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

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.