Pension consolidators heed government call for private market investment
Bulk insurance transfers hit a high during the final quarter of 2024 among the 43 UK corporate pension funds surveyed by MandateWire. Additionally, and in line with the agenda put forward by chancellor Rachel Reeves during her Mansion House speech in November, UK master trusts continued their push into private markets.
A total of 22 buyout/buy-in deals were agreed in the quarter, almost twice as many as the 12 signed in Q3. This represented a high point for 2024, according to data collected by MandateWire.
Just Group secured six of these deals and Aviva Group followed with five, while Pension Insurance Corporation won four. Canada Life, Legal & General and Rothesay each won two deals, while Royal London picked up one contract.
The largest of all these deals was the £1.7bn ($2.1bn) contract signed between Rothesay and the £2.5bn ($3.1bn) Electricity Group of the Electricity Supply Pension Scheme.
As well as de-risking through bulk insurance deals, UK corporate pension funds also headed down the fiduciary management route.
Fiduciary management
MandateWire tracked details of four fiduciary management mandate awards in the quarter, up from one such award in Q3.
The £72.3mn ($90.8mn) Aberystwyth University Pension and Assurance Scheme chose Schroders as it moved to a fiduciary management model.
The pension fund, which previously held separate mandates with Columbia Threadneedle Investments, Legal & General Investment Management, CBRE Global Investors and Insight Investment, will now use Schroders for asset management services, investment consultancy advice and to develop a de-risking plan for the fund.
Having employed a fiduciary model for a number of years, the £58.8mn ($73.7mn) Caffyns Pension Scheme opted to switch providers in Q4. The pension fund dropped SEI Investments for WTW.
The manager will assist the trustee in evolving and implementing the scheme’s investment strategy, and ultimately help the fund eliminate its funding shortfall. As at March 31 2024, that shortfall stood at £10mn ($12.5mn).
“ We see tremendous value in the government moving on to the swift introduction of scalable whole-life multi-employer CDC schemes.”
There was also a fiduciary management appointment for a defined contribution scheme. BlackRock was selected by the Royal Mail Collective Pension Plan, the UK’s first collective DC scheme.
Collective pensions
Commenting on the launch of the CDC, Chintan Gandhi, head of collective DC at Aon UK, said: “The launch of the UK’s first CDC pension scheme is an important milestone in the UK’s pensions landscape. This has been over seven years in the making.
“Using this as a stepping-stone, we see tremendous value in the government moving on to the swift introduction of scalable whole-life multi-employer CDC schemes. We believe these have the significant potential to help more than 30 million workers in the UK build up a pension – including the self-employed.”
Elsewhere in the multi-employer space, it was confirmed that the Wates Pension Fund would transfer its £210mn ($263.5mn) of assets to Clara-Pensions. The deal marked Clara’s third UK transaction, with the superfund noting that it expects to agree two further deals in the first half of 2025.
Pension consolidators themselves continued their drive towards private markets. For instance, the £9.3bn ($11.7bn) TPT Retirement Solutions, which has £6.5bn ($8.2bn) in defined benefit assets and £2.8bn ($3.5bn) in DC assets, launched an £800mn ($1bn) liquid alternatives fund that will invest in a spectrum of liquid alternative assets across credit and equities.
LTAFs
Similarly, the circa £21bn ($26.4bn) LifeSight, WTW’s DC master trust, revealed it would invest in WTW and Carne Group’s new private equity-focused long-term asset fund. One master trust though, the £6bn ($7.5bn) Smart Pension, was reconsidering the LTAF structure.
One master trust though, the £6bn ($7.5bn) Smart Pension, was reconsidering the LTAF structure.
In July, Smart looked at creating its own private markets vehicle within the structure, but during October’s Pensions and Lifetime Savings Association’s Annual Conference 2024, the master trust’s chief executive officer James Fiveash said it was rethinking whether the LTAF structure was ideal for its needs.
