Norfolk County Council Pension Fund, Norwich, England, is leading searches for preapproved lists of investment consultants and global custodians to serve all local government pension plans in the U.K., representing combined assets of £130 billion ($204 billion), said Nicola Mark, head of the £2.1 billion pension plan.
The search processes for these framework agreements, expected to kick off in the next couple of months, would lead to signing providers to the preapproved lists. Local government officials would then hold mini-competitions among those on the lists when hiring a new consultant or custodian.
“The key benefit is time,” Ms. Mark said. “However you do (a public procurement process), it takes almost a year,” while mini-competitions could be finished “in four weeks.”
The framework structure also would save a member pension fund about £50,000 per search, depending on the type of search, Ms. Mark said.
Norfolk led a similar national framework search for actuaries that ended in June with the selection of Aon Hewitt, Barnett Waddingham, Hymans Robertson and Mercer selected to the list.
A nationwide framework search won't likely be used for investment managers, Ms. Mark said, as individual plans' needs differ greatly depending on their investment portfolios. However, she said public plan executives are trying to think creatively about ways U.K. public funds might use their collective strength to cut investment costs.
Separately, a new manager selection platform has been introduced for private-sector pension funds in the U.K. Pension Fund Service announced Wednesday it will make searches cheaper and use the weight of members' combined assets to bargain for lower management fees on investment mandates.
“Having seen local authority pension funds work together and create framework agreements, we decided to find a solution for private pension schemes,” Chris Southworth, CEO of Pension Fund Service, said in a news release. “We have had strong interest from major private-sector schemes to create super mandates for them on a wide range of asset classes. The pension schemes stay independent of each other; however, (they) benefit from being together on the platform.”
