UK roundup: Southwark, British Polythene, NAPF, European Court of Justice
UK - Southwark Pension Fund is looking for three passive investment managers in a tendering process that could see applicants manage as much as 70% of total assets.
The local government scheme, currently valued at around £850m (€960m), said there were several reasons for the new tender, which could see the contract awarded for as long as 10 years.
The council confirmed that while one mandate had run the course of its term, two further mandates were terminated in February. It did not identify the managers, however.
According to its most recent annual report from the end of March 2010, BlackRock oversaw more than half of scheme's assets, managing a balanced mandate excluding property.
At the time, the second-largest mandate was overseen by Henderson Global investors, in charge of nearly 16% of scheme assets in property.
Alliance Bernstein, meanwhile, managed two global equity mandates, targeting value and growth, respectively, while the remaining 8.6% of assets - again invested in global equities - were overseen by Newton Investment Management.
The council intends to invite no more than eight managers to tender for the positions following the completion of a pre-qualification questionnaire.
Interested parties should contact the council by 27 September.
In other news, the defined benefit scheme for British Polythene Industries (BPI) has seen its deficit fall by £22m on the back of deficit-reduction payments backed by the firm's property holdings.
Under an agreement reached between sponsors and scheme trustees, BPI will pay £1.8m a year for the next two decades, starting next January.
However, the deficit reduction has already been achieved through other means.
The company's half-yearly results to the end of June said: "The present value of this additional funding stream has been recognised as an asset of the scheme at a current value of approximately £20m."
It adds that property holdings worth £21.9m have been transferred to a newly created limited company, with the £19.6m transfer to the pension scheme used to acquire a "nominal limited interest" in the partnership.
"This provides the scheme with a distribution of the profits of the partnership of £1.8m per annum, increasing in line with CPI, to the pension scheme for a period of 20 years starting in January 2012," the report says.
At the end of June, the scheme's liabilities amounted to £231m, compared with £198m in assets.
Meanwhile, a court case being fought by the National Association of Pension Funds (NAPF) regarding the payment of Value Added Tax (VAT) on investment management fees has been formally referred to the European Court of Justice (ECJ).
The issue was first broached in 2008 by the Wheels Common Retirement Fund (WCIF). The NAPF is now seeking to exempt pension funds from the tax, as exemptions already exist for a number of other vehicles.
The NAPF's chief executive Joanne Segars said she was pleased the case had been referred to the ECJ, saying the organisation felt it had a "strong case".
"It will take some time before the case is resolved, but it is an important issue," she said. "A successful outcome would benefit pension scheme members by cutting running costs and increasing the funds available for investment."
The organisation estimated a favourable ruling would reduce costs for pension funds in the UK by as much as £100m, with Segars urging schemes to ensure any overpayment of VAT was protected so these could be reclaimed for whatever backdated period the court decided.