Tesco PLC, Cheshunt, England, outsourced the management of its U.K. defined benefit fund to Schroders, transferring assets and some in-house staff.
The pension fund had £12.9 billion ($15.9 billion) in assets as of March 31, according to the latest trustee report for the Tesco PLC Pension Scheme. Spokespeople said the value of assets transferring to Schroders was not being disclosed.
The assets will be managed by Schroders Solutions, which provides outsourced CIO services to pension funds and runs more than £100 billion in OCIO and outsourced arrangements.
The assets of the closed pension fund had been run by in-house firm Tesco Pension Investment since 2011. The pension fund is fully funded on the trustee's funding basis, a Schroders news release said.
A small number of Tesco Pension Investment staff will move to Schroders, a Tesco spokesperson said. Others will be impacted by the change, and Tesco is working closely with them to find alternative roles.
The decision to hire Schroders followed a review of the long-term needs of the pension fund, the release added.
"On completion of a comprehensive strategic review of the scheme's long-term needs, the trustee has agreed to appoint Schroders as its outsourced principal investment manager," Ruston Smith, chair of the trustees, said in the release. "We are looking forward to working with Schroders to build on the huge achievements of Tesco Pension Investment in the implementation of the scheme's investment strategy and in delivering security for our members. The team at TPI have done an excellent job of managing the assets for more than a decade and have contributed to the scheme being fully funded on the trustee's funding basis."
The transfer of the management of the pension fund will be completed by the end of the year.
The pension fund was hit by market volatility over the year ended March 31, with total net assets decreasing by 38.9% to £12.9 billion.
The deal is the latest OCIO arrangement to include the transfer of some or all of an in-house investment team, along with pension fund assets, to a provider. BAE Systems, London, chose Goldman Sachs Asset Management as its provider in September, in a deal that transferred about £23 billion and the BAE Systems Pension Funds Investment Management team to the firm. In April 2022, Centrica, Windsor, England, chose Schroders to run £10 billion in assets across three plans, with the energy provider's seven-person investment team also moving to the manager.