CIO of UK’s Biggest Pension Plan to Exit

Roger Gray

The chief executive and investment officer of the UK’s largest pension plan is retiring in September.

Roger Gray will depart the $84.5 billion Universities Superannuation Scheme (USS) after a decade with the fund, the organization confirmed.

He joined as CIO after working with Hermes Fund Managers, UBS Global Asset Management, and UBS Asset Management in Switzerland, where he was also its CEO and CIO. Gray had also been CIO at Rothschild Asset Management, which is now Insight Investment.

Gray added the CEO title in 2012 when the fund’s USS Investment Management was created as a separate business to run its assets.

Never miss a story — sign up for CIO newsletters to stay up-to-date on the latest institutional investment industry news. 

The departing leader was responsible for the fund’s first moves into direct private equity investments in 2015, starting with UK’s gas station/rest stop chain Moto. It also holds stakes in infrastructure assets such as Thames Water and Heathrow Airport. Before Gray’s innovations, USS operated more like a mutual fund for its members.

In a 2016 interview with the plan regarding the early Brexit implications, the chief said the decision had a “moderate impact” on its funding position, but its portfolio was diversified enough to withstand the event. “These would have performed well since the referendum, similar to the asset side for the USS Retirement Income Builder (the defined benefit fund),” he said.

When Gray started with the university pension plan, it was $33.9 billion, a little more than one-third of its current size. Gray had more than doubled it by 2016, to $69.1 billion. That October, the fund launched its defined contribution section, dubbed the “USS Investment Builder.” The DC portion features two target date fund options (default and ethical, which takes a more environmental, social, and governance (ESG) approach) and 10 self-select funds for members who’d rather maintain their own assets.

Last year, the Universities Super proposed closing its defined benefit plan in favor of a total DC approach in April 2019, but it created too much tension for its members, resulting in nationwide strikes by university staff. This led to the creation of a taskforce that would determine the plan’s assets and liabilities, and assess the risk appetite of employers. The USS board of trustees also issued a consultation on a new valuation in January.

The fund previously won the CIO Innovation Award for best portfolio construction in 2016 at the brand’s UK gala, when it had a sister publication in the UK.

Gray told the firm in the fall he would be leaving, confirmed USS Group CEO Bill Galvin, who said in a statement obtained by CIO that knowing his intentions so far in advance “has allowed us to take a structured approach to succession planning, which will include opportunities for growth for the existing team.” Galvin said a search for Gray’s successor is already “well underway.”

Tags: Pension, Roger Gray, UK, Universities Superannuation Scheme

As Brazil’s legislature convened, the nation’s new president reinforced his agenda to overhaul its pension system.

Jair Bolsonaro sent a letter to Congress on Monday, which was read by Congresswoman Soraya Santos. Although the president was unable to attend the opening session as he is recovering from surgery related to being stabbed during his campaign, his message was loud and clear: Let’s fix the pension system.

He noted the need to privatize Brazil’s retirement structure, which he has been working on.

“We are conceiving a modern and at the same time fraternal proposal, which combines the actuarial balance with support to those who need it most, separating ‘welfare’ from ‘assistance,’ while fighting fraud and privileges,” the letter read.

For more stories like this, sign up for the CIO Alert newsletter. 

Bolsonaro said one of the items being “formulated” for the new pension is individual retirement savings accounts. Brazil’s legislature said the message could mean a minimum income for all beneficiaries, some of which would be tied to the “ceiling” of the pension system. Congress added that a minimum age requirement and public sector rules should be added to the proposal.

The president said the changes will encourage the rate of national savings, and a consistent way to “free the country from international capital,” adding that welfare’s overhaul “started a big change in Brazil, business flows, [and] employment increases.”

Rodrigo Maia, the president of the Chamber of Deputies, agreed that Brazil’s social security system needs a revamp. He called it the current legislature’s greatest challenge, but if approved, it would indicate further congressional changes such as tax reform, ways to continue economic growth, reducing violence, and combating inequality and poverty.

Maia was re-elected on Friday for another two-year term. He predicted a pensions bill to take two months to get a vote in the lower house before it went to the Senate.

“I am sure we will be able to make the necessary changes in legislation and continue to respond to the wishes of society,” he said.

Senate President Davi Alcolumbre said the overhaul is “vitally important for the balance and sustainability of public finances,” but that a “broad discussion” of this and other topics such as administrative and tax reforms was needed to clarify things.

Tags: Brazil, Jair Bolsonaro, Pension, Pension Reform, Rodrigo Maia