UK - The London Borough of Tower Hamlets has dropped Aberdeen Asset Management as a bond manager from its pension scheme, while Powys County Council is increasing its equity allocation and the Royal Borough of Kensington & Chelsea is seeking a global equity manager.

Elsewhere, Nestlé UK has announced changes to its defined benefit (DB) scheme; Leeds University has appointed a property manager for its non-USS pension fund; Quarriers has awarded a pension services contract and the UK government has confirmed the date for abolishing contracting out for defined contribution (DC) schemes.

The £686m (€753m) London Borough of Tower Hamlets pension fund has dropped Aberdeen Asset Management from a £164.8m bond mandate in favour of Investec.

The local authority scheme said Aberdeen's average returns had been ‘flat', adding that irrespective of a more positive performance at the end of 2009, the manager would be replaced by Investec.

Although Aberdeen loses out on the bond mandate, it maintains its role as manager of a £62.8m UK equity brief.

The £259m (€284.5m) Powys County Council pension scheme has switched 5% of the fund from bonds into equities as part of a medium-term asset allocation review.

The scheme is aiming for a 50/50 equity/bond split and has transferred assets from its government bond holdings - including £8m from Aquila Life's index-linked gilt funds - into Japanese and UK equities.

The Welsh scheme said it wanted to take advantage of a weakness in equities to reverse its underweight position and capitalise on renewed optimism in the stock markets.

The Royal Borough of Kensington & Chelsea (RBKC) is tendering an active global equity mandate valued at around £300m (€330m), equivalent to around 70% of the £409m pension fund's assets.

The mandate will be benchmarked against the MSCI All Countries World index with an outperformance target of at least 2% a year, gross of fees, over rolling three-year periods. It is expected at least two managers will be appointed to run the mandate, but it will retain an allocation to passive global equities with L&G that was confirmed in January.

(See earlier IPE article: Mandate roundup: Kensington & Chelsea, Norges Bank, Tower Hamlets, LAPFF)

The strategic asset allocation of the pension scheme is currently 70% equities, 20% bonds, and 5% each in private equity and property. The closing date for tender submissions is 6 April 2010 and further information can be obtained from Hymans Robertson.

Nestlé UK is proposing to make changes to its DB pension arrangements, which include offering benefits on a career average basis instead of the current final salary arrangement.  

Paul Grimwood, chief executive and chairman of Nestlé UK, said: "We are committed to providing quality pension provision in order to attract and retain the best people and are confident that our scheme will continue to be one of the best."

He added that the firm "will continue to offer both DB and DC options to both existing and new employees. These proposed changes will ensure the long term sustainability of our pension arrangements and enable us to continue to operate effectively and efficiently as a business."
 
Nestlé UK is now entering a formal period of consultation with employees regarding the proposed changes to the pension scheme.

Leeds University has appointed Aviva Investors Global Services to run a £20m investment into a pooled property fund by the university's pension and assurance scheme (PAS).

The university tendered the five-year mandate in November 2009 for a manager to run the investment into UK commercial property on behalf of the £175m pension scheme for non-academic staff. (See earlier IPE article: UK roundup: Environment Agency, Leeds University, City of London)

The Quarriers Pension Scheme has appointed Punter Southall to provide a full range of pension services to the trustees.

The mandate awarded by the £23m defined benefit scheme of the Scottish social care charity, includes all core scheme services including actuarial, administration, benefit consultancy, Trustee secretarial and investment consultancy.

Elsewhere the UK government has confirmed the date for the abolition of contracting out of the State Second Pension (S2P) into DC schemes.

The legislation for the move was included in the Pensions Acts of 2007 and 2008, however the Department for Work and Pensions (DWP) has stated the process will be "abolished from 6 April 2012. Individuals who are contracted-out into a DC pension scheme will be automatically brought back into the additional State Pension from this date".

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

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