The UK listed investment giant is to replace Tesco’s in-house team as the £12.9bn scheme’s principal manager.
One of the biggest corporate pension schemes in the UK is swapping its in-house investment model for an outsourced chief investment officer (OCIO) approach.
The Tesco Pension Scheme has appointed Schroders Solutions, part of UK listed asset manager Schroders, to run its investment portfolio. This is currently managed by Tesco Pension Investment (TPI), a wholly owned in-house asset management unit established in 2011.
According to the defined benefit pension scheme’s latest annual report, it had £12.9bn in assets under management on behalf of more than 336,000 members. Schroders declined to comment on the size of the OCIO mandate.
The move follows a decision by the scheme’s trustees to reduce investment risk and conduct a detailed review of the scheme’s long-term needs.
TPI Fund Managers, a subsidiary of TPI set up to house internal funds, has applied to cancel its Financial Conduct Authority (FCA) authorisation, according to the FCA’s register, and the in-house fund platform has been “terminated” after the scheme divested from its last remaining sub-fund.
Ruston Smith, chair of Tesco Pension Trustee, said: “We are looking forward to working with Schroders to build on the huge achievements of Tesco Pension Investment in the implementation of the scheme’s investment strategy and in delivering security for our members. The team at TPI have done an excellent job of managing the assets for more than a decade and have contributed to the scheme being fully funded on the trustee [board]’s funding basis.”
Schroders said the transfer of the investment portfolio would be completed “before the end of 2024”.
Both Schroders and Tesco declined to comment on whether in-house TPI staff would also transfer to Schroders as part of the arrangement. However, Pensions Expert understands that staff discussions will be taking place regarding future roles either within Tesco or at Schroders.
The deal marks Schroders’ latest multi-billion outsourced investment mandate, after it brought on board £10bn worth of assets from energy company Centrica’s in-house scheme in 2022.
