PPF Hires to Insource LDI | Chief Investment Officer

The UK’s lifeboat fund for pensions is to insource its liability-driven investment (LDI) work after appointing its first dedicated head for the strategy.

The Pension Protection Fund (PPF) has hired Trevor Welsh from Aviva Investors as head of LDI, a newly created role. Welsh spent 17 years at Aviva, where he was most recently in charge of the Aviva Staff Pension Scheme’s LDI strategy. He will take up his new role in October.

“Taking in-house part of our LDI is a key step in updating our investment model and crucial in helping us meet our funding target and future aspirations,” said PPF CIO Barry Kenneth. “Trevor’s expertise in LDI will be invaluable to our development and I very much look forward to working together.”

Kenneth added that insourcing “will allow us greater control and capability” to manage the PPF’s growing asset portfolio.

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The PPF currently has several LDI managers overseen by an internal team, but does not run any money itself. Under Welsh’s leadership the fund will bring a portion of this money in-house.

Welsh has run fixed-income funds for Aviva Investors, and has 30 years’ experience of investing in the asset class.

Aviva Investors announced earlier today it had promoted insurance fund manager Neil Snyman to replace Welsh as head of LDI.

“The PPF is entering a hugely exciting phase in its growth as it starts to insource more of its investments and take greater control of the decision making process,” Welsh said.

The PPF has £22.6 billion in assets and pays pensions to 220,000 members of pension funds linked to bankrupt sponsors. In the 2014-15 financial year its investment portfolio returned 25.9%, giving the fund a surplus of £3.6 billion above its liabilities.

In February, the lifeboat fund hired Hans den Boer as chief risk officer. Chief Executive Alan Rubenstein described the role as “crucial” to the future success of the growing fund.

In May this year, the fund won a CIO EuropeInnovation Award after overhauling its portfolio and removing derivatives exposure.

The California Public Employees’ Retirement System (CalPERS) sent an open letter to the Department of Labor urging it to adopt a controversial fiduciary standard for retirement investment advisors.

The proposal—advocated by the Obama administration—would not directly apply to CalPERS, which is already a fiduciary for its 1.7 million members. Extending that level of responsibility to advisors reflects the $300 billion fund’s core philosophy, it told Department of Labor officials.

“CalPERS believes that fiduciaries should be accountable for their actions, and must transparently perform their duties to the highest ethical standards,” Ann Boynton, CalPERS’ deputy executive director of benefits policy, wrote to the federal labor department.

“The proposed rule appears to align with CalPERS’ beliefs on fiduciary responsibility and we support the department’s efforts to ‘safeguard plan participants by imposing trust law standards of care and undivided loyalty on plan fiduciaries,’” Boynton continued, quoting language from the proposed legislation.

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The pension official highlighted the more than 40 million American families with assets in individual retirement accounts—their aggregate balance totaling upwards of $7 trillion. This population, she said, continue to be vulnerable to self-serving investment advice as long as the industry does not have to disclose any conflicts of interest.

Failure to implement the rule, according to CalPERS, could cost individual investors up to $1 trillion in retirement savings over the next 20 years.

“The proposed rule appears to be congruent with CalPERS’ belief that all Americans should have effective means to pursue retirement security,” Boynton concluded.