As outsourcing continues its rise in popularity, the Merchant Navy Officers Pension Fund (MNOPF) appointed Towers Watson as delegated chief investment officer for its £3bn (€3.5bn) pension fund, following a formal review by consultancy KPMG.
As a result of this appointment, the MNOPF is effectively passing responsibility for advising on and implementing investment decisions to a third party, that is in this case, investment consultancy Towers Watson. This practice of oursourcing investment decisions is also known as implemented consulting, delegated consulting or fiduciary management.
Roger Urwin, designated investment lead on the MNOPF at Towers Watson, said: “This new delegated CIO approach brings the fast-growing fiduciary management area to a defining moment. The combination of exceptional clarity of performance goals versus liabilities and a dynamic relationship with the investment committee will set new governance standards, streamline operational management and make the consultant explicitly accountable as never before.”
Andrew Waring, chief executive of MNOPF, said: “Fiduciary management is still evolving in the UK as a number of investment consultants, fund managers and other specialists look to compete in the market. During this process we explored the full range of solutions on offer, but ultimately chose to adopt the delegated CIO model because it encompasses many of the elements of investment governance best practice and should result in the creation of real value for our fund and its members.”
The KPMG review was carried out in order to identify best practice in investment governance as defined by the following criteria: degree of engagement; maximum access to investment tools and solutions -with particular emphasis on LDI, buy-in and other insurance solutions - an integrated view of risk and return versus liabilities; and effectiveness and timeliness of decision making and implementation. The review included research on global best-practice in fiduciary management.
William Everard, chairman of the MNOPF investment committee, said: “We now have governance structures and working arrangements in place which we are confident will deliver optimal fund performance with the maximum degree of alignment and accountability. In designing this new delegated CIO role, we believe we have created a best-in-class governance structure for the efficient management of large, mature pension funds.”
In other pension fund news, the £460m Cookson Group Pension Plan (CGPP), the UK defined benefit plan of Cookson Group, a materials science company listed on the FTSE 250, appointed BlackRock as its fiduciary management.
©2010 funds europe