressure on others to follow suit.
"We strongly expect to see more of the UK's largest companies completing risk transfer deals for their pension schemes later in 2010 and beyond, and would not be surprised to see new records set in terms of the size of longevity swaps, buy-ins and ‘DIY buy-ins'," Mullins said.
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