The government legacy pension scheme manager, Annuitas, has hired Mercer for a broadened consultancy role put out to tender earlier this year.
Annuitas sought pitches in February to provide “assurance and guidance on best practices” as well as investment advisory services to its two underlying schemes – the $5.2 billion Government Superannuation Fund (GSF) and the $1.8 billion National Provident Fund.
Under the request-for-proposal terms, Annuitas floated the possibility of splitting the duties between two consultants to minimise conflicts-of-interest.
“However, [having two consultants] is not very efficient and we are very open to one firm performing both roles as long as we have confidence that the firm can successfully mitigate that potential conflict through the elements or structure they bring,” Annuitas said at the time.
Mercer takes over from Russell Investments as asset consultant for the government pension schemes.
The Annuitas management team saw a refresh last year including new CEO, Tim Mitchell, arriving to replace veteran incumbent, Simon Tyler. Former Mint Asset Management portfolio manager, Anthony Halls, also joined Annuitas in 2023 as chief investment officer in place of the retiring Paul Bevin.
Meanwhile, the just-published GSF ‘statement of investment expectations’ has forecast a modest return of 5.1 per cent for the 12 months to the end of June next year compared to an estimated return of 4.6 per cent in the notional passive reference portfolio split 80/20 between equities and fixed income.
“Investment management expenses (including custody costs) are forecast to decrease from the estimate of $46.214 million in 2024 to a forecast of $31.791 million in 2025,” the GSF statement says. “This is predominantly due to a reduction in the estimated performance fees.”
The GSF panel of more than 20 underlying managers has held constant year-on-year with a broad mix of equities, fixed income and alternative assets (such as life settlements and catastrophe bonds) in the portfolio.
Remoulded in 2001 to manage a number of government defined benefit obligations and defray future pension costs, the GSF is forecast to hold assets under management steady year-on-year at about $5.2 billion by June 30, 2025.
Over the same time period, actuarial calculations show the government defined benefit pension liability is set to fall from almost $12.3 billion to $11.9 billion, shrinking the ‘unfunded deficit’ from $7 billion to $6.7 billion.
