UK - Trustees at the influential £3bn J. Sainsbury pension scheme have authorised a search for alternatives managers, decided on a stakeholder provider and chosen to increase the scheme's allocation to bonds.
The fund’s manager, Geof Pearson, stressed trustees still retained the right to reject all proposals for the near £150m alternatives tender which will represent up to 5% of the fund. First on the agenda is a decision on how to split the search into various alternative asset classes.
At a trustee meeting on Tuesday, trustees also decided to appoint Legal & General as stakeholder provider to the supermarket chain.
The scheme, which has more than 60,000 active members, selected the insurer from a shortlist of five firms including Standard Life, Prudential, Friends Provident and Norwich Union.
Trustees also decided to increase Sainsbury’s allocation to bonds. It currently stands at 80% in equities, 20% in bonds. This will change to 70% equities, 30% bonds. The up to 5% allocation to alternatives will be included in the equity portion. Deutsche Asset Management and Merrill Lynch Investment Managers currently run fixed income on a roughly 50/50/ basis.
The rebalancing is dependent on Sainsbury’s sale of its Homebase division and the subsequent transfer of member policies, which is expected to take at least a further three months to complete.
Pearson said maturity factors affecting the scheme that came to light following an asset liability study had been behind the reason for the change. Chemist Boots’s decision to move entirely into bonds had not been an influence. He added that Sainsbury’s policy was to match, percentage-wise, the allocation to fixed income with that of pensioners funded by the scheme.
In addition, the scheme is taking action to publicise its forward-looking policies on unmarried partners and its innovative attitude to retirement ages.
The scheme aims to make its members better aware that lump sums and pensions are payable to unmarried partners as part of death in service benefits. The fund has also increased its commutation factors to encourage its membership over the age of 65, currently just 1%, to work beyond natural retirement age.
By Luke Clancy
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