UK's Multi-Employer Pension Fund Revises Investment Strategy for Improved Returns

The group said the new approach aims to allow for better risk-adjusted returns relative to liabilities to ensure that better results are delivered for members.

(January 10, 2011) — In response to low funding and solvency levels, and tapering future return expectations due to falling interest rates, the UK-based occupational Pension Trust, with nearly $7 billion in assets under management, is offering an updated investment service in an effort to provide better risk-adjusted returns relative to liabilities.

“With funding and solvency levels significantly below 100%, and with future return expectations having dwindled as interest rates and market sentiment have fallen, the new strategy aims to allow for the generation of better risk adjusted returns relative to liabilities for pension schemes,” said Chief Investment Officer David Adkins in a statement. “In addition, our new investment governance structure, which has been in place in its entirety for less than a year, I feel is better equipped to produce better risk adjusted returns compared to the past.”

Adkins added that going forward, the UK firm will be taking a more responsive approach to fluctuations in market conditions by providing daily estimates of funding and solvency levels, improving performance reports.

The UK fund, under the new strategy, plans to invest more in alternative growth assets to hedge against risk, shifting away from quoted equities. Meanwhile, the fund will ensure that its new investment approach outperforms their benchmarks while relying more heavily on passive index-tracking investments.

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

The Pension Trust has also tweaked its governance structure by forming three sub-committees to support the main investment committee: the Funding and Investment Strategy Review Group (FISRG), the Investment Strategic Opportunities Group (ISOG) and the Investment Manager Review Group (MRG). According to the fund, the FISRG will approve funding conclusions with scheme sponsors within guidelines set by the board, recommending investment strategies to the investment committee. The ISOG will review, recommend, or reject new investment ideas before they appear in front of the investment committee, and the IMRG will monitor the performance of managers and other providers.

The Pension Trust, established in 1946 and now the 44th largest pension fund in the UK, is an occupational pension scheme and one of the leading multi-employer occupational pension scheme for the charitable, social, educational, voluntary and not-for-profit sectors. The Pension Trust’s products include: 29 stand-alone final salary schemes, five multi-employer defined benefit schemes, a money purchase plan and a multi-employer career average revalued earnings (CARE) scheme.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Public Pension Fund Coalition Urges Thorough Foreclosure Review by US Banks

A group of seven major public pension schemes are being led by New York City Comptroller John Liu to press the largest US banks to better examine their mortgage and foreclosure practices.

(January 10, 2011) — A coalition of public pension funds headed by New York City Comptroller John Liu and representing more than $430 billion in assets has asked the boards of four of the largest US banks to review their mortgage and foreclosure practices, calling for the banks to report the findings of their independent examinations in their 2011 proxy statements this spring.

The review highlights the mounting influence of public pensions nationwide in pressuring banks to heighten their standards and level of transparency following the financial crisis. The coalition includes the Connecticut Retirement Plans and Trust Funds, the Illinois State Board of Investment, the Illinois State Universities Retirement System, the New York State Common Retirement Fund, the North Carolina Retirement Systems, and the Oregon Public Employees Retirement Fund.

According to Reuters, the coalition of seven major public pensions urged the Audit Committees of Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, and Wells Fargo L& Co to increase the scrutiny they allot to their loan modification, foreclosure, and securitization policies and procedures. The coalition has a total of $5.7 billion invested in the four banks. “This will help to prevent future compliance failures and restore the confidence of shareholders, regulators, legislators and mortgage markets participants,” the coalition said in the letter, as reported by the news service.

Just last week, the Supreme Judicial Court of Massachusetts’ voted unanimously to void the seizure of two homes by Wells Fargo & Co and US Bancorp on the grounds that the foreclosures were completed without proper documentation. “We agree with the [Land Court] judge that the plaintiffs…failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,’’ Justice Ralph Gants wrote in the decision, reported the Boston Globe.

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

The ruling may exert a greater push on major US lenders to prove they own a mortgage before foreclosing. Already, around the country, attorneys general are looking into whether lenders are improperly forcing people into foreclosures.

“There is a fundamental problem in the banks’ procedures that endangers not just homeowners, but shareholders, and local economies,” New York City comptroller Liu said in a statement.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

«