UK – The Co-operative Group has decided to shut its final salary scheme and merge its existing schemes into a single roughly £5bn (€7.2bn) career average salary fund.

The new fund will be called the Co-operative Group Pension (Average Career Earnings) Scheme.

The merger – which will make the scheme among the largest in the UK – will involve the Group’s £2.4bn Co-operative Group Pension Fund, its £1.94bn CIS Employees’ Pension Scheme and the £403m Co-operative Bank Pension Scheme.

“The three schemes have come together and are going forward as one,” said a Co-operative spokesperson, adding: “It is subject to review going forward.”

The decision to change from a final salary scheme to a career average salary scheme comes in the wake of several company decisions to slash pension benefits rather than close final salary schemes altogether.

No other details could be given, but IPE understands the merger is in the beginning stages.

As IPE reported in January, the creation of a single fund could mean that the asset management roster could be put under the spotlight.

This includes names such as Legal & General, State Street Global Advisors, Fidelity, LaSalle Investment Management, Western Asset Management, Record Currency Management and Lazard Asset Management.

“It would make sense to review fund managers in the future, but we must first pass the first hurdle,” a spokesperson for the Co-operative Group said at the time.

The Co-operative Group pension fund today announced the appointed of Mercer Human Resource Consulting to provide actuarial and consulting services to for the trustees of the scheme.

It is unclear whether Mercer has replaced an existing actuarial and consultant service provider/s. According to ‘International Pension Funds and their Advisers’, the Co-operative Group Pension Fund was advised by Watson Wyatt, and the Co-operative Group Pensions Department were actuaries to the scheme.

“We believe the trustees felt confident in our ability to help them understand their roles and responsibilities, at a time when trustees in general are being expected to raise their game,” said Mercer scheme actuary and principal Neil Brougham.

The new Co-operative pension fund would have a total membership of roughly 98,000.

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