London, 31 January 2022 — The £13 billion National Grid UK Pension Scheme (NGUKPS) today announced the appointment of Russell Investments as the Scheme’s partner responsible for oversight and implementation of investments with the Trustee’s Executive Team and the Trustee retaining responsibility for strategic asset allocation. The appointment follows a competitive tender process managed by the Trustee’s Executive Team (TEL).
NGUKPS, which serves over 50,000 members, will utilise Russell Investments’ investment and operational expertise, open architecture infrastructure and implementation capabilities to increase efficiencies and maintain the Scheme’s strong funding position. With over 40 years of experience as an OCIO provider and over £140 billion1 in global OCIO assets, Russell Investments will provide NGUKPS with robust portfolio management capabilities, strategic advice and in-depth risk monitoring and reporting, including delivering on the Scheme’s ESG obligations and preferences.
The NGUKPS Trustee’s decision to partner with Russell Investments was principally based on its ability to deliver a tailored investment solution that can meet NGUKPS’ unique requirements and risk-focused objectives both now and in the future. The breadth and depth of Russell Investments’ global OCIO platform will allow the Scheme to continue extracting value from its existing investments while evolving its portfolio as risks and opportunities emerge. As the Scheme continues to mature, Russell Investments will support continued de-risking and ‘end game’ positioning, including potential further insurance buy-in transactions.
In working to implement the investment decisions made by the Scheme, Russell Investments will provide NGUKPS with increased visibility and strategic insights on key areas relating to portfolio construction. The outsourced structure will allow the Scheme to assess and manage its assets efficiently and adjust risk and portfolio exposure over time across both traditional and alternative asset classes, including private markets.
The partnership will also enhance the Scheme’s governance practices and help it meet its regulatory requirements. This is particularly significant with respect to ESG criteria, notably in the context of the Taskforce on Climate-Related Financial Disclosure requirements.
Increased market complexity combined with growing operational and regulatory demands have led many pension schemes to partner with OCIO solutions providers. The global OCIO market, with $2.46 trillion in assets under management, is expected to experience significant growth in the coming years. According to recent research from Cerulli Associates, the global OCIO market will grow at an annual rate of 5% over the next three years.2 A separate report forecasts particularly strong growth in fiduciary management assets under management in the UK, with estimates of £235 billion in 2020 to £660 billion by 2025.3
Commenting on the appointment, Chris Hogg, CEO TEL, the Executive to the Trustee, said:
“In the best interests of our pension scheme members, we continuously review and evolve our operating model and governance practices. We are outsourcing oversight and implementation elements of our investment activities, leveraging Russell Investments’ expertise and scale. We look forward to a successful partnership with Russell Investments to deliver trustee strategy and to further strengthen our funding position.”
Michelle Seitz, Chairman and CEO of Russell Investments, added:
“It is a distinct honour and a privilege to serve and help secure the financial futures of National Grid UK Pension Scheme’s 50,000 members. We have honed our investment capabilities over 85 years working with large institutions such as National Grid around the world. We will work incredibly hard, fully leveraging our global platform to deliver a comprehensive solution that meets the Scheme’s long-term goals.”
Jim Leggate, Head of UK Institutional, Middle East & Africa concluded:
“We are delighted to have been appointed by the National Grid UK Pension Scheme. With the complexity of investment markets, regulation and sustainability considerations posing substantial challenges, asset owners are increasingly reviewing their existing provisions and assessing the extent to which they might benefit from external support to meet their long-term goals. We expect this trend to continue in the UK, particularly as more and more defined benefit pension schemes move closer to their end game.”
1 Russell Investments as of 31 December 2021
2 Cerulli Associates, The Cerulli Edge, August 2021
3 Cerulli Associates, European Retirement Industry 2021: Reassessing Opportunities Across Multiple Asset Pools, November 2021
Stephanie Ramos, firstname.lastname@example.org
+44 (0) 207 02 46 446
About Trustee Executive Ltd (TEL)
TEL is an executive providing strategic guidance and governance to National Grid’s UK DB pension scheme trustees. Its primary focus is risk management. TEL offers expertise across the full trustee accountability spectrum, from Integrated Risk Management, and overall governance, right through to member experience. TEL’s direct alignment to the trustee means they provide independent insight to help trustees make informed decisions.
About Russell Investments
Russell Investments is a leading global investment solutions firm with £251.6 billion in assets under management (as of 31/12/2021) for clients in 32 countries. The firm provides a wide range of investment capabilities to institutional investors, financial intermediaries, and individual investors around the world. Building on an 85-year legacy of continuous innovation to deliver exceptional value to clients, Russell Investments works every day to improve people’s financial security. Headquartered in Seattle, Russell Investments has offices in 19 cities around the world, including in London, New York, Tokyo and Shanghai.
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