The agreement marks the largest outsourced chief investment officer (OCIO) mandate awarded to date in the UK market.
BAE Systems Pension Schemes Trustees has appointed Goldman Sachs Asset Management to manage about £23bn of UK defined benefit (DB) pension scheme assets.
The agreement means BAE Systems’ in-house investment team will join Goldman Sachs Asset Management and continue to provide investment services to the schemes.
It is expected that the asset management and team transition to Goldman Sachs Asset Management - one of the world's largest asset managers with £2.1 trillion under supervision and more than £200bn in global OCIO assets - will take place towards the end of 2023.
The scheme's trustees’ said the decision to appoint Goldman followed a highly competitive tender process.
Goldman Sachs Asset Management said the deal also furthered its position in the UK liability driven investment (LDI) and cashflow driven investing (CDI) markets, adding to the about £175bn managed by the firm globally in LDI and CDI portfolios.
Value for pension scheme members
David Solomon, chief executive officer of Goldman Sachs, said: “We are proud to partner with BAE Systems and the trustees to deliver this long-term solution, which brings the full capabilities of Goldman Sachs to the benefit of BAE Systems’ Pension Schemes.”
Andrew Gallagher, chair of trustees for the BAE Systems Pension Scheme and BAE Systems Executive Pension Scheme, said: “The in-house management team has delivered excellent stewardship of the Schemes’ bespoke investment strategies over many years.
"We are delighted that this agreement with Goldman Sachs Asset Management brings together both the expertise of our in-house team and the full capabilities of Goldman Sachs and we look forward to working together to continue to provide long-term value for our members.”
Brad Greve, group finance director, BAE Systems, added: “Through proactive actions of BAE Systems plc, in our role as scheme sponsor, the Trustees and the excellent work of our in-house investment management team, the pension funding level has moved from a significant deficit to a surplus.
"As we continue to look at ways to further de-risk pension liabilities, reducing the cost and improving the efficiency of asset management are essential."
