UK - North Yorkshire Pension Fund is planning to tender a "plain vanilla" corporate bond portfolio as it seeks the best way to deploy assets currently invested with European Capital Management (ECM).
Elsewhere, the Pension Protection Fund (PPF) is seeking a provider to manage the assessment and payment services for eligible schemes, and the Personal Accounts Delivery Authority (PADA) has issued a full tender notice for fund administration and custody services for the new NEST system.
In a report published ahead of tomorrow's meeting of the Pension Fund Committee, John Moore, treasurer at North Yorkshire Council, stated the mandate under consideration is "for an actively-managed bond portfolio with a performance objective of outperforming an index such as the iBox sterling non-gilt index by at least 0.5% pa (net of fees) over rolling three-year periods".
North Yorkshire has still to decide the timetable for the procurement process, which could see a manager appointed as early as October, but the official tender notice is expected to be issued towards the end of February.
The tender follows a decision in September by the committee to research options for a "plain vanilla" corporate bond mandate as an alternative to the "relatively complex geared investment with ECM". Minutes from the November meeting also revealed representatives of the pension fund had gathered information from ECM, and three other managers on different approaches to investing in this asset class.
Following "frank" discussions about the issue, the pension fund committee decided it "did not wish to retain the mandate in its current form with ECM or their proposed alternative." Instead, the meeting resolved that: "The mandate with ECM be changed by reducing the complexity and eliminating gearing at the most opportune time. That a procurement process to test the market for the most suitable broad bond portfolio, benchmarked to an aggregate bond index, hedged to sterling, be commenced."
Documentation also revealed the funding position of the scheme had improved to 51% by the end of December 2009, following a low of 35% in March. This follows an increase in the value of the scheme to £1.24bn and a slight reduction in its liabilities to £1.2bn.
The role will cover a range of responsibilities including the processing of insolvency notices, the determination of a scheme's eligibility for the PPF using tools such as the actuarial valuation, preparation of the scheme for transfer and general casework such as monitoring the progress of trustees.
It is offering an initial one-year agreement, with the option to extend it for two periods of three years, and revealed the successful applicant would be responsible for some or all of the tasks specified in the tender "save for those required to be carried out by the Board of the PPF by virtue of the Act or such other legislative constraints".
The PPF stated in the tender documents that because of the current economic climate "the number of schemes entering assessment is rapidly increasing and the Board is actively seeking alternative options for scheme assessment".
It therefore justified the short procurement process - the tender closes on 1 March 2010 - on a requirement to process schemes in assessment in a "timely manner". The PPF also confirmed four more pension schemes had been transferred into the fund, totalling 113 schemes. Its website showed 220 schemes had entered the assessment process between January 2008 and January 2010.
It also noted it may require the option to request additional services such as investment risk reporting, custody services, compliance monitoring and performance measurement of funds.
PADA is offering an initial 10-year contract for the role, with the option of extending the agreement by a maximum of five years. The closing date for the tender is 17 March 2010 and further information can be obtained from https://dwp.bravosolution.co.uk
If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com
No comments yet