Home > News > Pensions > UPS Hires Goldman Sachs Asset Management as OCIO for $43.4 Billion Pension Plans

PensionsMay 16, 2024

UPS Hires Goldman Sachs Asset Management as OCIO for $43.4 Billion Pension Plans

The company's investment staff will join GSAM, following one of the largest OCIO mandates to date.

UPS has hired Goldman Sachs Asset Management to provide OCIO services for the transportation company’s U.S. and Canadian pension plans, totaling $43.4 billion in assets as of March 31, 2024, GSAM announced. GSAM will provide investment management services for the company’s defined benefit plan assets.

The agreement is one of the largest pension OCIO mandates ever, followed by BlackRock’s $30.5 billion OCIO mandate with British Airways, and GSAM’s $28.8 billion mandate with BAE Systems.

UPS has the sixth largest corporate defined benefit in the U.S, according to Milliman’s 2024 Corporate Pension Funding Study. According to a UPS spokesperson, the outsourcing of the companies pension will not affect or alter any benefits plan participants receive or how the plans are administered.

As a part of this mandate, the investment staff of UPS’s corporate defined benefit plan will join GSAM in the firm’s Atlanta office. The team transition is expected to take place sometime in the third quarter of the year and will see the combined GSAM investment staff grow to 200 employees.

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“I’m confident this team will ensure strong continuity and best-in-class pension asset management with no change to benefits for plan participants. This decision also allows UPS to place our focus more squarely on serving our customers while adding more oversight and expertise that will benefit retirees,” said PJ Guido, senior vice president of capital markets and investor relations officer at UPS, in a press release.

GSAM is the largest OCIO provider in the world, with more than $325 billion in OCIO assets under custody, according to a press release.

“We are grateful to UPS’s pension plan fiduciaries for entrusting us with this significant mandate and we look forward to welcoming a number of talented new colleagues. Outsourced CIO solutions can deliver investment excellence, economies of scale and enhanced risk management while allowing corporate and pension plans of all sizes to focus on their core business,” said Marc Nachmann, global head of asset and wealth management at Goldman Sachs, in a press release.

The announcement comes at a time when many corporate pension plans are in surplus funding territory and plan sponsors consider what to do with their excess pension assets. Earlier this year, Kodak shuttered its investment office and outsourced its assets to NEPC.

UPS had a funded status of 91.2% as of the end of 2023, according to the company’s 2023 10K statement. UPS CIO Ernie Caballero is a member of the CIO Power 100 list and was a finalist in the corporate DB > $20B category during CIO’s 2023 Industry Innovation Awards.

Asset Managers Show Strong Efforts at DEI, Survey Finds

Callan study shows that 70% of them have a formal policy to deliver diversity, equity and inclusion.

By Larry Light

How committed are asset managers to diversity, equity and inclusion? Very. That’s the finding from a study by the Callan Institute, the research and education arm of consultancy Callan LLC.

The results of the survey of 1,200 asset managers, Callan’s first on the subject, were that 70% had a formal DEI policy, 71% had diversity recruitment initiatives and 65% had a DEI training program. Further, 50% sponsor a mentor program, where more senior employees guide new hires from underrepresented groups.

These findings are important to allocators, whose organizations hire outside managers to invest assets, often with a focus on particular asset classes, such as private equity.

One crosscurrent: Just 37% of the responding firms had a pay parity policy, meaning that people in the same job at the same location get equal pay regardless of race, gender or other factors. The study noted the low positive response rate and commented that this issue appeared “to be one of the more challenging policies to implement across the industry.”

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The surveyed firms that have DEI programs, like pay parity, tended to be larger (more than 750 employees) and handled more money (more than $100 billion assets under management).

The clustering of DEI programs in the larger firms, by both workforce size and AUM, showed that they “tend to have more resources and organization-wide policies overall, including DEI,” the study concluded. The number of firms that were diverse-, women- or disabled-owned was only 18%.

The Knight Foundation also found in a series of surveys—in 2017, 2019 and 2021— very low levels of diverse-owned firms in asset management, with the last one showing 6.1% owned by minorities and also 6.1% by women.

What about investment specialties? Looking at pay parity in the Callan study, private equity had the largest number of firms devoted to that DEI category, at 55% of PE companies, with fixed income at 45%, real estate at 35% and stocks at 32%.

For diverse recruitment initiatives, PE firms again were the leaders, at 91%, although the other asset classes also had a high showing here: 79% for fixed income, 77% for real estate and 63% for equities.

For mentorship, PE led with 68% offering that kind of guidance, closely followed by fixed income (63%), real estate (52%) and stocks (42%).

In terms of race and ethnicity, the survey found that—to no one’s surprise—whites made up just over two-thirds of the headcount at surveyed firms, with Asians 16%, Hispanics 7% and Blacks 6%. And also unsurprising was the gender finding: the surveyed firms’ workforces are 60% men to 40% women.