London Universities’ Pension Starts LDI Course

De-risking is on the timetable for London’s university and college staff, despite conditions being less than favourable for LDI.

(September 13, 2012) — The Superannuation Arrangements of the University of London (SAUL), one of the largest funded public sector pensions in the United Kingdom, has embarked on a liability-driven investing programme.

Legal & General Investment Management (LGIM) has picked up the mandate to run the LDI programme, the asset manager announced today.

Mike Walsh, head of solutions distribution and management at LGIM, said SAUL had worked with the company since 2001 when it was appointed to run passive mandates. “We are now looking forward to continuing to work with SAUL and their investment advisors, Redington, as they continue on their de-risking journey,” he added.

SAUL provides defined benefit pensions to non-academic staff at 49 universities, colleges, and other educational institutions in and around London. It has assets of £1.6 billion and 39,000 members.

LDI has been commonly acknowledged as a useful, or potentially essential, tool in a pension fund’s tool kit, yet the take up of the strategy has been relatively limited over the last five years.

This reluctance to engage with the strategy has most to do with prolonged historically low interest rates in the UK, Eurozone, and United States. Pension CIOs and trustees are also hesitant to commence LDI strategies while they retain poor funding levels following losses incurred during the financial crisis.

For an in-depth report on mid-sized pensions and their perceived hesitation over LDI from aiCIO’s June issue, click here.

Watch out for aiCIO’s second annual dedicated LDI edition published in November.