UK - The Pension Protection Fund (PPF) is looking for two fund managers to administer an initial £75m active equity mandate, according to the Department of Work and Pensions (DWP).
The mandate will initially be worth £75m, but could grow larger depending on the PPF’s eventual assets under management, said Maureen Hewlett of the DWP. The mandate will be benchmarked against a gilt/sterling bond market benchmark with an outperformance target of not more than 1% per annum.
The expected asset allocation of the PPF has not yet been established, Hewlett said.
“We think there will be an element of it that will be passive and and element of it that will be active.” she said. “It will also be liability driven - the more liabilities, the risker the asset allocation. If you think of the PPF in terms of insurance terms, it will have long term liabilities.”
The PPF will “go live’ on 6 April and will serve as a guarantee fund for underfunded occupational pension schemes after their sponsoring employer has gone insolvent. It will derive its assets from contribution from defined benefit and hybrid occupational pension schemes. It is expected to levy £150m in its first year, and £300m annually in subsequent years, Hewlett said.
Interested fund managers are requested to contact the DWP by 17 March, and will receive the official Invitation to Tender by 21 March, with an expected response time of 15 days, Hewlett said. Mercer Investment Consulting is assisting the PPF in the manager search.
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