Pension Protection Fund, Croyden, England, hired PIMCO and Insight Investments as fixed-income managers, with Goldman Sachs hired on a deferred basis, according to a statement from the PPF. State Street Bank also was hired as the fund's global custodian. The PPF is the United Kingdom's new pension insurance fund, similar to the PBGC. It began operations on April 6 and will manage a pool of the compulsory annual fees levied on companies with eligible U.K. pension schemes. Paul Reynolds, PPF spokesman, did not return a call seeking specifics about the hirings and the fund's current assets under management.
The managers will be measured against a hybrid benchmark with a two-thirds weighting to the FTSE Fixed Interest Gilts Over 10 Years index and one-third to the FTSE Index Linked Gilts Over 15 Years index, according to the PPF's investment principles, which were published today. The managers' expected rate of return will be 1.25% above the benchmark return. The fund's investment guidelines mandate that assets collected in the first year will be invested in bonds, cash and related derivative instruments, although the allocation may be reviewed in subsequent years.
"(We are) seeking to match our assets as closely as possible to our liabilities in the long run," Lawrence Churchill, PPF chairman, said in a statement.