UK Pensions Lifeboat Loses CIO

(June 20, 2012)  —  The chief investment officer of the Pension Protection Fund (PPF), the lifeboat for bankrupt company schemes in the UK, is to leave this summer, aiCIO has learned.

Ian McKinlay is to leave the PPF in August, a spokesman for the organisation confirmed to aiCIO. He joined the PPF in March 2009 and was initially seconded to the role from consultants and auditors PwC.

McKinlay is to join insurance and asset management firm Aviva to manage its staff pension fund, the company confirmed to aiCIO. Aviva closed the fund to new members in 2006 and began consultations to deny existing members final salary benefits in 2010. Aviva staff has been through significant job cuts in the UK this year.

Mike Urmston, member of the Aviva Trustee Board and Chairman of the Investment Committee, said: “We are delighted to confirm the appointment of Ian McKinlay as Pensions Investment Director. Ian’s knowledge and expertise in this arena will be an invaluable asset to Aviva.”

At the end of December, the Aviva fund’s assets reached £11.7 billion, according to the company’s 2011 annual report. Its liabilities were £10.5 billion, signifying more than a £1 billion surplus in the fund.

According to the Aviva annual report, the company’s “UK fund management companies manage most of the assets held by the Group’s main UK staff pension scheme, for which they charge fees based on the level of funds under management. The main UK scheme holds investments in Group-managed funds and insurance policies with other Group companies.”

The PPF, launched in 2005, was mandated by the government to take on the assets and liabilities of pension funds whose sponsoring employer had collapsed. The ‘lifeboat’ only takes on funds that are in deficit and promises a minimum pension for members. This means that the investment team behind it has to make enough money to cover these payments.

Unlike most defined benefit pension fund managers in the UK, the PPF’s asset are only set to grow. Along with an annual levy that is collected from all company pension funds in the UK – which would allow them access to the PPF should they fall on hard times – the PPF is growing by about £2 billion each year. A ballpark figure for the fund would be around £10 billion. 

McKinlay will be discussing liability-driven investing at the aiCIO European summit in London next week – click here to register.