New pensions solutions team and pooled fund for Standard Life Investments

Edinburgh-based global investment manager, Standard Life Investments, has created a pensions solutions proposition to deliver innovative new liability aware funds designed to address the needs of Defined Benefit (DB) pension schemes.

The first fund within the suite of Integrated Liability Plus Solutions (ILPS) is now available externally and called the Liability Aware Absolute Return III Fund.

It will aim to help DB schemes in the UK meet their payment obligations to members, without compromising on the potential for growth and returns from invested assets.

ILPS takes a unique integrated approach to liability management, offering low–risk growth potential alongside liability hedging within a suite of single pooled funds.

The fund will be managed by Standard Life Investments’ multi-asset team, with portfolio managers Jens Kroeske and Robert De Roecke, supported by Sebastian Mackay and Adam Rudd.

It targets a return of cash +5 per cent per year (gross) on a rolling three year basis with a liability hedge overlay, which aims to deliver outperformance of a pensions scheme’s liabilities. It is also compliant with imminent regulatory changes which will restrict how schemes manage liability risks.

The new pensions solutions team has over 50 years of actuarial and investment consulting experience between them and is led by Mark Foster, who brings 16 years of experience in the pensions industry as an actuary and investment consultant. He has also been a multi-asset investment specialist at Standard Life Investments, joining early 2011. The team will spearhead the continued development of Standard Life Investments’ liability aware capability.

Dianne Ramsay joined the team from Schroders Investment Management where she was part of the UK strategic solutions team, having previously worked for Mercer as an investment consultant; Mike Smaje joined from First Actuarial where he led the development of its investment consulting capability, after 19 years with Willis Towers Watson as an actuary and investment consultant. Both started at Standard Life Investments in summer 2015.

Stephen Acheson, executive director, global strategic partnerships, Standard Life Investments, said: “As the UK defined benefit pension landscape continues to change, schemes have to juggle the implications of new regulations, people living longer, volatile markets, low interest rates, low growth and low inflation.

“Many underfunded pension schemes are taking the decision to de-risk in order to avoid volatility, but new regulations on derivatives markets are placing constraints on the way risks are managed. The options are becoming limited.

“However, this is not purely a risk reduction exercise. We launched ILPS to respond to the needs of underfunded schemes, providing an active and innovative pooled proposition which efficiently combines both components – generating returns and managing liabilities. We believe firmly that you don’t have to sacrifice performance whilst controlling liability risk and have already used a similar approach in the management of our own Standard Life Staff Pension Scheme which is fully funded at around £4bn.

“The new pensions solutions team fully understands the challenges and complexities of pension scheme asset management and will draw on Standard Life’s experience of managing assets to meet liabilities, on behalf of insurers and pensions schemes for over 100 years.”